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Tyco Scandal

In: Business and Management

Submitted By mahyuddin
Words 9473
Pages 38
Part 1- Facts of the Case
Prior to the Tyco scandal, the company was one of America's largest conglomerates, with operating revenues of 38 billion dollars and 240,000 employees, worldwide. Tyco Laboratories began operations in 1960, performing experimental work for the U.S. government. The firm went public in 1964 and quickly expanded, mostly by acquisition, to exploit the commercial applications of its work. Dennis Kozlowski joined the company in 1975 as an assistant controller. The company subsequently shifted its focus from growth to profits within its three primary divisions: fire protection, electronics, and packaging. Kozlowski joined Tyco's board in 1987 and became president and chief operating officer two years later. Kozlowski engineered a coup to become Tyco's chief executive officer (CEO) in 1992 and the chair of the board in 1993. He diversified the company, branching into health care. Tyco eventually became the second largest producer of medical devices in the United States. On December 5, 2001, the Tyco shares were trading for 59.76 on the NYSE.
B. Identification of all individuals or firms who knew about, participated in, or condoned the behavior.
The primary people that were identified for responsibility of the scandal were Dennis Kozlowski and finance chief, Mark Swartz. Kozlowski joined the company in 1975 as an assistant controller at Tyco. He worked in the company during a time of rapid expansion and moved to the board of directors in 1987, become CEO in 1992, and became chairman of the board in 1993. Kozlowski was known for his vicious acquisitions, and gained a lot of attention by his extremely lavish lifestyle.
Mark Swartz was the Chief Finance Officer of the company and worked under Kozlowski. It was determined during trial that the two had worked synonymously in committing fraud, and working against the shareholders. Both of them ended up…...

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