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Copy of TYCO International
Transcript of Copy of TYCO International
The company closed 300 plants during 2003-2006 period
Employees were fired and laid off
Replacement of Board of directors and top managers
Dennis Kozlowski become CEO
over 1000 companies were acquired
Doubled Revenues-$214 Million
TYCO became embroiled in a massive scandal...
A Tyco Fraud Case
Mark H. Swartz
TYCO's former CFO
TYCO's former CEO
TYCO's KELP Program
Designed to encourage ownership of Tyco common shares by executives and other key employees.
KELP loans and relocation loans that Koslowski, Swartz, and Belnick and other employees owed were forgiven and written off TYCO's books, by being called "bonuses".
Kozlowski and Swartz directed others to falsify TYCO's books and to offset the costs of the relocation loan forgiveness program against an unrelated gain realized on IPO of TYCO's subsidiary.
Kozlowski and Swartz used $170 million for personal purposes, without any regard for the legitimate and authorized purposes of the two loan programs.
TYCO' s Relocation Loan Program
Designed to assist Tyco employees who were required to relocate from New Hampshire to New York and to Boca Raton.
Self Engineered Forgiveness Program
12 counts - grand larceny
8 counts -falsifying business records
1 count conspiracy
1 count - securities fraud
$430 million gain via TYCO share sale
$170 million taken as loans
Weak system of internal controls.
poor documentation and approval procedures
inadequate procedures for proper corporate authorizations
a lack of oversight by senior management at the corporate level
intimidating culture, where people were very unwilling to speak up
COMPANY AND EMPLOYEES
STAKEHOLDERS IN GENERAL
REBUILDING THEIR ETHICAL REPUTATION
Dennis Kozlowski and Mark Swartz:
8 1/3-25 years
sentence in prison,
of restitution payment,
fine for Kozlowski,
fine for Swartz.
Tyco International Ltd.:
settlement of securities and accounting fraud claims.
Tyco’s former auditor, PricewaterhouseCoopers:
settlement of securities and accounting fraud claims
Loss of over
, more than 80 percent of TYCO’s peak market value
Tyco scandal was one of numerous corporate scandals America and the world witnessed in 2002.
Led to decrease of investors confidence in stock markets and to development of new federal regulations.
Hiring of Eric Pillmore, the first ever SVP Corporate Governance
Replaced board of directors and 290 of the 300 corporate employees
Current 4 Key Values
“Tyco Guide to Ethical Conduct.”
Founded by Arthur J. Gandua
Focus in governmental research
Incorporation: Schaffhausen, Switzerland
Operational/corporate: Princeton, New Jersey
Leading Technology in Security and Safety
Growth under Joseph Gaziano
Died of Heart Cancer
"Bird's of a feather flock together"
Chief Legal Officer
Chief Financial Officer
Chief Executive Officer
"I WAS NOT INVOLVED..."
Not at Fault
In 2004, Tyco was recognized with an award- the “Outstanding Improvement in Board Governance” award, from the Centre for Corporate Change.