The pair had sued saying they were unfairly deprived of their constitutional right to present a defense when the prosecution refused to show them notes from an internal investigation of their conduct. The N.Y. Supreme Court ruled that they weren't entitled to the notes and that decision was left intact.
While few observers will shed tears for Mr. Kozlowski, he's probably the most sympathetic of the Enron/Worldcom/Tyco trio of corporate scandals that rocked the first couple years of the millennium. In contrast to those two titans that field for bankruptcy, Tyco emerged from the scandal as a thriving company -- and many of the decisions Kozlowski made as CEO have continued to pay rewards to shareholders. Sure, he was egregiously overpaid -- but this seems more likely to be a case of poor corporate governance than criminal malfeasance.
In September, I wrote that "One of the flaws with the Tyco case -- and it extends into media coverage of corporate governance today -- is that it held an executive responsible for gross negligence on the part of the board of directors. By throwing Kozlowski in jail and writing him off as a crook, the real threat to shareholders was essentially let of the hook: complacent and compliant directors at public companies."
I still think that's the case, and think there are much better ways to crack down on corporate malfeasance than sticking Dennis Kozlowski in prison.
Entrepreneur's Journal: Putting together a solid sales contract
The week in preview: Earnings from Walmart, Macy's, and other retailers
Six top trades for the rest of 2009
Reader Comments (Page 1 of 1)
6-08-2009 @ 9:50PM
winslow said...
Business leaders are in positions of trust. There has been such a breech of this trust over the last 10-15 yrs, perhaps prison time IS the only solution.
6-08-2009 @ 3:53PM
John said...
It's interesting that with TYCO only 2 people went to prison-Dennis and Mark.
What about all the others, -- the board, and the beancounters that signed the books.
Didn't they do anything wrong?
6-30-2009 @ 6:38PM
Benjamin Wright said...
The Tyco International scandal shows why the use of electronic archival systems is making more and more sense. --Ben http://legal-beagle.typepad.com/wrights_legal_beagle/2008/08/e-discovery-strategy-search-artificial-intelligence.html
7-06-2009 @ 12:19AM
Donald Murray said...
He made Tyco. Tyco was a multimillion dollar company before Kozlowski, but after him, it was a multiBILLION dollar company. His case is totally different than ALL the crooked cases at the time. His problem was he got caught up in the ENRON scandal and the DA's office was too eager to make an example of anyone doing anything out of line (remember martha stewart?). He was guilty of very bad taste for sure. However, that is not a jailable offence. He also claims to have informed the directors of certain bonuses, but they didn't remember them in court. I believe that kozlowski was telling the truth. The only vaguely criminal act was he and his pal took a bonus 11 months early to cover loans liberally taken from the company. Most of the other stuff such as the art in his apartment etc, was bought by other people. I do not believe that kozlowski himself engaged in purchasing shower curtains for his apartment. He would have been too busy for that. The company hired a decorating company and let them go to work is my guess, and THEY purchased the items for his apartment. The directors clearly didn't earn their money and as this article claims, the company continues to reap the rewards of kozlowski's work. The DA was overzealous and put a man in prison for possibly 30 years!!!! The early bonus would have been made available to the directors. If they had read this, they would have seen it (this is standard information made available to directors). I sure hope that he is released after doing the minimum time. He was guilty of bad taste and bending the rules, but he didn't "steal" anything. He took loans and paid them back. He got bonuses. Thats not theft. If I were running a medium sized company when he is released, I'd grab him up quickly due to his ability....but only if he does minimum time. If he has to do the full time, he'll be too old. They might as well have sentanced him to death. Death for taking a bonus early....
7-26-2009 @ 12:45PM
klivolsi said...
If Mr. Kozlowskik were running for any office I would be the first to vote him in! He is smart, wise and a builder of empires....He could certainly direct this country better than the current chief of staff and most certainly beyond what many others have achieved...and there is no reason why the DA's 'notes' were kept from Mr. Koslowski and his attorney.....Mr. Koslowski will come out stronger and more powerful... and many people owe him....
Karen
8-11-2009 @ 9:39PM
davidhoes said...
All of your tears for poor Mr. Koslowski are touching. However, I was a poor simple shareholder from the late 90's to the early 00's, and I lost quite a bit of money on TYCO. And yes, I waited until after the break-up to sell.
I realize that the interests of shareholders are far behind those of top management, but I hope you will feel some compassion for those of us who did not get nice shower curtains.