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Tyco International Ltd. Case Study

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    Tyco International Ltd. is a diversified company that provides products and services, operating in more than 60 countries. Tyco aims to be one of the leading companies in electrical and electronic components. Tyco has maintained over 40 acquisitions from 1986. Tyco’s International former chief executive officer, L. Dennis Kozlowski, and former chief financial officer, Mark Swartz were both involved in major unethical and illegal fraud which have pushed the company to suspend them from their jobs, arrest them and charge them with more than $170 million.

    Both directors were accused of stealing more than $430 million through Tyco’s stocks and enclosing false information to the public What are the ethical and legal issues in this case? There are a lot of legal and ethical issues in this case. In this case the CEO of the company Kozlowski used company funds to build a secret headquarters for him and other high ranking executives. Also he used funds from the company to buy and furnish luxury apartments for him and his colleagues. These funds could have been used to make the company headquarters better or use them to invest in legal, social and renovation programs to benefit the company.

    For Kozlowski and Swartz, they were found guilty on 38 felony counts for allegedly stealing $170 million from Tyco and selling an l $430 million in stock options. In addition, Kozlowski was accused of taking $240 million from a program intended to help Tyco employees buy company stock but rather he used them to buy personal property. Swartz was also found guilty in a charge of forging documents of employee loan waiving that he embezzled $14 million from. That ruined many employees’ lives and investments because the heads of the company were unethical.

    As for other moral mistakes they made was dismissing of Jeanne Terrile, the analyst at Merrill Lynch after the meeting between Kozlowski and CEO of Merrill Lynch, they dismissed her because she wrote a poor performance report about them which threatened there places in the company. That also brought negative publicity to them and raised suspicion towards them. What role did Tyco’s corporate culture play in the scandal? Tyco’s corporate culture played a big part in this scandal forming. Tyco was a major company whose employees were highly qualified and in some cases suffer from arrogance.

    In the sense that if you work for Tyco it means you are one of the best and criticism from other does not affect you in any way. Kozlowski was a leader with a lot of charisma. He saw himself as an amoral leader. His followers and employees though so highly of him that they never questioned his decisions no matter what they were which made this scandal happen. Furthermore the corporate culture of the organization that was related to the company’s aim which is to maximize profits for shareholders and not considering any other stakeholder had proven to mostly end up failing and resulting in scandals, bankruptcy and other problems.

    Adding to that the company had a trust problem. There was no transparency between the employees and higher executes or clients. Nobody knew the problems and no one asked about the problems which was also a contributing factor in this issue. What roles did the board of directors, CEO, CFO and legal counsel play? Due to the limited transparency and unlimited trust from their employees the board of directors, CEO, CFO and legal counsel though that whatever they do will only be known among themselves which is why this scandal occurred. They acted in an unethical way because of the situation they were in. owerful, charismatic, discreet and unethical. Their greed and power made it easy for them to embezzle millions of dollars to satisfy their luxurious lifestyle. In that situation they lost all regard for the people that will be affected by this action and kept on going to get more and more money. The legal council should have been the party that stops this from happening. Due to their profession and the high ethics they should have gone by this should have been stopped by them. Unfortunately it seems that the opportunity and the money involved were too great for them to turn down.

    Have Tyco’s recent actions been sufficient to restore confidence in the company? Tyco have undergone many operations to restore confidence in the company. They have a new book on ethical conduct and new guidelines that employees should commit too. According to Tyco’s official site, Tyco have uploaded the “Tyco Guide To Ethical Conduct”, a 32-page booklet that helps employees understand the company’s core values, which includes integrity, teamwork and accountability and making the best decisions. The booklet can be downloaded online in 28 different languages.

    Tyco’s Guide To Ethical Conduct has been a few months after the arrest of former CEO Kozlowski and CFO Swartz. Some of the new guidelines alson include Speaking up and asking for help Whenever an employee is facing a moral dilemma or an ethical issue they should report it to higher management to seek advice and to prevent an ethical or legal issue to occur again. That is one step in the right direction for Tyco. Promoting a positive workplace and promoting others This is straight from the Tyco guidebook and states the following.

    To ensure a successful business, we believe that our workplace should welcome employees and customers from different diversities. All stakeholders should be treated with respect no matter how different their background is. The company discourages discrimination between gender, age, religion and ethnicity. The company prevents harassments of all sorts, which includes: 1. Religious, Racial or sexual jokes. 2. Bullying and violence. 3. Sexual harassments. 4. Any other physical harassment that will distract the employee from working.

    What other actions should the company take to demonstrate that it intends to play by the rules? My opinion is that tyco must also change their corporate culture. They must install new beliefs that every decision made must be considered in order to avoid negative affects both financially and socially. Tyco must also introduce a new vision, mission statements and try and relive the company of the previous ones which were profit seeking goals and unethical ones. More strict supervision of financial statements in the company must also occur. That will be the best way to return Tyco to the top of the business world.

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