By Nick Leeson Wednesday, 29 January 2014

Kozlowski: victim or villain?

BOOKS: Convicted of corporate fraud, the boss of US firm Tyco went to jail for nine years. But Catherine Neal's account of his deeds made reviewer Nick Leeson think twice about his guilt.

I have to admit that I approached reviewing this book with some trepidation. I certainly do not have a morbid fascination with financial scandal and tend to fast forward to my own conclusions fairly quickly.

I'm also quite opinionated, but I tried to approach the story of former Tyco International CEO Dennis Kozlowksi, who was jailed for fraud in 2005, in a more reasoned and rational manner than I normally would and not jump to conclusions.

Initially, I had him down as guilty, but now I don't think he is, although I am undecided as to whether or not he is completely exonerated.

He had been convicted of corporate fraud at the electronics, healthcare, engineering and security business to the tune of over $100m and received an eight to 25-year jail term. He was released on parole last month. Tyco has been bundled together with Enron, Worldcom, Arthur Andersen, Global Crossing, but that is unfair as it continues to trade and prosper, admittedly in various guises.

Catherine Neal seems to have had unrivalled access to Kozlowski. Initially, I found her approach a bit disconcerting and overly sympathetic to his cause, but, as the book progresses, it rationalises itself out to a definitive slant on what she believes is the truth.

Her research took more than two and a half years, so this is far from an impulsive work, as some books are when they are rushed towards publication. My initial knowledge of the story being limited, at times I was left questioning if there had been a serious miscarriage of justice, or wondering if the author was simply deluded. But I ended up opting, like the author, for the former.

Kweku Adeboli, Jerome Kerviel, Leeson et al are all guilty as charged, Kozlowski - I am not so sure.

Having spent time in prison for my own involvement in the financial scandal that led to the collapse of Barings Bank, I am not easily convinced of someone's innocence. I knew all the time what I was doing and, most importantly, that I shouldn't be doing it, even though there was no real criminal intent at first.

I spent a total of 52 months in prison - considerably less than Kozlowski - and lost count of the number of inmates who professed their innocence. None was, but, thanks to the clever way in which the author lays out the history of Kozlowski's rise and fall and the articulate way in which she examines the charges against him, this book suggests that there is a very real chance he is both innocent and a victim.

Kozlowski actively courted the media in his heyday. Somebody should have advised him to be careful what he wished for. Much of the sensationalist reporting around the time of his trial turned the tide even more strongly against him and contributed to his heavy sentence.

The $6,000 shower curtain, the works of art and the Roman orgy-themed party in Sardinia are now the stuff of legend, but they made Kozlowski cannon fodder for the nation's media.

His board of directors, like many before them, developed amnesia and his fate, thanks to a lack of accurate record keeping, was at the whim of the judge - something that should never have been the case.

The story contains repeated lessons from both a corporate and personal perspective. For the decade that Tyco surpassed expectations, the board of directors became increasingly hands-off about governance and oversight, and paid little attention to corporate formalities.

Kozlowski himself had weaknesses that he did not recognise, and which contributed to his downfall: he paid scant regard to details, and the way that he delegated responsibility for them left him exceedingly vulnerable.

In a recent report in an Australian newspaper, I was described as living the dream by the age of 27, only to have lost it all by the age of 28. There is a certain amount of poetic licence in that statement, but Kozlowski really did have it all before suffering the humiliation of a most dramatic riches to rags story.

Kozlowski is still revered by his peers and it is amazing that his first parole application was turned down, before he succeeded this time round. He has said that he hankers after the simple things in life, like walking on the beach and seeing a dog, but I have the feeling that there are a still a few chapters of this colourful man's life yet to come.

If Neal is to be believed, 'Dennis Kozlowski was charged with and convicted of robbing a bank when the money was still in the vault.'

Nick Leeson is the infamous trader whose unchecked risk-taking caused the collapse of Barings Bank. He is now a conference keynote and after-dinner speaker. www.nickleeson.com.

BOOK

Taking Down the Lion

Catherine S Neal

Palgrave Macmillan, £18.89.

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