I first became aware of Tyco International Ltd. and its then CEO Dennis Kozlowski when both appeared on the radar during the 1990s as the company achieved impressive results for its shareholders quarter after quarter, year after year. My interest grew during the early 2000s when Tyco and Kozlowski became involved in a highly publicized scandal. I left the private practice of law for academia in 2002, the same year that Kozlowski’s tenure as the remarkably successful CEO of Tyco came to a sudden end. The textbooks I used in my business ethics and business law courses began including case studies about the Tyco corporate scandal soon after I began teaching.
I began this project with a clear objective, but with no plans to write a book. I simply wanted to understand a situation that on its face didn’t make sense to me. How did a successful, high-profile executive end up in a New York State prison? Why was he prosecuted by a local district attorney, and not a U.S. attorney? It was a very unusual circumstance that set the case apart from others. In the other major corporate scandals that occurred during the same time period, only federal crimes were alleged and charged. But federal prosecutors declined to charge anyone connected to Tyco. Instead, Tyco executives, including Dennis Kozlowski, were indicted and tried by the Manhattan District Attorney under the state laws of New York.
In addition to being intrigued by his unusual prosecution, I was confused by how Kozlowski’s crimes were described. Why did prosecutors and the media say that he received “undisclosed” compensation and took “secret” loans through the company’s employee loan programs? How could his compensation and loans be considered secret when so many people knew about them? The transactions were processed and recorded in the normal course of business and were audited by one of the most respected accounting firms in the world. During Kozlowski’s criminal trials, not a single Tyco employee testified that he or she concealed information, and not one believed anything was wrong inside the company. Plus, Tyco’s accounting methods were examined and investigated numerous times, yet no material errors were ever identified. It didn’t add up. The more I knew, the less I understood.
I first contacted former CEO Dennis Kozlowski in January of 2011. Spurred by my curiosity about the scandal, I wrote a letter to him at the Mid-State Correctional Facility, what he often referred to as the “gated community,” in upstate New York. I simply asked if he would discuss his case with me.
Kozlowski responded with a one-page, handwritten letter in which he indicated his willingness to address my questions. We exchanged several letters and in May of 2011, I met Kozlowski face-to-face at the prison. I visited Kozlowski several times and maintained regular contact with him for two and a half years. I asked and he answered hundreds of questions about his life, his career, and the twenty-seven years he spent at Tyco. Kozlowski gave me access to his attorneys, former colleagues, family members, and friends. Our ongoing conversation and thousands of hours of research evolved into this book.
In addition to interviewing Kozlowski, I spoke with another former Tyco CEO, and with former Directors, executives, and other Tyco employees. I talked with Kozlowski’s family members, his friends, the man who served as foreperson of the jury that convicted Kozlowski, and I met with legendary former Manhattan District Attorney Robert Morgenthau, who prosecuted the Tyco executives. The information in this book was found in tens of thousands of documents, hundreds of articles, Securities and Exchange Commission filings, the applicable laws and regulations, and numerous court opinions. I also relied on the evidence presented during two criminal trials that, in total, stretched over eleven months and spawned transcripts that contain 28,338 pages of sworn testimony, legal arguments, judicial decisions, a mistrial, and shocking verdicts. I sought the counsel of experts when I needed help interpreting and understanding what I found.
It’s fair to say that I am biased. I’m a business ethics professor. I spend my life studying and teaching the importance of thoughtful, legal, and ethical behavior in business. I’m probably more critical than most people about right and wrong. I have strong opinions about what is acceptable and what is unacceptable behavior, with particularly high expectations of those in positions of leadership. I’m not a likely advocate for a man who is widely considered one of the most notorious of all the corporate executives tried and convicted as a result of Enron-era scandals.
But here is what I know (and I’ve heard myself say it dozens, maybe hundreds of times in classrooms full of business students): It’s important to do what’s right, even when it’s unpopular, even when it’s criticized, even when it’s difficult. Especially when it’s unpopular, criticized, and difficult. As I looked into Dennis Kozlowski’s life and explored the Tyco scandal, I didn’t find what I expected to find. As I studied, read, researched, asked hundreds of questions, dug through thousands of documents, and immersed myself in the scandal and criminal prosecutions, I found far more than, and not at all what I expected.
It would have been easy for me to write the same story about Kozlowski that has been written hundreds of times. I could have focused on the $6,000 shower curtain and his Roman orgy-themed birthday party on the Italian island of Sardinia. I could have skimmed the surface of the facts (saved myself thousands of hours of work) and written a book consistent with the public’s perception of the former CEO of Tyco International. Instead, I decided to write exactly what I found, what I read, what I heard, and what, after more than thirty months of reasoned thought, I believe to be the truth.
This account of the Tyco scandal is accurate. My research was copious and meticulous and because I know Kozlowski is controversial, I checked and rechecked thousands of facts. I was able to verify about 80 percent of the information I received directly from Dennis Kozlowski and to his credit, there was not a single discrepancy between what he told me and what I found in reliable, independent, objective sources. Nothing he said or wrote was changed, twisted, fabricated, or misrepresented. From our first meeting, Kozlowski challenged me to look at everything, to talk to anyone and everyone involved, and to reach my own conclusions.
So that’s what I did. I spent two and a half years going through Dennis Kozlowski’s life and career with a fine-tooth comb. I worked until I was comfortable with my understanding of the facts and the law.
This book is the culmination of what I learned.