Tyco Corruption Under Kozlowski

Dennis Kozlowski, while pillaging Tyco and its shareholders, taught a valuable lesson about leadership and the expectations of ethical behavior, responsibility, and accountability.  Tyco’s culture of corruption and lack of governance during the Kozlowski reign enabled him to exert his power to not only grow the company, but to abuse his power and grow himself and his constituents, the board of directors.  The central argument is that leaders must watch for corruption and maintain their integrity.  Corruption existed at Tyco, but after Kozlowski’s rampant abuse of leadership, Tyco learned how to govern itself. 

The Tyco Corruption 

Dennis Kozlowski came into Tyco as an accountant in 1975 under another extravagant CEO, Joseph Gaziano, and worked up to CEO in 1992 (Thanos, 2015, p.2).  As CEO, he built his own extravagant kingdom at Tyco, went on expensive vacations, abused the employee loan program, and sold $575 million in stock in insider trading (Crawford, 2005).  He was an incessant reveler with extremely expensive houses (Thanos, 2015, p.2). Kozlowski was finally caught and investigated after tax evasion when he dodged paying import tax on $14 million of artwork, which created many more investigations at Tyco.  He was convicted in 2005 of stealing nearly $100 million from Tyco and sentenced to 25 years in prison (Kaplan, 2015).  Kozlowski is known for being unethical and excessive, having little regard for Tyco’s stakeholders (Thanos, 2015, p.4). 

Despite his extravagance, during his reign at Tyco, he was known as a “ruthless cost cutter” to Tyco (Kaplan, 2015). Called “Deal-a-Day Dennis” by some (Kaplan, 2015), Dennis Kozlowski was known as being an extremely aggressive CEO.  Growing revenue through mergers and acquisitions, he grew Tyco from $3 billion in all the way to $40 billion in annual revenue before the split (Daniel Funds Ethics Institute, 2011, p.7). 

Abuse of Leadership Power, Unethical Behavior, and Corruption 

Kozlowski hand-picked his board of directors, many of which had troubling red flags of corruption, such as Richard Bodman investing on behalf of Kozlowski, Frank Walsh helping Kozlowski to do the merger acquisition of CIT without board approval, Walsh held controlling ownership in firms that received millions of dollars for leasing aircraft to Tyco, Stephen Foss received over $750,000 for providing aircraft and pilot services, and Lord Michael Ashcroft used $2.5 million of Tyco’s funds to buy a house (Daniel Funds Ethics Institute, 2011, p.3). 

Kozlowski lied to the public about the austerity of Tyco with humble offices in New Hampshire while he secretly moved the executive offices and apartments to a luxurious headquarters in Manhattan. (Daniel Funds Ethics Institute, 2011, p.4). 

The ADT Bermuda acquisition enabled an offshore tax haven for Kozlowski and Tyco (Daniel Funds Ethics Institute, 2011, p.3).  Kozlowski manipulated external firm Merrill Lynch to replace the analyst in order to change their position on Tyco stock.  Through all of this, he became the second highest-paid CEO at the time (Daniel Funds Ethics Institute, 2011, p.4).  

Between the corruption at the board, the unethical behavior regarding acquisitions, and lying to the public about the perks for executives (and the existence of the Manhattan office), Tyco’s upper management had a culture of corruption, abuse of power, and making unethical decisions. 

Leaders:  Held to a High Moral Standard 

Leaders set the examples and standard for the rest of the organization.  Leaders are in a position of power and are watche and highly visible.  They influence people and processes, and they create change (Workplace Coach, 2013). Jim Collins, author of Good to Great discusses “Level V Leadership” (the ultimate level) as being humble, responsible and accountable (Herring, 2018).  People feel outraged when leaders do not live up to the higher ethical expectations.  Leaders should live by a code of conduct, be committed, be judged by their actions, so they absolutely need to live up to a higher moral standard (Daskal, n.d.).  Leaders are put up on a pedestal and are role models for not only their company and their corporate culture, but for the public. 

Tyco’s Improvements & Changes 

Tyco replaced Kozlowski with Edward Breen as CEO and crated a new management team.  Shareholders elected a new board of directors as well, removing the corruption of the previous board.  They also replaced ninety percent of the headquarters staff.  Tyco also hired Eric Pillmore as Vice President of Corporate Governance to create an ethics program and created the Tyco Guide to Ethical Conduct (Daniel Funds Ethics Institute, 2011, p.6).  Tyco also created an anonymous whistleblower report which they publish quarterly and created a confidential hotline called ConcernLine (Daniel Funds Ethics Institute, 2011, p.6). 

As a result of this aggressive ethical turnaround, Tyco was able to stay successful, make great change, and keep revenues high at $40 million before the company split into four separate companies.  Tyco joined the World Economic Forum Partnering Against Corruption Initiative in 2010 in order to combat bribery as well, in its journey to improve its reputation (Daniel Funds Ethics Institute, 2011, p.7). 


Leaders are under scrutiny and have the biggest and most visible impact on their company and its culture.  As a result, leaders must strive to be ethical, responsible, and accountable.  Held to a higher moral standard, leaders are influential to many, so need to be committed to a higher morality.  Kozlowski is an example of what happens when leaders have no moral compass and are given the power to indulge in extravagance at the expense of their company, their shareholders, and the public. 



Crawford, K. (2005, June 21). Ex-Tyco CEO Kozlowski found guilty. https://money.cnn.com/2005/06/17/news/newsmakers/tyco_trialoutcome/index.htm 

Daniel Funds Ethics Institute. (2011). Tyco International: Leadership crisis. The University of Mississippi. https://danielsethics.mgt.unm.edu/pdf/Tyco%20Case.pdf 

Daskal, L. (n.d.). Why You Need to Lead With a Higher Standard to Succeed. https://www.lollydaskal.com/leadership/need-lead-higher-standard-succeed/ 

Herring, H. (2018, January 16). Should Leaders be Held to a Higher Ethical Standard? https://ejewishphilanthropy.com/should-leaders-be-held-to-a-higher-ethical-standard/ 

Kaplan, D. (2015, March 1). Tyco’s ‘Piggy,’ Out of Prison and Living Small. https://www.nytimes.com/2015/03/02/business/dealbook/dennis-kozlowskis-path-from-infamy-to-obscurity.html 

Nguyen, T. (2021, May 26). Tyco International:  Leadership Crisis. https://www.linkedin.com/pulse/tyco-international-leadership-crisis-trinh-quoc-nguyen/ 

Thanos, L. (2015) Tyco International Ltd. Case Study: The Implications of Unethical Behavior. Academic Leadership Journal in Student Research: Vol. 3 , Article 7. Retrieved from https://scholars.fhsu.edu/cgi/viewcontent.cgi?article=1031&context=aljsr 

Workplace Coach. (2013, March 6). The Importance of Ethical Leadership. https://www.theworkplacecoach.com/the-importance-of-ethical-leadership/ 

Published by Art Ocain

I am a DevOps advocate, not because I am a developer (I’m not), but because of the cultural shift it represents and the agility it gains. I am also a fan of the theory of constraints and applying constraint management to all areas of business: sales, finance, planning, billing, and all areas of operations. My speaking: I have done a lot of public speaking in my various roles over the years, including presentations at SBDC (Small Business Development Center) and Central PA Chamber of Commerce events as well as events that I have organized at MePush. My writing: I write a lot. Blog articles on the MePush site, press-releases for upcoming events to media contracts, posts on LinkedIn (https://www.linkedin.com/in/artocain/), presentations on Slideshare (https://www.slideshare.net/ArtOcain), posts on the Microsoft Tech Community, articles on Medium (https://medium.com/@artocain/), and posts on Quora (https://www.quora.com/profile/Art-Ocain-1). I am always looking for new places to write, as well. My certifications: ISACA Certified Information Security Manager (CISM), Certified Web Application Security Professional (CWASP), Certified Data Privacy Practitioner (CDPP), Cisco Certified Network Associate (CCNA), VMware Certified Professional (VCP-DCV), Microsoft Certified System Engineer (MCSE), Veeam Certified Engineer (VMCE), Microsoft 365 Security Administrator, Microsoft 365 Enterprise Administrator, Azure Administrator, Azure Security Administrator, Azure Architect, CompTIA Network+, CompTIA Security+, ITIL v4 Foundations, Certified ScrumMaster, Certified Scrum Product Owner, AWS Certified Cloud Practitioner See certification badges on Acclaim here: https://www.youracclaim.com/users/art-ocain/badges My experience: I have a lot of experience from developing a great company with great people and culture to spinning up an impressive DevOps practice and designing impressive solutions. I have been a project manager, a President, a COO, a CTO, and an incident response coordinator. From architecting cloud solutions down to the nitty-gritty of replacing hardware, I have done it all. When it comes to technical leadership, I am the go-to for many companies. I have grown businesses and built brands. I have been a coach and a mentor, developing the skills and careers of those in my company. I have formed and managed teams, and developed strong leaders and replaced myself within the company time and again as I evolved. See my experience on LinkedIn here: https://www.linkedin.com/in/artocain/

Leave a Reply

%d bloggers like this: