There's a ton of Tyco
First, the alleged abuses. Tyco released an SEC filing this morning accusing Kozlowski, former CFO Mark Swartz, and former Chief Corporate Counsel Mark Belnick of granting themselves unauthorized benefits (such as interest-free loans), forgiving $96 million worth of loans to certain employees (including themselves) through the use of bonuses, and much, much more.
The company even disclosed some of the items Kozlowski had Tyco buy for his Manhattan apartment, including a $17,100 "traveling toilette box," and a $15,000 "dog umbrella stand." (What in the world are those things?) The SEC filing says all of this activity was concealed from the board of directors and other relevant people.
The Wall Street Journal even details a $2.1 million birthday bash for Kozlowski's wife on the Italian island of Sardinia -- Tyco apparently picked up half the tab. It was a Roman-style affair, complete with togas and an ice sculpture of Michelangelo's "David" that dispensed vodka through his privates.
The other part of this saga further reinforces the widespread skepticism toward Wall Street analysts. The Journal, citing "people close to the matter," says Merrill Lynch actually replaced an analyst after Kozlowski complained in a face-to-face meeting with Merrill CEO David Komansky about negative coverage. The new analyst promptly raised Tyco's rating from "accumulate" to "buy."
Luckily for Tyco shareholders, these latest developments will affect only the company's reputation, not its bottom line... though one wonders what other surprises might be in store.