Michael Ashcroft Resigns From Tyco Board

by Mike Godfrey, Tax-News.com, New York

12 November 2002

After a vote last Friday by Tyco's 11-member board confirming that nine of the directors would step down at the company's AGM next March, Michael Ashcroft resigned yesterday.

"I have been a vocal and persistent advocate of the wholesale replacement of the current board as the preferred option. Consistent with that lead, I should set the example by being the first to stand down," Lord Ashcroft said in a letter to new Tyco CEO Edward Breen. He turned down an offer from Mr. Breen asking him to stay on as an adviser to the board.

Michael Ashcroft joined Tyco's board in 1997 when the company reversed into his Bermuda-registered security-alarms company ADT Ltd. After Tyco's long-time CEO Dennis Kozlowski was charged with sales tax fraud this year, and the company misplayed a demerger attempt, leading to sharp falls in its share price, Tyco's Bermuda registration has come under scrutiny amid wider criticisms of 'corporate inversion' by US companies seeking to minimise international tax bills. But the company has denied speculation that it was considering a return to US registration.

Since merging his company with Tyco, Michael Ashcroft has sold at least $335 million of Tyco stock in the open market; his remaining 5.5 million shares are valued at about $81 million. Reports in August that he was under investigation by Manhattan District Attorney Robert Morgenthau in connection with Tyco's financial practices have not been confirmed.

Lord Ashcroft is no stranger to controversy in the UK. Late last year, he was accused by the Labour government of safeguarding a 'harmful tax regime' in Belize in order to protect the tax exemptions enjoyed by two of his companies located there, although as an ex-Tory party Treasurer he said the allegations were politically motivated.

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