Case Study on Tyco Fraud Case

Jun 18th, 2015
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Tyco International has operations in over 100 countries and claims to be the world's largest maker and servicer of electrical and electronic components; the largest designer and maker of undersea telecommunications systems; the larger maker of fire protection systems and electronic security services; the largest maker of specialty valves; and a major player in the disposable medical products,plastics. Edward Breen, who replaced kozlowski, removed nine members of Tyco’s international board, and adhesives markets. Since 1986, Tyco has claimed over 40 major acquisitions as well as many minor acquisitions.

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Auditing ProjectTyco Fraud CaseAcademic Session(2009-2012)Specialization(Finance)Submitted toRashmi JainSubmitted BySangeeta SanilRoll no: 45Tyco BackgroundTyco International has operations in over 100 countries and claims tobe the world's largest maker and servicer of electrical and electroniccomponents; the largest designer and maker of underseatelecommunications systems; the larger maker of fire protectionsystems and electronic security services; the largest maker ofspecialty valves; and a major player in the disposable medicalproducts,plastics. Edward Breen, who replaced kozlowski, removednine members of Tycos international board, and adhesives markets.Since 1986, Tyco has claimed over 40 major acquisitions as well asmany minor acquisitions.How the Fraud HappenedAccording to the Tyco Fraud Information Center, an internalinvestigation concluded that there were accounting errors, but thatthere was no systematic fraud problem at Tyco. So, what didhappen? Tyco's former CEO Dennis Kozlowski, former CFO MarkSwartz, and former General Counsel Mark Belnick were accused ofgiving themselves interest-free or very low interest loans (sometimesdisguised as bonuses) that were never approved by the Tyco boardor repaid. Some of these "loans" were part of a "Key Employee Loan"program the company offered. They were also accused of sellingtheir company stock without telling investors, which is a requirementunder SEC rules. Kieslowski, Swartz, and

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