Republic of the Philippines

Provincial Government of Bulacan

LA CONCEPCION COLLEGE
Quirino Highway, Brgy. Kaypian, San Jose Del Monte, Bulacan

A Narrative Report disclosing the

bankruptcy of Tyco International Ltd.

In partial fulfillment of the requirements for

Governance, Business Ethics, Risk Management, and Internal Control (BUS ETH)

Submitted by:
Banjawan, Anthony R.
De Villa, Lizette C.
Mongado, Dimple Shyne S.
Torres, Ma. Aizey G.
Tupas, Princess Denise B.
Vega, Christine Mae V.

Submitted to:
Khelly Ann Buala
BUS ETH Adviser
 Tyco International Ltd. was established in 1960 as a multinational conglomerate, initially specializing in research
and development within the science and technology sectors. As the years progressed, Tyco diversified its operations,
expanding into various industries such as fire protection, security, flow control, and electrical products. Led by CEO
Dennis Kozlowski and CFO Mark Swartz, Tyco underwent significant growth fueled by strategic acquisitions and
aggressive expansion efforts. The company gained recognition for its innovative offerings, serving diverse markets including
commercial, industrial, and residential sectors globally.
According to Encyclopedia.com, Tyco International Ltd. is a diversified manufacturing and service company,
with four main operating groups: healthcare and specialty products, fire and security services, flow control, and electrical
and electronic components. The healthcare and specialty products group manufactures and distributes disposable medical
supplies and other specialty products and is involved in vehicle auction and reconditioning services. The fire and security
services group is the world leader in the design, manufacture, installation, and service of fire detection, suppression, and
sprinkler systems, as well as being the world leader in electronic security services. The flow control group makes and
markets pipe, fittings, valves, meters, and related products that are used to transport, control, and measure the flow of
liquids and gases. The electrical and electronic components group is involved in the manufacture and sale of electric and
electronic connection devices and interconnection systems, printed circuit boards, steel electrical conduit, and undersea
communications cable systems.

In 2002, Tyco, a manufacturing and service company, dealt with bankruptcy because of unethical business
practices governed by the CEO itself, Dennis Kozlowski, and his CFO Mark Swartz. Wherein, the company was exposed
by engaging in a tremendous accounting fraud that was orchestrated by the company leaders. They were found guilty of
stealing a large amount of money, worth a million dollars, from the company and inflating its earnings. They used a variety
of schemes to steal money from the company, including loans, unauthorized bonuses, etc., they cover up these illegal
transactions with the help of some lower ranking employees and some Tyco officers.Furthermore, because of their self
interest, misguidance, this scandal severely damaged the trust of the investors and the reputation of the company that
ultimately led to its downfall.

Besides the company's financial difficulties, Tyco was involved in a major scandal concerning the excesses of its
former CEO and chairman, L. Dennis Kozlowski, and his senior management team halfway through the 2002 fiscal year.
Following Kozlowski's resignation, John F. Fort, a former CEO of Tyco, took over as interim CEO until the board of
directors concluded its search for a long-term replacement. Tyco was accused of violating the Securities Exchange Act of
1934 at the beginning of 2002 by faking its profitability and withholding important financial information. Frank E. Walsh,
a former director, and Mark H. Swartz, the company's former executive vice president and senior corporate counsel, were

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the targets of a federal lawsuit brought by Tyco on June 17, 2002. The discovery that Tyco International's chief financial
officer, Mark Swartz, and chief executive officer, David Kozlowski, had been accused of embezzling almost $150 million
from the business in 2002 caused a drastic transformation of the organization. Tyco filed for bankruptcy soon after the
CEO resigned in the wake of the claims, and the stock fell rapidly.

Tyco's corporate failure in 2002 was not related to declining operating and financial performance of the company
but rather involved illegal actions such as unauthorized bonuses, inflated stock prices, and misappropriation of company
funds. When these came to light, Tyco's executives and the board of directors came up with interventions in response to
the fraudulent activities committed by certain executives, including CEO Dennis Kozlowski and CFO Mark Swartz.

The board of directors promptly terminated CEO Kozlowski and CFO Swartz, in order to remove those
responsible for the misconduct. They conducted an internal investigation to uncover the extent of the fraudulent activities
and identify any other individuals involved, to understand its scope and implement appropriate corrective measures. The
company cooperated with law enforcement agencies and regulatory bodies, such as the Securities and Exchange
Commission (SEC), to ensure that those responsible for the fraudulent activities faced legal consequences by providing
evidence and testimony to support the prosecution of the individuals involved. They restated their financial statements to
rectify the inaccuracies resulting from the fraudulent activities which were done to provide accurate and transparent
financial information to shareholders and investors. They also implemented significant corporate governance reforms to
prevent similar incidents in the future which includes strengthening internal controls, enhancing board oversight, and
establishing clear ethical guidelines for executives and employees. And finally, the company engaged in extensive efforts to
rebuild trust with shareholders, employees, and other stakeholders which involved transparent communication, improved
financial reporting, and a commitment to ethical business practices.