Tyco Chairman Steps Down
Tyco International’s embattled chairman and chief executive officer, Dennis Kozlowski, recently resigned his position, according to a company statement, which did not disclose any other explanation beyond “personal reasons.”
But the resignation comes on the heels of a recent revelation that Kozlowski is under criminal investigation for tax evasion, complete with grand jury subpoenas, according to a report in the New York Times.
Kozlowski has pleaded not guilty to the charges.
The executive has publicly stated that he rarely, if ever, sold his shares in Tyco. However, he earned hundreds of millions of dollars over the past three years selling stock in the company.
Following the demise of Enron, Tyco’s accounting practices also came under scrutiny. Among the accusations that have been made is the charge that Tyco manipulated the finances of purchased companies to make its own profits appear stronger.
Tyco’s stock began to plunge in December, falling by nearly two-thirds before beginning a slight rise at the close of last month. In an effort to stem the downward turn, Kozlowski announced in January plans to split the company into four divisions—including a separate factoring unit. In April, the company announced it had abandoned the breakup plans.
The grand jury in the Kozlowski case has taken testimony from potential witnesses, but no formal charges have been filed against the executive.
John Fort, a member of Tyco’s board who previously served as chairman and CEO of the company, will assume primary executive responsibilities until a permanent replacement for Kozlowski is identified.
Tyco says that it will move forward with plans to spin off CIT, its financial services unit. —Darryl James
