Tyco Unethical Perspectives and Unintened Consequences

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Unethical Perspectives and Unintended Consequences Historical Summary Tyco was one of America's largest companies, with operating revenue over $30 billion and approximately 200,000 employees, prior to 2002. Tyco began operations in 1960 and the company went public in 1964, quickly expanding through acquisition. Dennis Kozlowski joined Tyco in 1975. Subsequently, the organization shifted its focus from growth to profit. Kozlowski joined Tyco's board in 1987 and became president and chief operating officer (COO) in 1989. In 1992, Kozlowski became chief executive officer (CEO) and shortly after chairman of the board. Kozlowski had great success, diversifying the company into health care. Under Kozlowski’s leadership, Tyco evolved into the second largest producer of medical devices in the United States in 2001, with an estimated book value of over $100 billion. The infamous Tyco scandal began to unfold in 1999 when the Securities and Exchange Commission (SEC) was conducting a probe. Some of Tyco’s business practices raised concern. Subsequently, the SEC initiated an inquiry. In 2002, the questionable accounting practices came to light. The company had forgiven millions of dollars in loans and granted excessive bonuses to executives. It was also found that Tyco’s stock price was inflated. (Kaplan, 2009) The main impropriety was discovered when District Attorney, Morgenthau, was investigating Kozlowski for tax evasion on some exotic art work. The investigation uncovered that many other questionable business practices had ensued. (Kaplan, 2009) The illegal and unethical behavior occurred when (CEO) Kozlowski, and (CFO) Swartz, awarded millions of dollars to themselves and other executives that were not approved by the board of directors. The board was supposed to approve every bonus, or loan forgiveness, as a bonus reward. The loan programs that

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