Tyco International Scandal

Today I will focus on one of the worst corporate scandals on the past decade.

It’s the Tyco International scandal, which took place in 2002. First I will start to present to you this company and who is at the origin of the scandal. Then I will go to explain the fraud and finishing by telling the consequences of this scandal for the company and the fraudster.

Tyco overview

Tyco International is a Swiss security system founded in 1960 by Arthur Gandua as an investment and holding company with two segments, the semiconductors and the materials research laboratory.

In 1962 the business is incorporated near Boston on high-materials science and energy conservation products and two years later the company went public. Following the year 1964 Tyco acquiring not less than 16 companies.

And in 1974 is listed on the New York Stock Exchange with a net worth of $140 million. After all these acquisitions, in the 1980s, Tyco decided to reorganize its newly subsidiaries by divided the company into three business segments, fire protection, electronics and packaging. Subsequently Tyco acquiring again new companies and this time reorganized its subsidiaries into four segments. The electrical and electronic components, healthcare and specialty products, fire and security services and Flow control.

In the 1990s and the beginning of the years 2000, under the CEO Dennis Kozlowski, Tyco adopted again an aggressive acquisition strategy by acquiring more than 1000 companies, that give Tyco in 2001 a revenue exceeding $110 billion.

2002 marks a change for Tyco with the start of high loss, $9 billion this year, but it's mainly because of the scandal.

The scandal and the trial

Dennis Kozlowski joined the company in 1975 as an assistant controller. He joined Tyco’s board in 1987 and became president and chief operating officer two years later. In 1992 Kozlowski became CEO and chair of the board in 1993.

He diversified the company and in 2001 the shares were trading for 60...