Tyco

Topics: Tyco International, Stock, Ethics Pages: 2 (391 words) Published: September 21, 2013
The Tyco Scandal
The Tyco Company refers to itself as a “world leader in global fire safety and security solutions”, but in 2002 they came close to losing their positive reputation. The trouble started when a $9.2 billion dollar cash deal is settled to purchase the finance company CIT group. The purchase of this company helped to drastically improve the stock shares of Tyco which is generally a great thing to happen. However, the shares took a dive when information was disclosed that the Tyco director, Frank Walsh, got a $10 million dollar fee out of the deal as well as a large donation to a charity where he was the director.

These “kickbacks” began to raise eyebrows and an investigation began. Prior to the announcement of the fee and donation Walsh and the CFO, Mark Swartz, sold over $100 million dollars’ worth of their stock. The two men then make an announcement that they will purchase back one million shares with their own money to prove their “innocence”. Their efforts were very short lived as their wrong doings began to come into light.

These men, along with several other company executives were stealing millions of dollars through a loan forgiveness scandal and fraudulent business expenses. In order to keep these executives quiet about what they knew was going on Walsh and Swartz began to unethically forgive loans made to these executives as well as pay the taxes on said loans. They did this by offering extremely generous bonuses as a result of the CIT purchase.

Had I been an accountant for this company I would assume that the wrong doings may have been rather noticeable in the books. If I knew that going to the executives was out of the question I would have contacted the board of ethics or government with my concerns. Preventing this controversy would have been rather simple; act ethically and honestly.

The biggest issue I see that still affects the profitability of this company is that many of those...
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