Tyco: a corporate worst-case scenario
After the Enron scandal and even more recently Martha Stewart, the ever-increasing problems with corporate dishonesty seem more visible to the public than ever. While jurors are still deliberating the 32 charges in the Tyco employee corruption case involving ex-CEO Dennis Kozlowski and ex-Chief Financial Officer Mark Swartz, spectators got the message that even Stewart is not above the law.
The New York Times reported March 26 that the Tyco trial jury has been deadlocked for 11 days. One jury member is questioning whether the prosecution has proven that Kozlowski and Swartz are guilty of grand larceny, securities fraud and falsifying business records. The Times also reported the two former employees of Tyco are accused of stealing $170 million from the company by hiding details of their pay packages from the board and also of stealing $430 million by selling Tyco shares after artificially pumping up its price.
But it is not as if cases like this have never occured before.
Former CFO of Enron Corp. Andrew Fastow was charged with securities, money laundering and conspiracy, as well as wire and mail fraud in October 2002. According to ABC News, Fastow was charged with hiding $1 billion in Enron’s debts. His trial date is still pending.
On March 5, Martha Stewart was found guilty of four counts of obstructing justice and lying to investigators. According to CNNmoney.com, Stewart avoided a loss of $51,000 by selling nearly 4,000 shares of ImClone stock Dec. 27, 2001. The stock crumbled after regulators rejected the company’s application for a key cancer drug.
Apparent to many onlookers is the fact that even with guilty verdicts in high-profile corporate trials, some CEOs still believe they are above the law. Unless stricter rules and regulations are made for all companies to follow, problems like these may never disappear, and the legal system will have no choice other than to continue to make examples of them.