Disgraced Tyco trio 'pillaged £400m'

FORMER Tyco International chief Dennis Kozlowski and two other ex-directors have been charged with fraud for allegedly pillaging more than £400m from the giant US industrial conglomerate.

Kozlowski and former chief financial officer Mark H. Swartz were each charged with enterprise corruption for allegedly stealing more than $170m (£115m), and for obtaining $430m through fraudulent sales of securities. Former general counsel Mark A. Belnick was charged with falsifying business records.

The charges were unveiled by Manhattan District Attorney Robert Morgenthau less than an hour after the Securities and Exchange Commission filed a related civil complaint against the three for failing to disclose tens of millions of dollars in low- or no-interest loans they took from the company.

Separately, Tyco itself said it would sue Kozlowski, seeking the return of more than $100m he allegedly stole, including unauthorized bonuses of $58m. 'Despite his being paid handsomely, he misappropriated hundreds of millions of dollars from Tyco that have not been repaid,' it said.

The three were to be arraigned later Thursday. Morgenthau said the DA's office had moved to freeze $600m in assets belonging to Kozlowski and Swartz.

The SEC charged that Kozlowski used $242m from an employee loan programme designed to help workers purchase Tyco stock to instead pay for yachts, fine art, jewellery, luxury apartments and vacations. It accused Swartz of misusing $32m in company funds and Belnick of $14m.

The executives also failed to disclose when they forgave the loans to themselves, the SEC said. The three 'treated Tyco as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors,' said Stephen Cutler, the SEC's director of enforcement. 'Defendants put their own interests above those of Tyco's shareholders. Those shareholders deserved better than to be betrayed by the management of the company they owned.'

The new charges against Kozlowski are on top of a 14-count indictment he already faces. They include evading sales tax on $13m worth of art, including works by Renoir and Monet. Kozlowski, who resigned from Tyco in June a day before being indicted, has pleaded innocent.