Switzerland-based holding company of Tyco Group, Tyco International has been charged by the US Securities and Exchange Commission in connection with breaching the Foreign Corrupt Practices Act (FCPA) when its subsidiaries facilitated unlawful payments to foreign officials in more than a dozen countries.
The US financial regulator blamed that subsidiaries of the firm perpetuated schemes that normally involved payments of fake "commissions" or the use of third-party agents to funnel money improperly to obtain lucrative contracts.
Due to its corrupt practice, Tyco overall reaped unlawful benefits amounting to over $10.5m as a result of the paid to win business.
SEC Division of Enforcement Associate Director Scott Friestad said, "Tyco’s subsidiaries operating in Asia and the Middle East saw illicit payment schemes as a typical way of doing business in some countries, and the company illicitly reaped substantial financial benefits as a result."
The US watchdog also alleged that from 2006 to 2009, Tyco subsidiaries operated 12 different illegal payment schemes around the globe.
The firm paid more than $4.6m to get the business in Germany, while its subsidiary in China inked a contract with the Chinese Ministry of Public Security for $770,000, but reportedly paid almost $3,700 to the "site project team" of a state-owned corporation to be able to obtain the contract.
Tyco agreed to pay more than $26m to settle the SEC’s charges and resolve a criminal matter by the US Department of Justice.
In another criminal proceeding, the Justice Department entered into a Non-Prosecution Agreement with Tyco in which the company will pay a penalty of approximately $13.68m.