Tyco International Business Case Study: Tyco International Case

Key Subjects:

• Sherron Watkins

Key Objects:

• Kenneth Lay, Andy Fastow, Jeff Skilling, investors creditors and other employees

Properties:

• Watkins knew about the fraudulent accounting practices being followed

• Fastow, Lay and Skilling were all involved in these fraudulent practices and were well aware of the repercussions

Events:

• Fastow transferred the losses of “raptors “which was a shell company to Enron but no profits were passed on

• Watkins found this in one of the accounting sheets and after a lot of contemplation reported the same to the CEO Lay

• Too late in reporting and the firm had to file for bankruptcy

Legal: The management of Enron was well knowingly carrying out an accounting fraud

Ethical: Running of shell companies like raptors for personal gains and

Once she realized that this problem was deep rooted within the organization and even the top management was involved she should have gone to the higher external authorities.

Tyco International was a blue-chip Swiss security systems company, founded in 1960. The company’s former CEO Dennis Kozlowski and former CFO Mark Swartz were convicted of stealing $150 million and falsely inflating the company’s income by $500 million in 2002.

Fastow and Lay were unethical and immoral in the actions they had undertaken. In this case. Whereas, Watkins should have adhered to the professional code of conducts according to which, it was her moral duty to report the wrong doings .However she did not go the whole way in reporting the case to the government. Hence her ethical and moral behavior is also questionable

Accounting Fraud in Enron

• Controllable variables (X): Accurate bookkeeping and in fair business practices Uncontrollable variables (Y): Financial impact on the