$7M Tyco settlement fund to endow business ethics programs
More than 10 years after the state negotiated a $5 million settlement with Tyco International to avoid sanctions by the Bureau of Securities Regulation, the board controlling the fund has finally come up with a long-term plan for its use.
Now worth $7.1 million, the fund will be used to create endowments for programs in corporate ethics and business responsibility at the University of New Hampshire and St. Anselm College.
"It's really quite gratifying to see the programs now in place," said Barry Glennon, director of Bureau of Securities Regulation in the Secretary of State office. Glennon was with the bureau in 2002 when the outgoing chairman of the international conglomerate, Dennis Kozlowski, was convicted and imprisoned for looting Tyco of more than $100 million.
Rather that face action by the bureau, Tyco agreed to the settlement, under the condition that the money be used to promote investor awareness and ethical governance of corporations - something lacking at Tyco under Kozlowski's tenure.
The organization created to administer income from the fund - The Center for Public Responsibility and Corporate Citizenship - hired CNN Financial Editor Myron Kandel as its first director in 2005, and sponsored several high-profile forums on ethical business behavior over the next three years.
Kandel and the organization parted ways in 2008, and the board set about finding a more permanent solution that would be rooted in programs within a college or university.
The University of New Hampshire and St. Anselm College submitted proposals, which were adopted in a slightly modified form by the CPRCC board in a resolution signed on June 3 by four of the five board members - Secretary of State William Gardner, Deputy Secretary of State Robert Ambrose, former UNH Chancellor Edward MacKay and former Gov. John Lynch, whose membership on the board stems from the fact that he was UNH board chairman at the time the deal was struck.
By their signature, they established a permanent endowment to be held by the UNH Foundation for the full amount of the settlement plus earnings, with $5 million for the benefit of UNH and $2 million for St. Anselm. The remaining $100,000 is to be split between the two schools to pay for program start-up costs.
Transfer of the money was scheduled to take place no later than June 30. The CPRCC board now ceases to exist, and the funds are in the control of the two schools, with the Secretary of State authorized to enter into letters of understanding with the respective programs to resolve any issues that may arise.
The CPRCC board resolution states that no more than half of the annual income from the endowments can be used for salaries and administrative expenses. Each school will establish advisory boards to monitor the funds, with annual reports due to the Secretary of State.
St. Anselm will use the money to develop an Ethics in Governance and Investor Education program through the New Hampshire Institute of Politics.
"We are eager to expand our ethics in governance offerings by allowing for new programs to be designed specifically for present and future business leaders in our community," said the Rev. Jonathan De Felice, president of St. Anselm College.
UNH will launch The Responsible Governance and Sustainable Citizenship Project, which would "become the centerpiece and engine behind an innovative curriculum to address the pressing issues of principled governance and ethical obligations," according to the UNH proposal.