Tyco boss charged with evading taxes

Dennis Kozlowski, who resigned the chairmanship of US industrial conglomerate Tyco International on Monday, was yesterday charged with evading more than $1m of sales taxes on expensive artwork.

The Manhattan District Attorney, Robert Morgenthau, said that Mr Kozlowski, 55, evaded paying New York sales taxes on more than $13m in art purchases, including works by Old Masters and impressionists.

The charges also allege that Tyco employees were directed to sign false documents to make it appear as though the paintings were purchased out of state.

Works by Renoir and Claude Monet were among the pieces on which he avoided taxes, according to the grand jury indictment.

Mr Kozlowski has surrendered to authorities and will be arraigned on charges of conspiracy, falsifying records, tampering with physical evidence and tax evasion. He was due to appear before a Supreme Court judge late yesterday.

Mr Kozlowski, who over a decade spearheaded Tyco's rise from a little-known company into a sprawling multinational through hundreds of acquisitions, abruptly resigned following news he was being investigated for tax violations.

The district attorney charges that from August last year, Mr Kozlowski – in collusion with art galleries and art consultants in New York and London – arranged the purchase of at least six expensive artworks in such a way as to avoid paying state sales taxes.

The investigation began with a tip to the New York state banking department, Mr Morgenthau said. The investigation is continuing.

Shares of Tyco tumbled almost 27 per cent on Monday, but were steady yesterday. The stock has fallen more than two-thirds this year, wiping out more than $80bn in market capitalisation.

Before news of the investigation that was the prompted his departure, Mr Kozlowski was under scrutiny for his flip-flopping corporate strategy and Tyco's plunging share price.