7. 2 Improving Ethical Behavior to Prevent Corruption as Leadership Power Abuse

Author : H. Lutfi Mulyadi, M.Sc 

Source :     

https://www.cbn.co.za/news/services/tyco-international-tyc-to-sell-south-african-security-business-in-us-140m-deal/

National television broadcasted criminal news on September 12, 2002 with the case of Mark H. Swartz (The former chief financial officer (CFO)) and L. Dennis Kozlowski (The former Chief executive officer (CEO)) who misappropriated more than $170 from the Tyco International. They got accusation of stealing more than $430 million through criminal deception of the Tyco stock sales and the hide of the real information to the shareholder. More than thirty numbers of crimes charged to both of them are the corruption of enterprise, grand robbery, and business record falsification. Mark A. Belnick, the company’s general counsel, easily concealed personal loan of $14 million. This scandal is one of the worst early 2000s criminal cases because of the fact that long after the initial arrest, the case is still being filed with serious lawsuit and charges (Boostrom at all, 2011).

This case is a real corruption as a result of leadership power abuse and unethical behavior of the company’s stakeholder.  The historical reason for this corruption case started from the rise of Kozlowki’s power. As time goes on making him the highest paid CEO in the second place, the company's economically disastrous condition was imminent. His power abuse are based on the fact that corporate structure decentralization even makes the boards of directors difficult to monitor the finance and dealings of the company in more effective ways. Moreover, Kozlowki’s unethical behavior was clearly indicated by his business aggression, luxurious way and style of life, violent confrontation with the more previously prudential CEO, and his policy to kick out critical employees who do not agree with the company’s activities.       

Thinking about the above ethical violation in the Tyco international company, Leaders are to held at a very high moral standard because of the importance and benefits for them and the people around them. Those benefits are Non-negative habits for making good feeling of the people in such a way that they feel under direction of a non-corrupt leader inspiring their performance to the highest level of standard, very good image and charisma for being a leading figure whose words and daily activities are used as a role model, preventing scandals by prevention of criminal and unmoral finance and dealings which damage the image of the organization and switch the costumer to other competitors in business cases, making loyal both the costumers and the employees to the company, and improving good emotion and feeling of all people due to the fact that highly ethical leaders are antitoxins for healthy personal and organizational relation (Kuligowski, 2020).                

In the case of any ethical violation, we are to put the changes to address the best ethical conduct resolving the ethical issues. For accounting corruption case, the steps to resolve are setting strongly standardized and legitimate laws and policies of anti-corruption with governmental standard, encouraging internal report within the board of directors and shareholder, external report to all customers, getting external monitoring from related governmental institution and independent corruption watch (ICW) organization, and transparent in all kinds of activities (Hatter, 2017). In the case of non - transparent works of the Tyco stakeholders, to rebuild the trust of all investors, the highest authority replaced the criminal stakeholders and 90 % of the previous staffs in the headquarters. Tyco International also wrote special guide and the best ethical conduct having the length of 32 pages available in very diverse languages for all employees with different countries and cultures (Boostrom at all, 2011).       

References

Boostrom, R., Fraedrich, J., Ferrell, O., & Ferrel, L. (2011). Tyco International : Leadership Crisis. Retrieved December 31, 2020, from https://danielsethics.mgt.unm.edu/pdf/Tyco%20Case.pdf

Kuligowski, K. (2020, October 13). 7 Things You Should Do to Be an Ethical Leader. Retrieved December 31, 2020, from https://www.businessnewsdaily.com/5537-how-to-be-ethical-leader.html

Hatter, K. (2017, November 21). How to Prevent Accounting Corruption. Retrieved December 31, 2020, from https://smallbusiness.chron.com/prevent-accounting-corruption-38901.html