Brief Historical Description Of The Tyco Company

In looking at the suit filed by Anheuser, we can closer examine how Anheuser- Busch was damaged through the actions taken by Mr. Thayer. Anytime that an insider trading scandal takes place, there is always damages and repercussions. The most identifiable damage is that of money and capital. Anheuser-Busch paid nearly $40 million more for the acquisition of Campbell Taggart due to the active trading of Mr. Thayer, and the rest of the insiders. It is easily identifiable, that one damage to Anheuser-Busch was a $40 million dollar excess payment to acquire Campbell Taggart. By exploring and understanding capital markets, we find other monetary damages to Anheuser-Busch. These damages come from the cost of ongoing lawsuits with the SEC as well as with the defendants, Paul Thayer, and the other insiders. Another monetary damage from the effects of the insider trading is the allocation of management resources during the legal battles and

The situation began to unfold when the Securities and Exchange Commission was probing into a restatement of the company's stock price. Kozlowski's business practices raised some eyebrows. In 1999, the Securities and Exchange Commission (SEC) initiated an inquiry into Tyco's practices that resulted in a restatement of the company's earnings. In January, 2002, questionable accounting practices came to light. Tyco had forgiven a $19 million, no-interest loan to Kozlowski in 1998 and had paid the CEO's income taxes on the loan. It was found that he company's stock price had been overrated, and that the CEO and CFO had sold 100 million dollars' worth of shares, and then stated to the public that he was holding them, which was a misrepresentation and misled the investors.

Some of the dishonorable measures taken by the interstate trusts and monopolies were product quality reduction, employee exploitation, and even putting ultimatums on necessary products (“Domination” 1). Such abuse of business combinations consisted of secrecy or misinterpretation in corporate organization, overcapitalisation, and of course, price manipulation (Johnson 572).

There are laws in place to reduce the chances of an employer firing an employee based on their race, gender, disability, or sexual preference. Throughout the scandal, Kozlowski fired multiple employees without any warning or write up when he discovered that some of the revenue goals were not met after a company was acquired or they merged with another organization. Besides that, anyone whom gave a negative review or spoke negatively about Tyco had a strong possibility of being fired by Kozlowski. David Tice was vilified by Kozlowski for short selling Tyco. He worked for Prudent Bear and was only doing his job when he spoke out negatively about Tyco’s use of large reserves during acquisitions. That’s not the only instance, Jeanne Terrile, a former employee of Tyco was removed from covering Tyco as an analyst for Merrill Lynch because she refused to upgrade Tyco after the rapid amount of acquisitions and mergers. Also, the way Kozlowski handled his employees can be seen as over stepping his boundaries as CEO. He abused his legitimate power by treating the followers unfairly if he did not like the way business was being conducted or the company’s profits were not where they were supposed to be. Kozlowski implemented expert, legitimate, and coercive power to influence the outcomes he wanted and to get rid of any subordinate or analyst portraying Tyco in a

The word “fraud” was magnified in the business world around the end of 2001 and the beginning of 2002. No one had seen anything like it. Enron, one of the country’s largest energy companies, went bankrupt and took down with it Arthur Andersen, one of the five largest audit and accounting firms in the world. Enron was followed by other accounting scandals such as WorldCom, Tyco, Freddie Mac, and HealthSouth, yet Enron will always be remembered as one of the worst corporate accounting scandals of all time. Enron’s collapse was brought upon by the greed of its corporate hierarchy and how it preyed upon its faithful stockholders and employees who invested so much of their time and money into the company. Enron seemed to portray that the goal of corporate America was to drive up stock prices and get to the peak of the financial mountain by any means necessary. The “Conspiracy of Fools” is a tale of power, crony capitalism, and company greed that lead Enron down the dark road of corporate America.

Robber barons will stop at nothing to keep their wealth, and the insignificant laborer is dispensable in achieving this goal. America’s win-lose economic system further negates the employee’s situation. Mitt Romney referred to 47% of the population as parasites feasting of the earnings of himself and other wealthy men (Derber and Magrass 35). This hatred of the lower-class precedes the twentieth century completely. A perfect example of this took place at Carnegie’s homestead plant in 1889. Employees formed a union demanding higher wages, and were barred from the factory, but they refused to leave company grounds. The Pennsylvania governor was associated with Carnegie and sent the state militia to effectively end their strike, killing several

Unethical behavior…sounds bad doesn’t it? But what employee can truly say that he is completely innocent of any unethical behavior in the workplace? Some of the most common unethical business behaviors are fudging work hours, making phone calls on business lines and photo copying of personal paperwork. Simple acts such as these are highly unlikely to have an employee face criminal charges but when the acts of embezzling money or falsifying business records are committed a company is more apt to prosecute. People have different views regarding what is ethical and what is unethical. Some feel that it’s

Case two: Darleen Druyun accepted the vice president position offered by Michael Sears once the Boeing discovered the illegal job offer the company fired Sears and Druyun, both were sentenced to prison terms four months for Sears and nine months for Druyun. Based on the action of Boeing, investigators have covertly been placed in the procurement offices at the Pentagon and the head of the government contracts Stuart B. Nibley states that these illegal practices have brought about the reexamining of the rules and regulations which govern ethics and procedures so that these incidents will never occur again (Pae,

The biggest mistake the board of directors made was to trust a single man only because of his reputation. Just because Nick Leeson was reporting large profits, he was given virtually free rein and nobody had knowledge of his activity, when a trader on arbitrage strategies should not report such profits. The fact that Nick Leeson was reporting such profits should have been interpreted by the board of directors as a warning bell.

today we call them human rights" (McShea 34). The issue of whether or not to

Even the small profits reported by Enron in 2000 were eventually determined to be only a illusion by court-appointed bankruptcy examiner Neal Batson. Batson’s report reveals that over 95% of the reported profits in these two years were attributed to Enron’s misuse of MTM and other accounting techniques. But while financial analysts could not be expected to know that the company illegally manipulated the earnings, the reported profit margins in 2000 were so low and were declining so steadily that they should have merited ample skepticism from analysts about the company’s profits.

Astor’s abuse of weaker stakeholders was typical of his era, however if he were to trade today, he would be hit with a hefty fine, thrown in jail and even lose his company and all his earnings.

Cendant Corporation, one of the world’s largest hotel and real estate franchises was known as the largest accounting fraud before Enron. Cendant Corporation was created in 1997 when Hospitality Franchise Systems (HFS), Inc. merged with Comp-U-Card international (CUC). Chairman Walter Forbes and Vice-chairman Kirk Shelton were the perpetrators to a decade long accounting and securities fraud. The day after Cendant exposed evidence of accounting irregularities the corporations stock and convertible bonds lost nearly $14 Billion (Morgenson, 2004). This paper will address the issues that went wrong with Cendant and how the crimes fit into to Friedrichs’ typologies.

This research paper will explore the fraud at Tyco and focus primarily on accounting and auditing issues related to the fraud. One thing worth noting about this case is that fraudulent financial reporting was not at the core of the fraud, which was the case with majority other big frauds at the time, such as Enron and Waste Management. On the contrary, fraud consisted of misappropriation of assets, and fraudulent financial reporting came as a consequence of trying to hide misappropriation of assets and the use of corporate money for personal benefit.

A key factor to Enron’s fall from grace, was due to the foibles of its corporate leadership, in particular, how certain executives were willing to overlook unethical behavior in lieu of profits. For example, Ken Lay, Enron’s Chairman, espoused the ideals that Enron had higher level of morals than the average company (Gibney, 2005). However, on several instances, he failed to enforce or show that level of commitment. In the Vahalla case, he allowed traders that were involved in manipulating and gambling the company’s earnings to continue their operations, despite being warned of their fraudulent behavior (Gibney, 2005). His justification, at the time, was that Vahalla was the only part of the company that was making any money (Gibney, 2005).