Business Ethics: Tyco’s Redemption New Hampshire Ethics Studies Funded

In the universe of botched business ethics, there was probably no bigger offender than New Hampshire based Tyco and its former CEO Dennis Kozlowski and his former CFO Mark Swartz.

It is difficult to imagine a more unethical duo than Kozlowski and Swartz; in all, there were nearly 30 counts filed against them in 2002, after it was shown they had taken more than $120 million in unauthorized bonuses, in addition to committing an entire library’s worth of fraudulent ethical practices.  There was no subtlety as to their ethical indiscretions; nothing hidden in its excesses, unless one calls Kozlowski’s acquisition of a $6,000 shower curtain, a $15,000 umbrella stand and paintings by Monet and Renoir subtle.

Their high rolling life-styles led both of them to jail cells where their standard, prison jumpsuits replaced fancy business suits where they initially faced 25 year prison sentences.

Did They Learn?

Did they learn anything? It is always a question I ask myself as I scan over an audience. I don’t always know. However I do know that business students in New Hampshire are going to be learning something – big time.

Tyco’s headquarters in the United States is Nashua, New Hampshire. As part of the company’s penalty phase for abusing shareholder funds, Tyco was ordered by the State of New Hampshire Bureau of Securities Regulation to dole out a little more than $7 million dollars to fund ethics programs at Saint Anselm College and the University of New Hampshire. It is sort of like the fresh ethical cherry plunked atop the stale Tyco cupcake.

At the University of New Hampshire, the faculty will start a Responsible Governance and Sustainable Citizenship Project and Saint Anselm will launch an Ethics in Governance and Investor Education Program complete with an online program.

But Did They Learn Anything?

New Hampshire’s Secretary of State William “Bill” Gardner, is being quoted all over the internet as saying that business schools need to teach their students ethics because they will be the future business leaders of this nation.

“The establishment of these programs is a major step to accomplishing that goal,” he is quoted as saying.

If I could, I would like to give Mr. Gardner a gold medal. Like Mr. Gardner, I am sure; I often wonder who is teaching business school students their sense of ethics.

It is not a matter of the executives lacking intelligence.

For example Kozlowski attended Seton Hall University, a Catholic University where ethics are supposedly drummed into students.  Swartz attended the University of California where, I am sure, some professor must have, over his college experience, uttered the word, “ethics.”

For both, it did not work. In fact, for many a budding captain of industry, it has not worked at all.

My conclusion is that well intentioned professors of all stripes, in teaching from case studies, ponderous text books, downloaded Kindle workbooks and the like, have failed to incorporate one critical element into their lectures: real life.

It is said that that Dennis Kozlowski, a man who once threw private parties in Sardinia on shareholder money, quickly became a model prisoner. They said he helped other prisoners gain their high school equivalency credentials. He was such a model prisoner he was released early (after 8-1/2 years) to a half-way house. Having been carted off in handcuffs myself, I will tell you that spending just a single night in jail is a slap in the face that no amount of excess can ever fully erase. It is amazing what a dose of real life can do. I just hope it stuck.

I also hope students in New Hampshire and across the nation understand that Koslowski and Swartz were no heroes. They were buffoons.

It is a shame that some men and women will continue to flaunt the law and end up where Koslowski and Swartz have spent the last several years of their lives. In a sense, they are the true-life professors of ethics. They embody what stuffy professors cannot adequately convey.

If either man is ever called upon to lecture, chances are they will explain that despite all of those years of excess nothing ever truly makes up for the fact that for part of their adult lives their rooms were jail cells. Even if they forget the jail cell part, they cannot escape the internet; a quick search by any student in one of the ethics programs will reveal words such as “criminal” associated with each name.

For those descriptors, the ethical failures will be life-long.

YOUR COMMENTS ARE WELCOME!