Tyco Fraud

Topics: Tyco International, ADT Security Services, Audit Pages: 4 (1126 words) Published: October 21, 2013
MEMORANDUM
To: 2012 Audit Files
Re: AAER No. 3409 – SEC v. Tyco International Ltd
Company Background:
Tyco International is a global manufacturing company based in Switzerland with operations around the world. Tyco International and its subsidiaries operate in People’s Republic of China, India, Thailand, Croatia, Serbia, Saudi Arabia, Libya, Syria, the United Arab Emirates, Mauritania, the Congo, Niger, Madagascar, Turkey, Poland, Malaysia, and Egypt. Tyco’s securities are listed on the New York Stock Exchange.

Parties Involved:
Tyco’s wholly owned subsidiaries…

M/A-COM – Turkey – company under control of Tyco with 4 high-level officers also officers of M/A-COM

TTC China – Ministry of Public Security

TWW Germany

TFIS France

TFHK and Keystone – China

ADT Thailand – CCTV

TFS Malaysia

TFIS UK – Egypt

THS Saudi Arabia

THC China

THC Polska

Cause of the AAER
In early 2006, a Commission filing over disclosures, accounting fraud and a FCPA injunctive action against Tyco was settled and led to the agreement of an overview of Tyco’s global organization. The investigation of the matter then led to the findings of the misconducts that Tyco is getting Charged for in this case. During the fiscal years 2006-2009, Tyco Inc. was found to be involved in several illicit payment schemes. The company filed misstated financial statements with the SEC, failed to place and maintain efficient internal controls, paid false commissions and payments through a third party, and violated anti-bribery provisions set by the FCPA. By using Tyco’s international business, illegal acts were easily hidden within the financial statements and the company was able to earn $10.5 million in profits by employees’ commissions and promises with third party contracts. Improper reporting of books and records was one of Tyco main issues. This was a violation of Section 13(b)(2)(A) of the Exchange Act. Misstated books and records were the results of the...
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