Man Without Qualities

Wednesday, September 11, 2002

Tyco Follies

The New York Times reports:

Tyco is also planning to file its own lawsuit as early as today against the former chief executive, L. Dennis Kozlowski. Tyco will seek the return of his income and benefits since 1997, an amount that is at least $250 million. ... The Manhattan district attorney, Robert M. Morgenthau, plans to indict Mr. Kozlowski as well as Tyco's former chief financial officer, Mark H. Swartz, and the company's former general counsel, Mark A. Belnick, on charges that include conspiracy to commit fraud, larceny and enterprise corruption, these people said. The S.E.C. is expected to accuse the men of securities fraud and plans to seek millions of dollars in penalties.

The period with respect to which the new charges pertain is interesting: since 1997. For example, investment banker Richard Johnson worked two years at Tyco before returning to Merrill Lynch's mergers group in late 2000. Mr. Johnson is now a senior officer of that group. Merrill is now reportedly vying for fees from a planned break up of Tyco, which also had very close ties to Goldman, Sachs during this period - and has such close ties now.

Can the rot at Tyco be so broad and deep as the prosecutors are saying without Merrill and Goldman being heavilly involved?

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