A Corporate Looter Becomes Board Chair—Your Thoughts?

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February 9, 2016; ABC News


Retraction

In the following newswire, NPQ discussed the finances of the Fortune Society as being in trouble based on our misreading of its financial information on GuideStar. The information reflected there for 2014 was based on an audit of a six-month, rather than a 12-month period. Thus, our characterization of the Fortune Society as being in financial trouble was unsubstantiated, and NPQ completely retracts that aspect of this story.


At the risk of seeming uncharitable…

In 2012, NPQ wrote that ex-Tyco International CEO L. Dennis Kozlowski, convicted in 2005 of looting the securities corporation he headed of nearly $100 million, was setting up shop as a nonprofit financial consultant. Now, he has been elected the board chairman of the Fortune Society, an organization that helps former prisoners reintegrate into society. The Society’s commitment to employing and depending on ex-offenders is only to be admired, but we do have concerns in this particular case.

Kozlowski distinguished himself among his corporate fraudster colleagues with his own particular brand of over-the-top conspicuous consumption, including a $2 million toga party he threw on Sardinia in celebration of his wife’s birthday featuring an ice sculpture of Michelangelo’s David urinating vodka. His $6000 shower curtain is famous all on its own.

In 2013, when he was released, Catherine S. Neal wrote one of many let’s-let-bygones-be-bygones articles that almost appear to have been generated by a PR firm, they are so similar to one another. Hers was for Forbes, and she muses:

So what’s next for Dennis Kozlowski? There’s really no chance he’ll reoffend. Let’s face it—he’ll never again be in a position to wrongfully take compensation from a publicly traded corporation. As a parolee, his life and activities will be restricted for a while. One of the requirements of his parole will be finding and keeping a job. So what will he do? Most people look for a job where they can use their prior experience. But Kozlowski will never again be a corporate executive. Clearly, the former CEO has valuable skills, but his character has been so severely damaged by the media for more than a decade, it’s going to be difficult for him to rehabilitate his image and move forward.

Well, apparently Ms. Neal spoke too soon. I know that nonprofits are not considered to be part of the real world, but is this not a position of trust? The $11 million the organization has in assets pales, of course, to what he managed to squander at TYCO—but really?

Don’t get me wrong, I am all for everyone getting a second chance to do right, or even a third, but placing a corporate looter at the head of your nonprofit board is too much even for me, and he should have thought better of taking the position, even for reasons of organizational reputation.—Ruth McCambridge