CORRUPTION CASE OF TYCO COMPANY

CORRUPTION CASE OF TYCO COMPANY

BUS113 Organizational Theory & Behavior

DR. Deen

University of the People

12/28/2021
 CORRUPTION CASE OF TYCO COMPANY

The corruption case hoovers around Tyco’s international company. Which was founded in 1960

by Arthur J. Rosenberg who was into investment and holding company that focused on solid

state science and energy conversion by 1968 the company have acquired about sixteen different

companies and by 1973 to 1982 the company has grown from 34 million dollars to 500 million

dollars (Daniels Fund Ethics Institute).

In 1975 an accountant by the name Dennis Kozlowski who was looking for a job and who

happen to know the CEO of Tyco company Joseph Gaziano was granted employment and he

quickly rose to the top as the CFO of Tyco company while John F. Fort 111 replaced Gaziano

and became the CEO of Tyco company. Though Kozlowski loved the lavish lifestyle of his

former boss Gaziano, he had to readjust to help the current CEO with his vision of putting the

shareholders first (Daniels Fund Ethics Institute).

By 1992 following the resignation of Fort, He was quickly made the CEO of Tyco international

and with that, his hidden agenda of extravagantness began to manifest with him changing some

of the board of directors to suit him by him appointing a new CFO by the name Martz Swarts

and many other changes that were made in the board to suit him (Daniels Fund Ethics Institute).

At this point, Kozlowski has made, Richard Bodman invests $5 million for Kozlowski in a

private stock fund managed by Bodman. Frank E. Walsh, Jr. received $20 million for helping to

arrange the acquisition of CIT Group without the other board members’ knowledge. Walsh also

held controlling interest in two firms that received more than $3.5 million for leasing an aircraft

and providing pilot services to Tyco between 1996 and 2002. Stephen Foss received $751,101

for supplying a Cessna Citation aircraft and pilot services. Lord Michael Ashcroft used $2.5

million in Tyco funds to purchase a home. And many more which includes stealing $170 million
 CORRUPTION CASE OF TYCO COMPANY

from Tyco and fraudulently selling an additional $430 million in stock options. Among other

allegations, Kozlowski was accused of taking $242 million from a program intended to help

Tyco employees buy company stock (Daniels Fund Ethics Institute).

This case was an abuse of leadership power because Kozlowski was made the CEO of Tyco

company which means that he oversaw the four department, and he had a full authority and

power of anything and everything that happened in that company, and he was fully responsible

for anything that transpired in that company starting from the employee to the whole board of

directors. But rather he went ahead and toke advantage of his position and kept stealing lumpsum

of money and was embezzling them from the artwork that was worth 14million dollars to

expensive houses and apartment decorations to not paying his taxes and the lumpsum of money

that was transferred to his account that was unknown to the board.

He was also accused of fraudulent act of not paying 1 million dollars in tax. And many other

corrupt acts that he was involved in like, stealing $170 million from Tyco, and fraudulently

selling an additional $430 million in stock options. Among other allegations, Kozlowski was

accused of taking $242 million from a program intended to help Tyco employees buy company

stock.

A leader with high ethical standards conveys a commitment to fairness, instilling confidence that

both they and their employees will honor the rules of the game. Similarly, when leaders clearly

communicate their expectations, they avoid blindsiding people and ensure that everyone is on the

same page (Giles, 2016). The Triple Bottom Line “captures the essence of sustainability by

measuring the impact of an organization’s activities on the world… Including both its
 CORRUPTION CASE OF TYCO COMPANY

profitability and shareholder values and its social, human and environmental capital” While there

is disagreement on how to calculate the TBL, it clearly includes ethical dimensions, because it

strives to account for the impact on the environment and on improving people’s lives through

measures like job growth, personal income and the cost of underemployment in creating

sustainable companies (Herring, 2018).

When you build yourself up by putting others down, you’ve lost your ability to lead. When you

remain silent in the face of leaders who disparage others, you also forfeit the right to lead. And

don’t give up in thinking that’s an impossible standard to which to hold leaders in any sector.

Perfection from leaders? No- that’s an impossible standard. But we can and should expect them

to struggle to be moral, compassionate, and respectful of every person (Herring, 2018). Argue

robustly over principles and beliefs, engage in debate about what is most beneficial to

community and country, but set a tone that attacks the merits of ideas, and not the quality of the

people who espouse different points of view (Herring, 2018).

The changes that were put in place to address the ethical conducts were three elements of culture

which were strong and ethical corporate leadership; accountability; and behavior tracking

processes. Tyco also established a hotline call Concern line that the employees could be using in

case they notice or suspect any misconduct or fraudulent act and they would be reporting

anonymous. Additionally, they added a quarterly report based upon the report that the employees

have brought up. They also reorganized the company and tried to retrieve some of the money

that was stolen by Kozlowski back (Daniels Fund Ethics Institute).

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In conclusion, Kozlowski first came up as being a leader that wants the progress of the company

and the shareholders at large but unknown to most of the board of directors that he was a wolf in

sheep’s clothing. And that his aim was to embezzle the company’s money and live a lavish

lifestyle. That he for once was not and never had the qualities of a good leader. And was a big

mistake from the part of the board of directors to have made him the CEO which gave him the

utmost power to do as he wished, which almost brought the company down. With that I can fully

state that having a good leader in any company or organization means having a successful and a

progressing company.
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References

Daniels Fund Ethics Institute

Tyco International: Leadership Crisis (uopeople.edu)

Herring. R. H, (2018) Should Leaders be Held to a Higher Ethical Standard?

Should Leaders be Held to a Higher Ethical Standard? – eJewish Philanthropy

Giles. S, (2016) The Most Important Leadership Competencies, According to Leaders Around

the World

The Most Important Leadership Competencies, According to Leaders Around the World (hbr.org)