Chapter 3: Tyco and Hewlett-Packard
Fine/Settlement: Former CEO and former CFO $35 million to Tyco plus fines of $70 million $35 million, as well as prison sentences.
Former CEO Dennis Kozlowski and former CFO Mark Swartz were accused of the theft of more than $150 million from Tyco. During their trial in March 2004, they claimed the board of directors had authorized it as compensation.
There were signs of extravagant personal spending by both men, but nothing was done about it. In 2002, questions about the accuracy of the books at Tyco triggered a slew of events that led to a major fraud investigation. Kozlowski and Swartz are paying the price for the crimes: 22 counts of grand larceny, false business records, and conspiracy and securities fraud.
- These two men played significant roles at Tyco and weren’t held accountable for their actions. When Tyco introduced Ed Breen as the new CEO, it became apparent that the company wanted to make the right move and hire someone who would hold everyone, including himself, responsible for their actions.
The leader sets the tone for the company and establishes the corporate culture. Peter Löscher was the man for the job.
Issue: Lawsuits and Investigations
Multiple lawsuits and investigations in a short period of time made 2010 a rocky year at HP. A sexual harassment investigation, a kickback probe and an SEC investigation into whether or not former CEO Mark Hurd leaked inside information wraps up the year for HP.
- Ethics training
- Employees need to know what is expected of them. An evaluation of risks they face should be used to ensure training topics are up-to-date with current ethics and compliance threats. Ensure training is ongoing so that change is lasting.