Tyco Corporate Scandal Case Analysis 2022

Running Head: TYCO SCAM
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TYCO CORPORATE SCANDAL
INTRODUCTION
The Tyco International Scam case was brought into light in the year 2002. The company used to
operate in more than 100 countries and largely produced electrical components, such as fire pro-
tection, plastics and adhesives, electronic security services and most importantly, the medical
products. In the year 2002, this scam was highlighted in which the accounting theft was done by
Dennis Kozlowski, the former CEO of the company and Mark Swartz, the former corporate
Chief Financial Officer of the company.
The TYCO International Scandal of the year 2002 is all about the theft done by Dennis Ko-
zlowski, the former CEO of the company and Mark Swartz, the former corporate Chief Financial
Officer of the company. The company was involved into two primary business sectors, that is,
security solutions and the fire protection. The then CEO, Kozlowski was indulged into many of
the financial transactions which were not declared in the financial reports of the company. Ko-
zlowski including with many other officers were involved in this fraudulent transactions. ("Un-
ethical Issues or Legal Issues in Tyco International", 2019)
The system of common law and the civil statutory law of the United States are both different in
legislations. The rulings in both the system depend on the rulings which have been made prior in
similar cases. Tyco International, according to the U.S. Federal Securities Laws had violated the
laws by preaching improper accounting practices. (Atiyah & Summers, 1987)

Running Head: TYCO SCAM
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Both the CEO and the CFO had been found guilty of reaping $600 million through the racketeer-
ing scheme which involved unauthenticated bonuses, fraud in the stock records and the incorrect
expense accounts. The company’s former general counsel was also charged that he had misled
the company records and had concealed $14 million under the head of improper loans to himself.
("Tyco International| Bartleby", 2019) They were included in more than 30 counts of Fraud. Ma-
jor fraud counts included:
● Bribery
● Inaccurate discharge of employees
● Failure of accounting policies
Both the accused men were imprisoned for not less than 25 years in the light of the above
scam according to the laws of the United States. ("Tyco Corporate Scandal of 2002 (Ethics
Case Analysis) - Panmore Institute", 2019)
SAUDI ARABIA (RELIGIOUS LAW SYSTEM)
Assuming the case had taken place in Saudi Arabia, then the laws would have been different.
Saudi Arabia does not have specific penal code of conduct and does not have any principle
that any corporate organization is criminally liable under the Islamic Laws preached in the
Kingdom. Saudi merely depends on the paramount body of law called the Shariah, which is
derived from the Holy Quran and the Sunna, earning the words and actions of the Prophet
Mohammed. Let’s assume, Kozlowski was working in the Arabian country and had commit-
ted the fraud in any company with similar circumstances, then the laws could have been dif-
ferent. If any such company or officer is said to have committed organizational crimes such

Running Head: TYCO SCAM
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as bribery or money laundering or anything else, then the company would be subjected to a
fine imposition of up to 10 times the value of the bribe and a ban would be levied of mini-
mum 5 years on the company when it will not be able to carry out its operations.
Violation of laws might lead to the imposition of penalties and also confiscation of the prop-
erty and sale proceeds. ("Saudi Arabia Update March 2018 - Criminal Law - Saudi Arabia",
2019)
Saudi Arabia, as already mentioned works on the Shari’ah principle based on the holy books
of the Arabian laws, there does not specify the rules for the arrest warrant, detention or im-
prisonment for the cases which unless are related to the murder or unless specified by the
law. No penal punishment would also be imposed on the guilty unless stated by the law. The
Anti Money Laundering Law, issued pursuant to Royal Decree No.M/39, imposes criminal
liability on the person found guilty if violated the money laundering rules. Such as case of
Tyco International, where the CEO and the CFO of the company themselves were included
in the fraud, then according to the Arabian laws and also referring to the Anti Commercial
Fraud Laws pursuant to Royal Decree No. M/19 would attract and be punished according to
the law.According to the aforementioned laws, such officers if involved in the fraud case as
of Tyco would be liable as follows:
• The officers would be subject to fine upto times the value of the funds stolen from the
company
• The Law could withdraw the license agreement of the company and also possibly black-
list the said guilty officers.