Dennis Kozlowski And Tyco

Dennis Kozlowski and Tyco

Tyco International, is a company that was once hailed as the "Next GE and so was it’s CEO Dennis Kozlowski who was once compared to GE’s Jack Welch. In 2001, Dennis Kozlowski, chairman and CEO of Tyco International, was identified by Business Week as a manager to watch. In 2002, it turned out that he certainly was the man to watch. Tyco International is an American conglomerate, operating in the electronics, healthcare, fire and security systems, underwater cables, commercial finance and flow control industries.

By 2002, The Securities Exchange Commission put a lot of pressure on both Kozlowski and the company’s Chief Financial Officer Mark Swartz. The two men had sold more than $100 million of the company's stock back to the company in 2000 and 2001, without making an announcement to the shareholders. “Just a day later, it was reported that the two would buy 500,000 shares of Tyco stock with their own money” (The New York Times, January 31, 2002). Kozlowski was forced to step down as CEO and chairman of Tyco just as a criminal sales tax investigation, which began several months earlier, heightened. This is a man who was put in charge of the stakeholders’ interest, yet he abused the trust that had been bestowed upon him by swindling money from the same people he was supposed to safeguard. It was also reported that the вЂ?Koz’ had failed to pay 1.1 million in New York taxes on paintings worth 13.2 million that he had purchased with money вЂ?borrowed’ from Tyco. He had purchased the paintings in the name of the company and had them shipped to New Hampshire instead of his home in New York but later moved the paintings to his home for his personal use.

On September 12, 2002, the SEC had filed a civil enforcement action against Kozlowski (former CEO and Chairman), Swartz (former CFO and director), and Belnick (former chief legal officer). The charges included secret loans, undisclosed compensation, undisclosed related party transactions, and fraudulent stock trading.