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Tyco in $26 million settlement with DOJ and SEC

Tyco International Ltd. agreed on Monday to pay criminal and civil penalties totaling more than $26 million to resolve Foreign Corrupt Practices Act violations.

The Switzerland-based maker of fire security products paid more than $13.6 million in criminal penalties to the DOJ, and $13 million in civil penalties to the SEC.

The SEC settlement consisted of $10.5 million in disgorgement and $2.5 million in prejudgment interest.

A subsidiary — Tyco Valves & Controls Middle East Inc. — pleaded guilty in the criminal case to conspiring to violate the anti-bribery provisions of the FCPA. It ‘paid bribes to officials employed by Saudi Aramco, an oil and gas company controlled and managed by the government of the Kingdom of Saudi Arabia, in order to obtain contracts with Saudi Aramco,’ the DOJ said.

In the civil case, the SEC said Tyco companies also paid bribes in Germany, China, Thailand, and Turkey.

Tyco funded the bribes by falsely recording payments to agents and other third parties as ‘commissions.’

The DOJ gave Tyco a non-prosecution agreement. Prosecutors cited the company’s ‘timely, voluntary and complete disclosure, its cooperation — including a global internal investigation concerning bribery and related misconduct — and its extensive remediation.’

Tyco enhanced its compliance program, the DOJ said, fired employees responsible for the bribes and covering them up, terminated culpable third-party agents, and closed subsidiaries due to compliance failures.

Tyco discovered in 2005 that subsidiaries and agents had paid bribes overseas. The company launched an investigation and reported what was happening to the DOJ and SEC.

It wasn’t until 2010, Tyco said in SEC filings this year, that the DOJ and SEC started talking about a settlement of the FCPA offenses.

In 2006, Tyco resolved securities law violations in a $50 million settlement with the SEC. Most of the charges in the 2006 enforcement action related to improper accounting practices and overstated financial reports. But the SEC also referred to FCPA offenses in Brazil.

Tyco International Ltd. trades on the NYSE under the symbol TYC.

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The DOJ’s September 24, 2012 release is here.

The SEC’s Litigation Release No. 22491 and Accounting and Auditing Enforcement Release No. 3409 (both dated September 24, 20120 in Securities and Exchange Commission v. Tyco International Ltd, 1:12-CV-01583 (D.D.C. filed Sept. 24, 2012) is here.

Download the civil complaint in SEC v. Tyco International Ltd here.

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