Kevin Cato MGT-207
Research Report
Fiduciary- Mark Swartz (Chief Financial Officer), Mark Belnick (General Counsel)
Tyco International, Ltd.
1. Both Swartz and Belnick acted socially irresponsible. They both acted for their benefit to the detriment of the other stakeholders in the organization (pg28). Swartz was given a $28 million bonus from the CEO without disclosing it to the board. Swartz manipulated two corporate loan programs for his own personal gain(pg5). Swartz and Belnick failed to disclose multi-million dollar low interest and interest-free loans they which they did not repay to the company (pg5).
2. Both Swartz and Belnick acted to maximize their own personal profit but they were not seeking to maximize profits for the company. They were charged with stealing $170 million in company loans which is in itself contradictory to maximizing profits (pg5). In addition to stealing money through company loans, they also made it look like they were generating revenue obtaining $430 million through fraudulent sales of securities (pg5). Based on the stakeholder interest theory (pg28) they used funds invested by employees and other stakeholders’ into programs designed to benefit the stakeholders as a whole for their own personal gain(pg5).
3. The stakeholder interest theory is the fiduciary considering other stakeholders’ interest in their decisions. Belnick did not act with stakeholders’ interests, but Swartz in particular did not consider stakeholders’ interests in his actions. Swartz stole money from loans in the company name as well as making fraudulent transactions which gave the appearance of making a profit (pg5). Belnick also stole money to a lesser extent through personal loans disguised as loans for the company. Belnick was also charged with falsifying business records (pg5) to cover up their actions to give stakeholders a false sense of security that they were profiting when in reality they were not.
4. N/A
5. The Sarbanes-Oxley act set up a system of checks and balances in terms of corporate governance, auditing supervision and responsible accounting (pg9).The Public