TYCO SCANDAL

A. COMPANY PROFILE AND OPERATIONS

Tyco International provides security products and services, fire detection and suppression products and
services, and life safety products worldwide. The Company operates through three segments: North
America Integrated Solutions and Services, Rest of World Integrated Solutions and Services, and Global
Products. It designs, sells, installs, and services electronic security systems, and fire detection and
suppression systems, as well as fire protection, security, and life safety products, including intrusion
security, anti-theft devices, breathing apparatus and access control, and video management systems.
The Company offers its products under various brands to commercial, industrial, retail, institutional,
residential, small business, and governmental customers.
Tyco International mission is to advance safety and security. We find smarter ways to save lives, improve
businesses and protect where people live and work. Our 69,000 employees in over 1,000 locations
around the world take a consultative approach to delivering tailored, industry-specific solutions. Our
global reach allows us to anticipate changes across geographies and industries, and deploy the right
solutions rapidly. In the most challenging and demanding environments, we help our customers achieve
their safety, security and business goals. For more than half a century, Tyco has been delivering the
latest solutions to unique business challenges. Today, Tyco Integrated Security brings these solutions to
enterprise, mid-size and small business companies throughout the United States. Our passion to protect
what matters most is stronger than ever.
Some of the many products made by Tyco included:
* CCTV/Access Control Equipment (Tyco Integrated Security, American Dynamics, Kantech, Software
House, CEM Systems)
* Circuit protection devices
* EAS (electronic article surveillance) & RFID (radio frequency identification) products (Sensormatic)
* Engineering services
* Fire alarm systems (Simplex, Tyco Integrated Security)
* Fire sprinklers (SimplexGrinnell, Wormald)
* Fire-fighting hardware (Scott Safety) and Fire-fighting foam concentrates (Ansul, Chemguard, Skum,
Total Walther, and Sabo)
* GRINNELL Grooved Products
* Safety products (including industrial-site safety & personal protective equipment (PPE) SCOTT Safety)
* Security systems (Tyco Integrated Security, ADT, DSC)
* Physical Security Information Management (Proximex)
* Valves and controls
* Pressure-relief valves for nuclear power generation
CASE STUDY
TYCO SCANDAL

The said scandal from TYCO INTERNATIONAL was happened 17 years ago that creates a big spotlight of
bitterness from the said company in which unethical practices inside the organization had been
practiced by top officials which includes unethical leadership, unethical business practice of
subordinates, and unethical auditing practices on Tyco’s business which are all product of greediness.
Moreover, it was all started from the chief executive officer of the company named Denis Kozlowski of
1992, chief financial officer Mark H. Swartz and other lower officals and subordiantes of the said
company due to financial support.
Since then, Tyco was a large organization that grew through numerous acquisitions. Tyco’s case shows
that the problem was the unethical business practices of a number of its top ranking officers, especially
CEO Kozlowski. Kozlowski was involved in numerous financial transactions that were not included in the
financial reports of the company. Kozlowski was also involved in unethical transactions with other Tyco
officers and lower ranking employees to cover up for Kozlowski’s illegal financial transactions. Kozlowski
even got outsiders involved in the problem when his second wife received money diverted from the
firm. Court proceedings proved that Kozlowski stole millions of dollars from Tyco, and that his illegal
financial transactions were extensive. Kozlowski and other officers from Tyco were imprisoned. Tyco
declined as investors lost confidence in the company.
Tyco’s unethical leadership is one of the issues in this case where he was supposed to be the role model
because he was given a named chief executive oficer ad yet he is the main actor of this unreasonable
issue. Also, he even influeced his subordinates to join him in his plan in replacement o financial support.
Based on that scene, it is not acceptale for him to do that action because his job is to strengthen his
people and to be an asset of the company, hence he became the “bad debts” of his own place that
made him suffer to rest of his life.
Another, unethical business practice of subordiates is one of the factors. Being part of an organization
specially in a big company like Tyco International is to be the main human technology that will act as the
“heart” of the company that gives life and make the entie system alive. Apparently, some subordinates
were not that loyal and even accepted what Kozlowski offered to them which is not relevant to the
nature of business and to the so called ethical beliefs. About the scenario, Kozlowski convinced one of
the board membes to keep silent about the illegal financial transactions on the mansion Tyco paid for
the benefit og Kozlowski and his wife. In echange, the said board member have received financial
benefits.
In contrary, Former chairman and chief executive Dennis Kozlowski and former chief financial officer
Mark H. Swartz were accused of the theft of more than US$150 million from the company. During their
trial in March 2004, they contended the board of directors authorized it as compensation.
During jury deliberations, juror Ruth Jordan, while passing through the courtroom, appeared to make an
"okay" sign on the table. She later denied she had intended that gesture, but the incident received much
publicity (including a caricature in the Wall Street Journal), and the juror received threats after her name
became public.[29] Judge Michael Obus declared a mistrial on April 4, 2004.
On June 17, 2005, after a retrial, Kozlowski and Swartz were convicted on all but one of the more than
30 counts against them. The verdicts carry potential jail terms of up to 25 years in state prison.
Kozlowski and Swartz were each sentenced to no less than eight years and four months and no more
than 25 years in prison. Then in May 2007, New Hampshire Federal District Court Judge Paul Barbadoro
approved a class action settlement whereby Tyco agreed to pay $2.92 billion (in conjunction with $225
million by Pricewaterhouse Coopers, their auditors) to a class of defrauded shareholders represented by
Grant & Eisenhofer P.A., Schiffrin, Barroway, Topaz & Kessler, and Milberg Weiss & Bershad.
Hence, on January 17, 2014, Kozlowski was granted parole, from the Lincoln Correctional Facility in New
York City.
In general, the so called leader create an athmosphere within the organization in which some
subordinates got distructed by the outlook of purpose to be influenced with that point of view in which
they think it will be worth it in the end but little did they know, the outcome is much bigger than what
they get form it.