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Tyco Intenational Legal Issues

Essay by   •  June 11, 2011  •  Case Study  •  830 Words (4 Pages)  •  1,708 Views

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Abstract

Tyco International was founded by Arthur J. Rosenberg in 1960, which originally started off as an investment and holding company. Since the beginning it has evolved into a multi faceted fast-growing organization which to date has three entities Tyco Healthcare , Tyco Electronics and Tyco fire & Security and Engineered Products and services which have all returned billions of dollars in profits. Dennis Kozlowski began his career in 1975 at Tyco under the direction of his friend and mentor Joseph Gaziano who embodied similar management styles. Kozlowski impressed by Gaziano' lifestyle and wanted the same advantages.

This analysis will delve into the ethical and legal issues created by Kozlowski during his reign as President and later Chief Financial Officer. How it impacted the employees as well as the shareholders. We will also discuss the role that Tyco's culture played in the scandal, and lastly how the implementation of the Sarbanes-Oxley Act will prevent the misdeeds at Tyco from resurfacing.

Analyze three legal issues in this case

The legal issues involved in this case were that the top executives such as Dennis Kozlowski CEO and Mark H. Swartz along with several other were involved in a plot to ultimately defraud shareholders of over more than over 600 million dollars from Tyco to fund their lavished lifestyles of trips, parties, artwork, and real-estate. Kozlowski and Swartz were guilty of taking pay bonuses, selling their company stock at an inflated price, misappropriating company funds, falsifying records, and abusing loan programs. The executives hid their alleged thefts by failing to disclose the bonuses and loan forgiveness and bought the silence of underlings with outsized compensation.

Analyze three ethical issues in this case

Business ethics is defined as "inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rule of conduct" (Ferrell, 2011). In regards to Tyco, Kozlowski and Swartz used Tyco's stockholders funds as their own personal bank accounts. Kozlowski strategically put business associates in place on the board to guarantee that his misdeeds would not be found out. The ethical issues involved were the fact that top executives stole large sums of money and in the process deceived the shareholders as well as the employees who entrusted the firm with their money thinking that it would be safe when invested. The shareholders deserved better than to be betrayed by individuals they put in place to run the organization. They also took the guidance and trust away from its employees who looked to them for leadership.

Explain the role

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