Ex-Tyco director pleads guilty to securities fraud

Former Tyco director Frank Walsh yesterday pleaded guilty to securities fraud charges for failing to disclose that he had pocketed a $20m payment from the firm.

Mr Walsh, 61, who had been the head of the disgraced conglomerate's corporate governance committee, was charged at the Manhattan Supreme Court. He agreed to pay fines and reparations of more than $22.5m.

Mr Walsh is the fourth Tyco executive to face charges since an investigation into fraudulent activities at the Bermuda-registered business was launched earlier this year.

Tyco said in January, six months after the event, that Mr Walsh had received the fee for brokering its $9.5bn acquisition of the security firm CIT Group in 2001.

He had maintained the payment was entirely legal and had been approved by Tyco's former chief executive Dennis Kozlowski, who has been charged for allegedly looting the firm of hundreds of millions of dollars.

Mr Walsh resigned from the board at the beginning of the year. Repaying the fee, as well as a $2.5m fine, settles the charges brought against him and he was sentenced to a conditional discharge. He is barred from working as a director of a public company.

Mr Kozlowski, former finance chief Mark Swartz and former general counsel Mark Belnick face criminal charges for allegedly taking $600m from the firm through fraudulent share sales, unapproved bonuses and written-off loans. They have denied the charges.

Tyco had launched a civil lawsuit to recover the funds from Mr Walsh. Mr Kozlowski agreed to pay $10m directly to Mr Walsh for arranging a meeting with the chief executive of CIT and another $10m to a charity in Mr Walsh's name, according to the criminal complaint. The charity will keep the money.

The company has also filed a civil suit against Mr Kozlowski for the return of $730m.

Former Conservative party treasurer Lord Ashcroft recently resigned as a Tyco director.

The board of WorldCom, the telecoms firm tilted into bankruptcy by the discovery of the largest ever alleged corporate fraud, yesterday said it would follow the example of Tyco, announcing that the entire board planned to step down.

Six directors, who were employed during the time that the alleged fraud was perpetrated, have tendered their resignations, leaving only three recent appointees.

WorldCom also said it had agreed a revised lower compensation package for chief executive Michael Capellas after a proposed package met with resistance from the judge overseeing the bankruptcy. But he will still get $8m in cash over the next three years, as well as a $2m signing on bonus and $12m in shares.