ADT 2002 Annual Report Download - page 107

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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
17. Related Party Transactions (continued)
Chief Executive Officer, Mark A. Belnick, our former Executive Vice President and Chief Corporate
Counsel, and Mark H. Swartz, our former Chief Financial Officer, for breach of fiduciary duty and
other wrongful conduct relating to alleged abuses of our Key Employee Loan Program and relocation
program, unauthorized bonuses, unauthorized payments, self-dealing transactions or other improper
conduct.
As previously reported in our Current Report on Form 8-K filed on September 17, 2002, on
June 17, 2002, we filed a civil complaint against Frank E. Walsh, Jr. for breach of fiduciary duty,
inducing breaches of fiduciary duty and related wrongful conduct involving a $20 million payment by
Tyco, $10 million of which went to Mr. Walsh with the balance going to a charity of which Mr. Walsh is
trustee. The payment was purportedly made for Mr. Walsh’s assistance in arranging our acquisition of
The CIT Group, Inc. On December 17, 2002, Mr. Walsh pleaded guilty to a felony violation of New
York law in the Supreme Court of the State of New York, (New York County) and settled a civil action
for violation of federal securities laws brought by the Securities and Exchange Commission in United
States District Court for the Southern District of New York. Both the felony charge and the civil action
were brought against Mr. Walsh based on such payment. The felony charge accused Mr. Walsh of
intentionally concealing information concerning the payment from Tyco’s directors and shareholders
while engaged in the sale of Tyco securities in the State of New York. The SEC action alleged that
Mr. Walsh knew that the registration statement covering the sale of Tyco securities as part of the CIT
acquisition contained a material misrepresentation concerning fees payable in connection with the
acquisition. Pursuant to the plea and settlement, Mr. Walsh paid $20 million in restitution to Tyco on
December 17, 2002. Our claims against Mr. Walsh are still pending.
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