TYCO Embezzlement

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Tyco’s use of limited purpose entities inflated free cash flow. Uses of funds from company loans included: Kozlowskis $ 18 million Manhattan apartment, $ 2 million birthday party for Kozlowskis wife in Italy, $ 6,000 shower curtain, $ 2,000 trash can, $ 13 million worth of art work PWC chief auditor for TYCO, Richard Sculze, issued fraudulent audit reports and was aware of the interest free loans.
Embezzling funds as a financial fraud which causes an act of conflict of interest. In order to fulfill self-interest (luxurious life) the leaders embezzled the company funds that should be used to manage the company in the best interest of the shareholders and stockholders. Kozlowski had exploited the company by using company funds to fulfill his own desire of have a lavish lifestyle. According to the principle of they must never exploit others to achieve their own objectives. Also, Kozlowski and other directors had their duties to manage the company well. However, they failed to manage the company well because they had misappropriated the funds which embezzling the funds caused them not to fulfill their duties and violated them instead. TYCO also did not emphasize an ethical corporate culture during the empire of Kozlowski. The unethical corporate culture in TYCO was due to the unethical leadership of the CEO of the company, Kozlowski. Another ethical issue under the conflict of interest in the scandal of TYCO is bribery. One instance of bribery was when Frank E. Walsh Jr., the director of TYCO had received $ 20 million for helping the arrangement of the acquisition of CIT group without the knowledge of the rest of the board of directors. The third ethical issue that relates to the conflict of interest is accounting fraud. The auditors, accountants, and the executives of TYCO sacrificed the quality of financial reporting information for their personal interest. TYCO failed to give a true financial picture for several years. Kozlowski, Swartz, and Belnick

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