Tyco International: Leadership Crisis
Tyco International: Leadership Crisis
Case Study Paper
Group Project Abstract
In 2002, Tyco International became the center of attention in a fraudulent scandal. CEO Leo Dennis Kozlowki, and CFO Mark Swartz, among other members of the board of directors in Tyco International, were found at fault for the misuse of company funds. The internal investigation and federal finding revealed that Tyco’s money was use for personal forgiveness loans, bribes paid in form of bonus for business deals, disposal of employee programs, personal purchases, and tax evasion. This paper answers case study questions to provide an overview of Tyco’s ethical and legal issues, company culture, and the role that both top executives and board members had in this scandal. It also presents and recommends the course of action that the company took, and should take, to restore the trust of stakeholders while avoid fraudulent financial problems.
The Ethical and Legal Issues in this Case
There were numerous ethical and legal issues in the Tyco case. The most damaging issues were accounting fraud, misleading of board members and shareholders, and expense abuses committed by Kozlowski and his counterparts. Over $150 million were stolen from the company in the form of massive bonuses and commissions paid to Kozlowski and other board members. Kozlowski committed tax evasion in New Hampshire and New York. He cheated his employees out of their stock options and used the money to buy yachts, art, and vacation homes.
The Role That Tyco’s Corporate Culture Play in the Scandal
Tyco’s corporate culture played the role of being supporters of Kozlowski’s greed. This corporation exacting culture was focused on the rapid growth and profitability rather than concern for all stakeholders. While in the role as president of Tyco’s largest division, Grinnell Fire, Protection Systems Co., Kozlowski created a competitive culture among managers. He established bonus programs for
Case Study Paper
Group Project Abstract
In 2002, Tyco International became the center of attention in a fraudulent scandal. CEO Leo Dennis Kozlowki, and CFO Mark Swartz, among other members of the board of directors in Tyco International, were found at fault for the misuse of company funds. The internal investigation and federal finding revealed that Tyco’s money was use for personal forgiveness loans, bribes paid in form of bonus for business deals, disposal of employee programs, personal purchases, and tax evasion. This paper answers case study questions to provide an overview of Tyco’s ethical and legal issues, company culture, and the role that both top executives and board members had in this scandal. It also presents and recommends the course of action that the company took, and should take, to restore the trust of stakeholders while avoid fraudulent financial problems.
The Ethical and Legal Issues in this Case
There were numerous ethical and legal issues in the Tyco case. The most damaging issues were accounting fraud, misleading of board members and shareholders, and expense abuses committed by Kozlowski and his counterparts. Over $150 million were stolen from the company in the form of massive bonuses and commissions paid to Kozlowski and other board members. Kozlowski committed tax evasion in New Hampshire and New York. He cheated his employees out of their stock options and used the money to buy yachts, art, and vacation homes.
The Role That Tyco’s Corporate Culture Play in the Scandal
Tyco’s corporate culture played the role of being supporters of Kozlowski’s greed. This corporation exacting culture was focused on the rapid growth and profitability rather than concern for all stakeholders. While in the role as president of Tyco’s largest division, Grinnell Fire, Protection Systems Co., Kozlowski created a competitive culture among managers. He established bonus programs for