Investor Group Urges Tyco to Relocate to U.S.

By David Darman on Wednesday, March 5, 2003.

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Tyco International Limited holds its 2003 annual meeting in Bermuda tomorrow/today.

Although it lists it offices in Portsmouth, New Hampshire, Tyco's headquarters are officially in Bermuda, where it pays no U.S. corporate taxes.

An investor group including unions, state and local officials, and pension plans, is calling on Tyco to move its headquarters back to the United States.

NHPR's David Darman has more.

The investors calling on Tyco to reincorporate in the U.S. held a coast to coast telephone news conference on Tuesday.

Sean Harrigan, president of the California Public Employees Retirement System, or CalPERS, urged the company to relocate.
08 242 ..when tyco meets at its annual meeting on Thursday, I hope that they will be responsive to our call for action and give us their commitment to set a date, to set a time, and set an agenda which will bring them back home to America. 08 257

The investors say Tyco is beyond the reach of U.S. law in Bermuda.

Richard Ferlauto is director of pension investment policy for the American Federation of State, County and Municipal Employees, or AFSCME.

Ferlauto says Bermuda law requires Tyco to be responsible to its board of directors, not its shareholders.
36 24 For example, in Bermuda, a company can sell substantial assets, or the whole company, without getting shareholders permission to do so. Obviously, in the u.s., you need shareholders permission to do that. 36 39

Bermuda law also prevents shareholders from suing Tyco for fraud.

Tycoï¿½s former Chief Executive, Dennis Kozlowski, and two other officers were indicted in New York last year for several crimes, including allegedly stealing 600 million dollars.

Gerald McEntee, AFSCMEï¿½S president, says TYCO legitimately claimed to avoid paying the same amount in U.S. taxes in 2001.

McEntee says in the current economic climate, Tyco should pay taxes to the U.S., as a good corporate citizen.
49 122 here we are, in the united states, where the feds are running a deficit that is higher than going back to the second world war. We have states and local governments that are running a collective deficit of probably, depending on what time of day it is, from 70 to 80 billion dollars. And here we have a large corporation that has Bermuda as tax haven.

Congress is getting ready to consider a measure that would disqualify American companies with overseas headquarters from doing business with the federal government.

That could cost Tyco more than 200 million dollars.

William C. Johnson, Jr. is Controller of New York City.

Johnson says lawmakers may also remove the loopholes that attracted Tyco and other companies offshore.
06 103 in congress, the reid-levin-neal bill, the corporate patriot enforcement act, will deny tax benefits to former, American companies, that reincorporate offshore, to avoid corporate income taxes. At introduction, the measure had over 150 co sponsors 06 122

The investors urging relocation say that while they hope Tyco will agree to move, they canï¿½t force the company to come back.

Investors say they would consider divesting from Tyco if the company fails to relocate over the long term.

Still, the public pressure theyï¿½ve exerted seems to have had some effect.

One high ranking Tyco executive told Reuters news service last week the Board of Directors will begin weighing the possibility of reincorporating in the United States.
Tyco did not return NHPRï¿½s phone calls.