Myron Kandel: Letting Tyco settlement funds lay dormant is a waste
Editor's note: Last Sunday, we published a story by New Hampshire Union Leader business reporter Dave Solomon about the future of a $7 million fund controlled by the Securities Bureau and the University System of New Hampshire that was collected as part of a settlement with Tyco Corp. in 2002.
The now dormant Center for Public Responsibility and Corporate Citizenship spent about $1 million on education efforts, including a series of public forums hosted by former CNN financial editor Myron Kandel, whom it hired in 2005.
The University of New Hampshire and Saint Anselm College have pitched ideas on how to use the money to educate students about ethical behavior and governance. (Tyco chief Dennis Kozlowski was convicted and imprisoned for looting the company of more than $100 million.)
Kandel, who was associated with the center for three years, wrote this letter in response to the story.
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I read with great interest the recent article in the Union Leader (Sunday News) concerning the nearly total lack of expenditure of the Tyco settlement funds. USNH Chancellor Edward MacKay seems to have an amorphous memory regarding the use of the funds received in the Tyco settlement.
The fact is the funds were sitting largely dormant when I was asked by Secretary of State Bill Gardner, in 2005, to find a proper use for them. At his invitation, I created The Initiative for Corporate Responsibility and Investor Protection to hold a number of high-profile forums on those issues. The Initiative was announced with great fanfare by former Gov. John Lynch and Gardner.
Working with college campuses across the state, we attracted such speakers as former U.S. Attorney General Dick Thornburgh; former Securities Exchange Commission Chairman Harvey Pitt; John Bogle of the Vanguard mutual funds; Paul Steiger, former editor of the Wall Street Journal, and Martin Baron, editor of the Boston Globe, among others. These programs shone a bright light on the topic of business ethics and the importance of holding corporate leaders to the highest standards of responsible behavior.
When the 2008 presidential primary campaign began, I felt there was a special opportunity to get the issues of corporate responsibility and investor protection into the presidential discussion, particularly following the wave of corporate and Wall Street scandals ranging from Enron to Tyco. So I invited all the major aspirants, in both parties, to join me in a series of individual half-hour interviews, which New Hampshire Public Television agreed to broadcast. Four of them were bold enough to discuss those previously ignored issues. They were John McCain, Chris Dodd, Mike Huckabee and Ron Paul. The interviews received a good deal of attention; one even received a TV award. Curiously, Gardner declined to use his influence to help line up any other participants, and I frankly was exasperated at the lack of direction from the board - the Center for Public Responsibility and Corporate Citizenship - controlled by Gardner and MacKay.
Once the 2008 election was over, I presented an ambitious program of forums for the final year of my three-year commitment and outlined a proposal for the long-term use of the funds that would serve college students, faculty and business and community members based on campuses across New Hampshire. But Gardner and MacKay seemed to have other, yet distinctly separate, plans for the funds. It appears they continue to be at odds on how to use the Tyco funds, with MacKay wanting to send the funds to UNH and Gardner opposing that option. As MacKay hinted in the article, he can't even get agreement to schedule a board meeting to discuss the distribution of the funds.
When they rejected my proposal for utilizing the settlement, they instead asked me to work with New Hampshire Public Television, where we produced three programs titled "More than Money: An Investor Survival Guide." They then allowed the Initiative, in Mr. MacKay's words, to "fizzle out." I can assure you I did not agree with this outcome for my efforts in New Hampshire.
Their decision to abandon the Initiative in 2008 greatly puzzled me because the nation - and indeed the world - was then in the midst of the greatest financial crisis since the Great Depression. That was when a focus on corporate responsibility and investor protection was needed as never before, and New Hampshire was particularly well-positioned to lead the way in addressing these issues.
But the funds were allowed to remain dormant during all that period. It seems that well over a decade after the Tyco award that the board members, some of whom are no longer in the public offices they held then, don't even have a process in place to appoint new board members. Perhaps someone, I might suggest the state Legislature, should step forward and demand an open process be instituted for utilizing these funds as outlined in the original agreement - the promotion of investor awareness and ethical governance of corporations.
Allowing these funds to lay dormant was - and continues to be - a great waste.
Myron Kandel was the founding financial editor of CNN from 1980 to 2005 and served from 2005 to 2008 as the founder and president of the New Hampshire-based Initiative for Corporate Responsibility and Investor Protection.