ADT Likely to Be Major Focus of Forensic Report on Tyco
BOCA RATON, Fla.
A top Wall Street follower of Tyco Int’l Inc. expects the conglomerate will issue a long awaited report on company accounting practices as early as Dec. 3. Tyco’s ADT Security Services unit, based in Boca Raton, is expected to play a big part in the eagerly anticipated report.
The security alarm firm is suspected of improperly accounting for dubious contracts following its acquisition by Tyco.
A report released Dec. 2 by Credit Suisse First Boston analyst Michael Regan said that the results of an intensive investigation into the deal making of the men—deal making that created the Tyco of today—could come as early as Dec. 3, according to Reuters news agency.
Tyco investors are keen on finding out whether ADT has been a central element of the “forensic” accounting investigation’s focus. The company has denied that it pushed unethical sales tactics in order to quickly boost revenues immediately after being acquired by Tyco in 1998.
“Such tactics have never been authorized,” said Tyco spokesman Gary Holmes, who spoke of behalf of ADT two weeks ago.
The denial came in response to reports that accused ADT of aggressively targeting poor neighborhoods for fast growth. ADT may also have improperly accounted for canceled contracts after much of that low-income business turned sour, according to the reports.
Boca Raton has been a major focus of the looting investigation, because former Tyco CEO Dennis Kozlowksi is accused of illegally forgiving nearly $100 million of allegedly unauthorized Boca Raton company relocation loans, including $32 million for himself. The forensic report will show if Boca Raton, through ADT, has become a focus of the accounting investigation as well.
ADT has already admitted that it overstated income from various fees charged to outside dealers, which resulted in a large $130 million charge against profits for this year’s first three quarters.
In October, the company landed a five-year, $135 million contract from the U.S. Marshals Service to help protect federal courtrooms. John Kraus, chief of judicial security contracts with the Marshals Service, told Reuters news agency that ADT had “come back clean” from an audit undertaken by the Defense Contract Audit Agency.
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