Why?

That's the question on everyone's lips in the wake of the indictment of Tyco's former superstar chief executive, L. Dennis Kozlowski, on charges of evading $1 million in sales taxes on paintings he bought. Why would a man who earned $125 million last year and owns planes, yachts and multimillion-dollar homes risk it all to save a million bucks--probably about what he spends each year to keep his fleet of Harley-Davidson motorcycles running?

After immersing myself in Kozlowski's business history, I have a different question: Why is anyone surprised? The alleged behavior that has him facing prison is exactly the behavior that was the hallmark of his run as Tyco's swashbuckling, take-no-prisoners CEO. Why is it, then, so shocking to learn that Kozlowski is now accused of being a small-time con artist to avoid paying taxes on $13.2 million worth of paintings wryly described by the New York Times as "second-tier work by big-name artists"? This, after all, is the same guy who, in 1997, moved his company's nominal headquarters to Bermuda to--you got it--avoid paying taxes on billions in overseas earnings. Apparently, life imitates business when it comes to the art of cutting corners.

According to the less-than-flattering portrait painted by prosecutors, Kozlowski bought the high-end paintings--which included a Monet and a Renoir--for his $18-million apartment on Fifth Avenue, but had them routed through Tyco's offices in New Hampshire so he wouldn't have to pay New York City's 8.25% sales tax. In one case, the cooperative art dealers allegedly sent them directly to Kozlowski's apartment while shipping empty crates to New Hampshire.

Adding to this murky moral landscape, it turns out that Kozlowski funded some art purchases with no-interest loans drawn from a Tyco program designed to help employees buy company stock. Perhaps if he had made do with a few LeRoy Neiman sports scenes and that perennial classic, "Dogs Playing Poker," he could have avoided downsizing employees and raiding their stock fund.

It was maneuvers like these that, until his fall from grace, had earned Kozlowski the admiration of Wall Street and a reputation as America's "most aggressive CEO"--the title of a 2001 cover story in Business Week. The magazine went so far as to laud Kozlowski, an accountant by trade, for his "willingness to test the limits of acceptable accounting and tax strategies." It took the Enron collapse for Wall Street to stop applauding and start asking questions. The disturbing answers caused stock in Tyco--a conglomerate whose products include electronic parts, telecom systems, medical equipment and burglar alarms--to lose three-quarters of its value this year, costing investors $95 billion.

Somewhere along the way, Kozlowski, the son of a New Jersey cop, began to see himself and the company he led as one and the same. Like so many other CEOs grabbing today's headlines, Kozlowski adopted the outlook of France's Louis XIV, who notoriously proclaimed: "L'etat, c'est moi"--"I am the state."

If King Louis was Kozlowski's historical ancestor, convicted felon Leona Helmsley--who once declared that only the little people pay taxes--was his spiritual godmother. Dennis the Public Menace's progress from tax aversion to tax evasion began with his loophole-exploiting business practices and ended with his defrauding the public out of tax money.

Last month, prosecutors breathing down his neck, Kozlowski gave the commencement address at New Hampshire's St. Anselm College. Freud would have had a field day with his message to the Class of 2002. "You will be confronted," he warned them, "with questions every day that test your morals. Think carefully, and for your sake, do the right thing, not the easy thing." You could almost see Kozlowski's superego and id duking it out under his mortarboard.

We've spawned a corporate culture that has made demigods out of those doing the easy thing. Turning it around will take more than noble commencement speeches. It will take throwing a few of those demigods in jail. I can picture it now: "Still Life In Prison Stripes."

Copyright 2002 Los Angeles Times

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