Est1 Case# 4
1. What are the ethical and legal issues in this case? Ethical issues were that Tyco was split into 3 branches that reported only to the CEO and they had little connection to each other. Kozlowski loaned or paid off many of the directors of Tyco. Those who spoke out against Tyco were hushed or removed. The CEO and his accomplices illegally sold stock and funnel money into their personal accounts or lavish spending. Not to mention a little tax fraud as well.
2. What role did Tyco’s corporate culture play in the scandal? Tyco’s corporate culture wasa very shallow. Some of the board of director who are supposed to protect the shareholders were taking money or loans themselves. Once this got out to the other directors is when it started to fall apart. The auditing of Merril Lynch was flawed in that they replaced those who warned about Tyco’s situation, so there is some poor over site.
3. What roles did the board of directors, CEO, CFO, and legal counsel play? The CEO, CFO and legal counsel were the main instigators in this debacle. The CEO and CFO stole 170 million from Tyco as well as selling 430 million in fraudulent stock among other things. Legal counsel took 26 million and committed larceny and tried to complicate a federal investigation.
4. Have Tyco’s recent action been sufficient to restore confidence in the company? I looks like Tyco with a new CEO and board and a new structure have gotten off to a good start considering the harm that was
