Enron

Former Tyco International director Frank Walsh has been arrested and charged with securities fraud after allegedly receiving a secret $20m (Ј12.5m) payment.

Manhattan district attorney Robert Morgenthau announced the charges against Mr Walsh at a news conference in New York.

TYCO INDICTMENTS

CEO Dennis Kozlowski

Lead director Frank Walsh

Finance chief Mark Swartz

General counsel Mark Belnick

Mr Walsh, who served as the lead director of Tyco, was charged with violating New York state's Martin Act for failing to disclose that he received a substantial fee for assisting his firm's purchase of finance-giant CIT Group.

"The complaint charges that [former chief executive Dennis] Kozlowski and the defendant submitted the proposed transaction to the Tyco boards for its approval without disclosing the Walsh stood to gain from the transaction," the district attorney said in a press release.

'Legal' fee

Mr Walsh resigned from Tyco's board in January.

That same month, Tyco said Mr Walsh received the payment, split between himself and a charity of which he was a trustee, for brokering Tyco's $9.5bn acquisition of CIT Group in 2001.

Tyco filed a lawsuit against Mr Walsh in June for taking the unauthorised fee.

Mr Walsh had argued the $20m fee was entirely legal as part of his work in helping cement the Tyco/CIT deal and said the scheme was approved by Mr Kozlowski.

Now contrite, Mr Walsh is expected to plead guilty to the charges, repay the $20m fee and pay a $2.5m fine.

Fourth arrest

In doing so he will simultaneously settle criminal charges and civil charges.

He faces up to four years in prison.

Tyco ex-chief executive Kozlowski stepped down earlier last spring shortly before being indicted on tax avoidance charges.

Mr Walsh's indictment is the fourth since an investigation into fraudulent activities at the Bermuda-based corporate giant began earlier this year.

Ex-chairman Kozlowski, former finance chief Mark Swartz and former general counsel Mark Belnick have been indicted and face criminal charges for allegedly taking $600m (Ј3.75m) through fraudulent stock sales and other means.

They have denied the charges.

Wall Street found itself in the dock yesterday as two of the most eagerly awaited criminal trials to have emerged from the financial scandals of the past few years got under way.

Dennis Kozlowski, the former chairman and chief executive of Tyco, and Mark Swartz, his former chief financial officer, arrived at the state supreme court in lower Manhattan accused of looting the conglomerate of $600m.

Mr Kozlowski, who had spent the weekend at a reportedly lavish wedding