An Inside Job: Tyco

770 Words4 Pages
Imagine the head of security at a bank using his years of training in security procedures to orchestrate an incredible heist. This is essentially what happened to the corporate giant Tyco, only the person planning it was the CEO, Dennis Kozlowski and his right hand man CFO, Mark Swartz. Kozlowski and Swartz were at the helm of Tyco and used their experience and skills to carefully plan a scheme, along with the help of other henchman within the company, to siphon money out of Tyco in such a way that even after independent audits and scrutiny by the SEC, the fraud remained unnoticed. Tyco’s corporate was built upon their knowledge of audit procedures and internal controls that they would have learned in their fledgling years as practicing auditors. Dennis Kozlowski was an accounting major from modest beginnings who worked his way to the top of Tyco, but along the way he made an important career stop at Nashua Corporation, as the Director of Audit and Analysis. In keeping with his tactic to handpick his management team, along came his new CFO Mark Swartz. He was an impeccable choice for Kozlowski, fitting the requirements of being “smart, poor, and wants-to-be-rich” (Symonds) and since he began his career as a CPA auditor for Deloitte & Touche he had the perfect skill set to assist in Kozlowski’s corruption (Hamilton and Micklethwait 82). Before they could begin to pillage the company they needed to establish a way to avoid detection by the SEC, the board of directors and the auditors. In much the same way a bank robber would disable security cameras, they made their thieveries invisible or paid off those that would help them. First, Kozlowski organized the company so that the internal audit team reported directly to him ins... ... middle of paper ... ...rranted extensive tests for internal controls. This is an extreme example of what can happen when internal controls are fraudulently engineered by those skilled in scrutinizing them. Works Cited Hamilton, Stewart and Alicia Micklethwait. "Greed and Corporate Failure: The Lessons from Recent Disasters." New York: Palgrave MacMillan, 2006. 81-97. Securities and Exchange Commission v. Tyco International LTD. No. 06 CV 2942. United States District Court, Southern District of New York. 17 April 2006. Sorkin, Andrew Ross. New York Times. 13 September 2002. 26 February 2014 . Symonds, William C. Bloomberg Businessweek Magazine. 29 September 2002. 26 February 2014 .
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