TYCO

INTERNATIO
NAL
Case Study
Security Analysis: Accounting
company
Scandals
HISTORY

1960- Founded by Arthur J. Rosenberg

1964- publicly traded company

1982 - reorganized into three business segments:
- Fire Protection, Electronics, and Packaging.

1986 – segment addition : Flow Control

Early 2000s -acquired more than thirty major
companies
TYCO
INTERNATIONAL CORPORATE SCANDAL
Security company
Unethical Leadership at Tyco.
Ethics Issues in Tyco’s Case

The Tyco scandal shows that ethics

Unethical Business Practice of Subordinates.
issues can occur in various aspects and
components of an organization,
including the top corporate leadership.
Leaders and executives trusted by
stakeholders and with seemingly
commendable backgrounds could
Questionable Auditing Practice
exhibit unethical behavior and facilitate
unethical and illegal practices that harm
the business and its stockholders.
ABOUT THE Dennis Kozlowski was at the center of the unethical activities in the
business organization. As the CEO, he committed unethical practices
COMPANY that led to the legal battles and related financial problems of Tyco.

ACCOUNTING CONFLICTS BRIBERY

OF INTEREST

THEFT OF COMPANY FUNDS COMMINGLE ASSETS TAX EVASION

 Mark Swartz Stephen W. Foss
chief financial officer CEO of a textile concern

Richard S. Bodman Frank E. Walsh, Jr

a venture capitalist director of the board.

PERSONS The complications in Tyco’s case involved people other than

Kozlowski. Kozlowski recruited the support of CFO Swartz, another
INVOLVED high-ranking officer in the organization. Members of Tyco’s board of
directors were also involved
 OTHERS

Joshua Michael James S. W. Peter Joseph F. Wendy John F.

Berman, Ashcroft Pasman Slusser Welch Lane Fort III,

vice president British dignitary from ADT from ADT CEO of Bachman private equity former CEO and
Company investor chair of Tyco
PRICEWATERHOUSE The auditing firm PricewaterhouseCoopers (PwC) responsible for
checking the financial reports of Tyco failed to identify Kozlowski’s
COOPERS illegal financial transactions.
ACTIONS In 2005, Kozlowski and Swartz both were found guilty on twenty-two of twenty-three
counts of grand larceny, conspiracy, and falsifying business records and violating
business law. The judge ordered both to pay $134 million to Tyco.

Board Of Directors New Hampshire New York State Bank Department

WHY THINGS
HAPPENED?

BOARD OF
DIRECTORS
IRRESPONSIBILITIES
 CONCLUSIONS
If a company wants to survive
and grow in today's business
world, it needs to be more than
just aware of ethical standards; it
needs to be actively
implementing them, combined
with rigorous internal controls to
prevent unethical and/or
unlawful behavior.
 References:
https://scholars.fhsu.edu/cgi/viewcontent.cgi?article=1031&context
=aljsr
https://danielsethics.mgt.unm.edu/pdf/Tyco%20Case.pdf
http://panmore.com/tyco-corporate-scandal-2002-case-analysis
https://money.howstuffworks.com/cooking-books10.htm
https://www.financial-dictionary.info/terms/tyco-international-scandal
/
https://en.wikipedia.org/wiki/Tyco_International
THANK
YOU!
MEMBERS:
AGUILA, Ian Mark
FABRO, Rain Vince
HEMOR, Stephanie Rose
MADAYAG, Jovie Ann
UGAY, Paulyn Mae