The foundation of TYCO was established in 1960 by Arthur J. Rosenburg.

Initially, it was a
research laboratory to conduct experimental work for the United States government
United to later become a company dedicated to the manufacturing of products
industrials, in 1964 it makes a public offering of shares and starting in the year 1965, TYCO
A growth strategy begins, based on the acquisition of other companies.

TYCO became a much larger and more diversified corporation, which began to be listed
at the New York Stock Exchange in the year 1973, achieving:
Sales of 500 million dollars
A net worth of almost 140 million dollars.

TYCO's policy over the years has been to acquire profitable companies to then
manage them continuously, in such a way that the profitability of the benefits is increased
the shareholders.

In 1986, TYCO reorganized its subsidiaries and gave rise to its current businesses:

Electrical and electronic components

Medical services and special products

Firefighters and security services and flow control.

The company changed its name to TYCO International Ltd. In 1993, with the aim of reflecting
its presence worldwide.

In January 2002, TYCO announced a plan to divide the company into 4 companies.
independent, a plan that was aborted and replaced by a public offer of 100% of the
In June of that year, the company's president Dennis Kozlowski resigned.
The board of directors initiated an internal investigation, under the direction of advisors.
externals, to examine the use made by the former executive director of the company's funds.

In July 2002, Edward D. Breen was appointed president of the company, who
immediately took steps to help stabilize the company and to recover the
shareholder confidence. In August of that same year, TYCO announced the appointment of
Jack Krol, to improve everything related to the Corporate Governance of the company.
By the year 2003, the Board of Directors of Tyco took several measures to improve the
business management, some of them are:

Re-election of John A. Krol as Principal Director.

New responsibilities for board members.

Approval of a new Code of Ethical Conduct for employees.

In 2004, TYCO launched a global print advertising campaign, with the purpose of
to significantly improve the knowledge and understanding that clients had
of the company and with the aim of revitalizing its corporate image, damaged by the
scandal raised.

By 2005, TYCO published its first annual report on Environment, Health and
Safety (Environment, Health and Safety - EHS), this report is a sample of
commitment that TYCO has to excellence in environmental care, health
and safety, and in the development of better practices throughout the company.

Today, TYCO is a model of service, of sophisticated and innovative production, that

employs

250,000 workers around the world

Invoice 40 billion dollars

It maintains a leadership position in each of its 5 business areas: protection

fire protection and security services, including the ADT brand; electronics, healthcare,
engineering of products and services, plastics and adhesives.

Identification of situations where ethical dilemmas exist.

In 2002, the regulatory authorities of New York began to investigate the

company president until that year, Dennis Kozlowski and other senior executives of the
company, which were accused of resorting to illegal actions to take over nearly 600
millions of dollars from Tyco International.
Due to this situation, the company commissioned lawyer David Boies for an internal investigation.
From Tyco International's accounts, the company reported that no fraud was found.
important or a systematic plan to defraud the company, but more were discovered
of 300 million dollars in accounting errors, in addition to the previous administration
the company had used aggressive accounting formulas to increase its revenue.

The regulatory authorities of New York said that Kozlowski and Swartz defrauded the
company for taking secret loans and unjustified bonds between 1999 and 2001. These two senior
company executives were also accused of defrauding the company's shareholders,
by selling 575 million dollars in Tyco stock while falsifying the financial statements
financial statements of the Company.

In addition to having high-level managers with questionable ethical behavior,

Tyco was facing serious problems, burdened with debts of 28 billion dollars.
of which 11 billion had a maturity of 12 months, the collapse in the value of their
stock market actions, after rumors of default and the titanic effort that
It was supposed to integrate the 400 companies acquired over the previous five years.

Analysis of the behavior of the involved and responsible individuals.

The main cause of the actions of these executives was greed, as expressed by Diane L.
Coutu (Senior editor at Harvard) who claims that 'people have always been
greedy, the problem starts when the ambition for money infects a society
enter

Citing the Professor of Law and Business Ethics from Wharton, Tomas W. Dunfee, who has
taught business ethics since the 1960s, claims that rich people enjoy
from a good position, tends to have the feeling that they have the right to practically
I think that in the last five to ten years there has been a socialization of the
perception of rights among the higher echelons of organizations, including those who
they are very well paid, with huge compensation packages, they believe they are so good that they
they are being paid little.

The problem for Kozlowski is that it was precisely he who brought the culture of greed.
to almost caricatured terms, since, as president of Tyco, he only left the company
when a grand jury charged him with evasion of a million dollars in taxes on works of
art acquired for 13 million dollars.
As a result of the investigation, the luxury in which he lived in his duplex was also discovered.
from Fifth Avenue in New York, her other houses, the trips, her birthday party
woman in Italy valued at two million dollars and the extravagant and ridiculous purchases,
like a $4,000 trash can or the already legendary shower curtain with details in
gold valued at 6,000 dollars.

The prosecutor accused Kozlowski and Swartz of deceiving the company and misappropriating 600 million.
of dollars through unauthorized compensation, theft, stock manipulation and
forgery of the books, noticeable in all its actions abuse of power, which over the
the company's resources were exercised by the executives, while they proclaimed that "we work for
reduce costs across the organization

Interest Groups and the conflicts of interest that exist within them

Regarding the individuals or groups of individuals who were harmed by the fraud in the
Tyco company, we can distinguish 4 groups:

The company.

The shareholders.

The employees.

The society in general.

The Company: The financial scandal at Tyco affected it in such a way that no one else did.
another situation had done it until that moment, the collapse that the value of its stock market had experienced
actions, the real and growing possibility of declaring bankruptcy and the almost blow
lethal blow that affected the company’s image, they almost managed to make the company disappear.

Unlike other financial scandals that ended with the bankruptcies of companies,
Tyco managed to save itself, largely thanks to the solid and profitable production activity that
provided a wide range of products, which allowed it to be sufficiently
positioned to withstand the storm and become an ideal reform laboratory of
corporate governance.
The Shareholders: The company's shareholders, in a very short period of time, saw
As the value of the stocks fell sharply, the value of their investments decreased.
significantly, to the point of considering the possibility that the company
it would disappear and with it the total loss of the
investment.

The Employees: The vast majority of Tyco employees were unaware of the frauds and embezzlements.
what the senior executives of the company were doing, once the scandal broke out, the
employees of the company faced the real possibility of losing their jobs, in fact,
When the measures to ensure Tyco's survival began to be implemented, some
their offices were closed, with the corresponding dismissal of the people who were in them
they worked.

Society: All these problems impact society, in the trust that they have
people and the general public in the business world and consequently in the sector
governmental, due to the little "control exercised" over companies in the eyes of the citizen
common.

Identify the systematic, corporate, and individual aspects generated

depending on the case.

Individual Aspects

The case of Denis Kozlowski at Tyco is already a matter taken as an example of how essential it is that the
ethics for business should apply. The following paragraphs will aim to convey
how the theme is reflected in psychoanalytic theory.

This theory focuses from a normative point of view; its own division is taken into account.
into consequentialists and non-consequentialists. We must also mention that the
four main normative theories in business ethics are presented as
different way. Taking selfishness as the first example, as Denis Kozlowski had for
option to satisfy their individual desires and so did he. He prioritized his own interests by
above that of others.
We see that the personality and actions of Denis Kozlowski are influenced by the theory.
consequentialist since he knew that he was not clear about the parameters of conduct of
control that existed and surfaced in him when he saw he had economic power at his disposal. No
he never learned a system of stable values that would allow him to adapt to society without
to harm third parties.
Corporate Aspects

We enter the topic of codes of ethics and corporate conduct. Many times it is overlooked
overlook the behavior or some actions because it is not established within the company
a code of ethics that at least seeks to regulate attitudes. According to the study we have
In the course, codes of ethics have two types of content:

a) Definition of principles or standards that the organization believes in and wishes to

to support.
b) Establishment of practical guidelines for employee behavior, whether in
general or in specific situations.

We imagined that such a large company had at least the first point resolved. No
There is a company without a mission and vision to adhere to. The problem, in my opinion, was found
in the second point. The opportunity to delve into topics such as standards of conduct,
obedience to the law, relationships with clients and shareholders, treatment of employees, among others,
they may not have seen each other due to multiple reasons. This causes a free will on the part
of people, until reaching the point of distorting intentions and that the bad
interpretation of some things I took the lead of the situation.

On the other hand, Utilitarianism was also presented in a certain way, as the person decided
escape through the easiest way out of the situation, which turned out to be the most vile alternative. To this
responds to the condition that 'man is guided by the avoidance of pain and the attainment of'
pleasure”, since at all costs, regardless of the means, pleasure is sought.

This aspect sees how Tyco (or rather its executives) saw an increase in the coffers of
utilities, knowing the mismanagement that was occurring. Maybe the finance director should have
to prevent this and not to "turn a blind eye" to such a situation, which is why they are also
guilty and are involved in the accusation. It is to put it this way: "it doesn't matter the
however you manage to do it, just seek the greatest fortune to fill my pockets.
morally wrong, but morality is not a law.

Kozlowski thought he could hide the reality of things so easily. On the other hand, he also
I underestimate the role of effort and managerial skill, as by refusing to work in a way
honest and honorable provoked this managed discomfort and involved other people (it might be
it is not his fault, since he did not force anyone to continue with this) use of utilitarianism.
Systematic Aspect:

We must also add the analysis of the factors related to the context. But, what does this
How are you involved in the situation? Very easily, the attitude of the people who let it pass.
The fact was simply due to the desire to gain social prestige, money and
acceptance within a community. This conclusion is reached because many times one seeks the
well-being or the fulfillment of an action, not for the satisfaction itself, but for the desire of
reward or the fear of punishment that one can face. All those involved suffer from this in
trying to enrich themselves in a way that was not correct.

Point out the consequences and sanctions

NEGATIVES

Legal:

The former CEO of Tyco International LTD, Dennis Kozlowski, was found guilty.
of conspiracy, fraud, and falsification of commercial records and for the case of the director of
finance Mark Swartz, for grand larceny, securities fraud and eight of the nine charges of
falsification of accounting records. Both executives will face 25 years in prison.

In addition to the prison sentence, both executives will have to pay 134 million dollars.
in restitutions, plus a fine of 70 million dollars against Kozlowski and one of 35.
millions against Swartz.

Economic:

The company was defrauded of hundreds of millions of dollars, which gave rise to the possibility of
that TYCO would declare bankruptcy, this, along with other factors, caused the value
the stock would fall significantly in the stock market.

In addition to this, Tyco was carrying a significant liability of more than 28 billion dollars and
I was having enormous problems integrating the 400 companies that had been acquired over the years.
previous.

Image:
The image and credibility of Tyco, both inside the company (employees) and outside
(suppliers, investors, clients, etc.), was seriously affected by the scandal
financial, which generated significant and concerning consequences in the valuation of the
company and its future survival.

This significant deterioration in the company's image forced its new executives to
conduct global advertising campaigns, campaigns that cost significant amounts of
money.

POSITIVES

This situation generated a series of measures by the new management, which in the short term,
medium and long term would strengthen the company and allow TYCO to return to the place where
it was for many years.

The crisis that TYCO faced was a "generating" situation of opportunities to strengthen the
practices
business activities of the company on all fronts, including, logically, that of governance
corporate

The internal audit department of the company was strengthened, working jointly.
with external professionals in order to ensure its independence and objectivity.
important function.

The human resources department created a company-wide succession plan that

it took into account not only the academic and professional preparation of individuals but also
its moral category and its ethical values.

A guide was drafted, distributed, and shared among all the professionals in the company.
ethical conduct to improve the management levels of the company in all its areas.

What measures should be taken to prevent these events in companies?

according to the situation presented.

Having an internal audit department but working together with

external professionals in order to guarantee the independence of their functions.
Develop and distribute an ethical conduct guide among all company employees.
to improve management levels in all its areas.

Establish a policy of incentives and compensation that allows staff to be

completely committed to the organization's destiny.

A growth plan must be created not only for professional and academic purposes but also for
moral and ethical growth.