I want to be prepared to claim the greatest virtue of all - that I was a man who made money
I don't imagine any would have guessed it, opening their invitation that spring, that they were being invited to an event which would prove emblematic of the second American Gilded Age, a party which would mark the most vulgar odious excesses of the beginning of a decade when greed triumphed over any sense of decency. The note read, “Optima Festa. Optima Amici (best party. best friends). Our summer party is moving from Nantucket to Sardinia. Please join us in celebration of our friendship and Karen's 40th birthday in the scenic Costa Smerelda. Accommodations have been arraigned at the hotel Cala di Vope Resort. We look forward to seeing you there - the fun begins on the evening of June 10th. Buon viaggio e felice arrivo – a prestol (good journey and happy arrival– to the throne).” It was signed “Karen and Dennis” and carried the postscript - “The best present for my birthday is your company, so please, no presents.”
Civilization is the process of setting man free from men.
Ayn Rand, The Fountainhead
The emerald coast was the creation of Prince Karim Aga Khan. In 1962, fresh out of Harvard, this revered Muslim sect leader put together a group of industrialists and financiers to buy 14 square miles of empty coastal Sardinia. There they constructed a resort for the very rich and beautiful people; an airport, two five-star luxury hotels, Disney-esque quaint villages filled with upscale shops, polo fields, golf courses and pink granite bolder lined coves framing picturesque pristine white sand beaches. The Aga Khan insisted only the finest building materials were used, that all power lines be buried, and outfitted the fire brigade and the resort's private security guards. But time and the inevitable logic of laissez faire economics would eventually force the Prince off the Smerelda's controlling board and lead to an orgy of flaunted excess. The logical outcome of that excess was the Tyco Roman Orgy.
Money is the barometer of a society's virtue.
Tyco was incorporated the same year as Costa Smerelda. Its modest goal was to build and sell semiconductors and, as a sideline, to invest in other companies' stock. Ten years later, when Tyco was listed on the NYSE, those roles had been reversed. Tyco was now a holding company, holding $140 million in other companies' stock, and had even started buying entire other companies. Then in 1992, Dennis Kozlowski (above), who had started out at Tyco 27 years earlier as a lowly accountant, was named the companies' CEO. Over the next ten years “Deal-a-Day Dennis” acquired 1,000 companies, raising corporate revenues to $38 billion in 2001 with a quarter of a million employees worldwide. The SEC had already grown suspicious of “Big Koz's” free wheeling business practices. In 1998 the company had forgiven a $19 million loan to Dennis, and his 1999 compensation package including $170 million in salary and $430 million in company stock. He described the salary as "a way of keeping score", which put him on everybodies' list of Wall Street Masters-of-the-Universe, executives who were about to lead the world off an economic cliff.
So you think that money is the root of all evil. Have you ever asked what is the root of all money?
The 75 guests began arriving at the rented Chateau at 7:15 pm. Half were employees of Tyco and half were personal friends of Dennis Kozlowski and his wife of one year, Karen Mayo All the guests had been provided with free air fare to and from Sardinia and free accommodations for four days and five nights. Most did not realize that, for accounting purposes, officially they were attending a stockholder's meeting. As the “stockholders” stepped from their chauffeured vans they were greeted by two male models wearing togas. Inside, they found a caged tiger (for “shock value”). They passed between a line of body builders dressed as gladiators, before exiting around the chateau’s pool, in which floated flowers and candles. The centerpiece was a 8' tall ice sculpture of Michelangelo's David, with Stolichnaya vodka pouring from its penis into crystal goblets. Waiters and waitress' dressed in togas carried the Stoli to each table so that, by the time Dennis arose to greet his guests, the party was well liquidated. Dennis explained this evening was intended to highlight Tyco's core competency, “the ability to party hard”.
If it's worth doing, it's worth overdoing.”
After finishing dinner an Elvis impersonator sang “Happy Birthday” as Karen's birthday cake- shaped as an anatomically correct female with sparklers exploding from the breasts - was wheeled out. This was followed by a concert by Jimmie Buffet and his band, and the evening was topped off by a fireworks and laser light show, featuring Dennis' face painted on a mountain. Allan Westler for CNN described it as “Bourgeoisie Gone Wild”. And this was just the opening act for a four day long all expenses paid party in one of the most expensive vacations locations in the world. The travel expenses for the entire trip ran to a quarter of a million. In total, the “Roman Orgy” had cost $2 million, half of which had been paid for by the unsuspecting and largely uninvited Tyco shareholders.
The world is perishing from an orgy of self-sacrificing.
Ayn Rand, The Fountainhead
In fact there was nothing unusual about the orgy. “Deal-a-Day Dennis” had convinced Tyco to buy him a $19 million condo in Manhattan, which he decorated with $11 million worth of kitsch, including a $15,000 umbrella stand, a $17,000 traveling toilette box and a $6,000 human shower curtain. Tyco helped him shell out another $11 million for a Renoir and a Monet. Then there was a $30 million mansion in Boca Raton, Florida, vacation houses on Nantucket Island and in Colorado and a $16 million yacht, all bought at least in part with cash from Tyco. This profligate excess might have gone on forever, had the Big Koz not refused to pay his sales taxes on the paintings.
The question isn't who is going to let me; it's who is going to stop me.
The Manhattan District Attorney had noticed that those two $11 million paintings had been delivered to New Hampshire, which does not have a sales tax, but does have Tyco offices. Yet those paintings had spent very little time in the Granite State before Tyco had shipped them back to the Kozlowski condo on Fifth Avenue. This maneuver had saved Dennis and Karen a measly $1 million - chump change when compared to the $100 million in company stock Dennis had sold in 2001 – all the while assuring everybody he was not dumping Tyco shares. In January of 2002, The New York Times broke the story about the stock sales. Tyco stock took a nose dive, which finally prompted the Tyco board to start asking questions. On June 3, 2002, just short of the year anniversary of the Roman orgy, Dennis Kozlowski resigned from Tyco. But it was too late. In September he was indicted for stealing $600 million from his own company. His indictment for not paying sales taxes on the paintings soon followed.
We are all brothers under the skin - and I, for one, would be willing to skin humanity to prove it.
Thanks to a lunatic juror, it took two trials, but on June 17, 2005, Dennis Kozlowski was convicted of22 counts of grand larceny, conspiracy and securities fraud and sentenced to 8 ½ to 25 years in Federal prison. Tyco paid almost $3 billion to the defrauded stockholders. Donald Trump, of all people, called the entire affair “tacky”, and as Dennis observed, “...he would know." And corporate observer Dan Ackerman could only pause and wonder “how did this plump, bald, graceless red-faced working-class accountant become the head of one of America's largest industrial conglomerates?” That was the problem, I guess - no that Dennis was a thief, but that he was a working-class thief. That year, Tyco reported net revenues of $39 billion. One year later, while Dennis was recovering from a heart attack in the prison hospital, Karen Mayo Kozlowski filed for divorce.
A man's ego is the fountainhead of human progress.Ayn Rand
In 2010 another Tyco accountant, Jeffery Weist, filed suit in Federal court, claiming he had been fired after refusing to sign off on a $300,000 corporate party in the Bahamas, including such expenses as $3,000 for “Mermaid Greeters” and “Costumed Pirates and Wenches”. The accuracy of the charges were never disputed, but a Federal District Judge dismissed the suit in 2011. But whatever the legal outcome of his appeal, it seems obvious that the essential truth about Tyco, capitalism and corporate America has been proven once again; greed makes you stupid.
Evil requires the sanction of the victim.
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