The Tyco scandal of 2002 clearly demonstrates that the firm’s moral compass was askew. In the restructure of Tyco, Kozlowski compromised the company’s corporate governance system in positioning his close associates in prominent organizational ranks, thus leaving room for his cohorts to assist and participate in his wrong doing.Kozlowski and some other executives were able to perpetrate crimes of fraud, grand larceny and conspiracy,embezzlement, accounting conflicts of interest, excessive unethical personal spending and other questionable activities, since Tyco was left unprotected by its damaged controls. Authorities accused Kozlowski and Swartz, Tyco’s CFO, of stealing $170 million from Tyco and fraudulently selling an additional $430 million in stock options in 2002. Federal prosecutors cited some of Tyco’s board members, and Kozlowski, for accounting conflict ofinterest and pilfering of Tyco funds for luxurious private spending. According to Insead Knowledge (2012),at the height of the scandal, Kozlowski threw his wife a $2 million dollar birthday party on the Italian island of Sardinia, toga style, with famous singer Jimmy Buffett as the featured entertainment all courtesy of Tyco. Authorities further investigated Tyco’s board members and executives after Kozlowski’s arrest, uncovering that therelationships between Kozlowski and numerous other members was questionable and fostered a tempting situation for them to engage in unethical activities (Daniels Fund, n.d). This compromised the corporate governance system making it possible for illegal activities to occur. For instance, one board member used $2.5 million in Tyco funds to buy his home and another received $20 million for helping to arrange the acquisition of CIT Group without the other board members’ knowledge. Using an interview method of investigation explore the case and evidence found (Assuming that you are the investigator)
The Tyco scandal of 2002 clearly demonstrates that the firm’s moral compass was askew. In the restructure of Tyco, Kozlowski compromised the company’s corporate governance system in positioning his close associates in prominent organizational ranks, thus leaving room for his cohorts to assist and participate in his wrong doing.
Kozlowski and some other executives were able to perpetrate crimes of fraud, grand larceny and conspiracy,
embezzlement, accounting conflicts of interest, excessive unethical personal spending and other questionable activities, since Tyco was left unprotected by its damaged controls. Authorities accused Kozlowski and Swartz, Tyco’s CFO, of stealing $170 million from Tyco and fraudulently selling an additional $430 million in stock options in 2002. Federal prosecutors cited some of Tyco’s board members, and Kozlowski, for accounting conflict of
interest and pilfering of Tyco funds for luxurious private spending. According to Insead Knowledge (2012),
at the height of the scandal, Kozlowski threw his wife a $2 million dollar birthday party on the Italian island of Sardinia, toga style, with famous singer Jimmy Buffett as the featured entertainment all courtesy of Tyco. Authorities further investigated Tyco’s board members and executives after Kozlowski’s arrest, uncovering that the
relationships between Kozlowski and numerous other members was questionable and fostered a tempting situation for them to engage in unethical activities (Daniels Fund, n.d). This compromised the corporate governance system making it possible for illegal activities to occur. For instance, one board member used $2.5 million in Tyco funds to buy his home and another received $20 million for helping to arrange the acquisition of CIT Group without the other board members’ knowledge.
Using an interview method of investigation explore the case and evidence found (Assuming that you are the investigator)
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