The Tyco scandal, also known as the Tyco International scandal or the Tyco corporate scandal, was a major corporate scandal that came to light in 2002 and resulted in the conviction of the company's top executives on charges of fraud and larceny. The scandal involved the misappropriation of millions of dollars by Tyco's top executives, including former CEO Dennis Kozlowski and former CFO Mark Swartz.
Tyco was a multinational conglomerate with a diverse range of businesses, including security systems, fire protection, and healthcare. However, it was the company's financial practices that attracted the most attention during the scandal.
The scandal first came to light in 2002 when it was revealed that Kozlowski and Swartz had taken hundreds of millions of dollars in unauthorized bonuses and used company funds for personal expenses, including lavish vacations and expensive artwork. They were also accused of using Tyco's money to make illegal campaign contributions to politicians.
In 2005, Kozlowski and Swartz were found guilty of multiple counts of grand larceny and securities fraud and sentenced to prison. In addition to the criminal charges, Tyco faced a number of civil lawsuits and settlements related to the scandal.
The scandal had significant consequences for the company and its shareholders. Tyco's stock price plummeted and the company faced significant financial losses and legal fees. The scandal also damaged the company's reputation and trust among investors and the general public.
In the aftermath of the scandal, Tyco implemented significant changes to its corporate governance and financial reporting practices. The company also appointed new leadership and implemented stricter controls to prevent similar misconduct in the future.
Overall, the Tyco scandal serves as a cautionary tale of the dangers of corporate greed and the importance of strong corporate governance and ethical practices. It also highlights the role of regulatory agencies, such as the Securities and Exchange Commission, in holding corporations accountable for their actions.