Make the Buck, Then Pass It

In this issue's Performance Review, Fast Company analyzes the opening defense arguments for L. Dennis Kozlowski and Frank Quattrone, the besieged chiefs of Tyco International and Credit Suisse First Boston's technology group, respectively. While the outcome of their trials still may be up in the air, the court cases raise important questions. Should CEOs and other chief executives be held accountable for the sins and ills of their organizations? Is top-level ignorance of breaches of the law ever a defense? Join Fast Company readers as members of the jury and make your voice heard.

Frank Quattrone strode into the federal court building in New York with his customary confidence. Dapper in gray tweed and a neatly cropped moustache, he waved and posed for the hurtling phalanx of photographers. Just another deal, man. As boss of Credit Suisse First Boston's technology group, Quattrone was one of the most powerful men on Wall Street. He launched public offerings for Amazon.com and Cisco. He practically minted money. People--important people--did as he said.

A block up Centre Street, by coincidence, former Tyco International chief L. Dennis Kozlowski was beginning his run at the New York State Supreme Court. A bald, imposing linebacker of a man bearing a weird resemblance to Mr. Clean, Kozlowski was to CEOs what Quattrone was to bankers: an alpha leader, a big swinging you-know-what. Through hundreds of acquisitions, Kozlowski took Tyco from inconsequential mishmash to $36 billion in sales.

Which is why we were all there, scrambling for gallery seats. These guys were kingpins, as rich and as powerful as they come--and then, according to the United States of America and the state of New York, respectively, they done wrong. Quattrone was charged with obstruction of justice for allegedly instructing coworkers to destroy documents that might have furthered an SEC investigation. As for Kozlowski, well, what wasn't he charged with? Essentially, Manhattan assistant district attorney Kenneth Chalifoux accused Tyco's former CEO (with former CFO Mark Swartz) of dipping into Tyco's corporate honey jar to the tune of $600 million. "The concepts are simple," Chalifoux said. "Lying, cheating, and stealing."

To which Quattrone and Kozlowski responded, through their attorneys--allow us to translate from the original legalese--It wasn't our fault. Other people called the shots. They knew the deal. Their defenses were less about innocence than about power. Suddenly, these big shots were desperate to show how little power they really had.

Their lawyers' opening statements made for telling codas to two years of alleged corruption, malfeasance, and all-around bad behavior. With these trials, America begins to formally reckon with its Era of Excess. And an awkward reckoning it is. Corporations paid execs big money because these people were, ostensibly, responsible. Yet here were lawyers telling us that responsibility was someone else's problem.

Quattrone, argued his lawyer John Keker, was just a cog in the vast machine that was Credit Suisse First Boston. "You are going to learn that what the lawyers told Quattrone this was about was a different part of the bank than the one that the email was addressed to," Keker said, then launching into a convoluted discussion of CSFB's structure that boiled down to this: It is a very big place. Keker's argument lacked both passion and clarity, relying intentionally or not on corporate speak. (Judge Richard Owen made clear his displeasure, rebuking or stopping Keker three times, which is a lot for an opening statement.)

Stephen Kaufman referred mistakenly (and tellingly?) to his client as Mr. Tyco rather than Mr. Kozlowski. But he also described Koz's appreciation for, shall we say, a broad-brush management style. Notify Tyco's directors of relocation bonuses? Doesn't some intern take care of that? Kozlowski "wasn't a detail person," Kaufman said, "but a concept individual."

Responding to the state's attack on his client and Swartz as skilled deceivers who secretly approved special bonuses for themselves, Kaufman went for emotion. The payments, he said, were common knowledge among other employees, Tyco's outside auditors, and others. Moreover, "the board was a cheerleading squad for Dennis," he argued. "If [Kozlowski and Swartz] wanted to cheat and steal," he implored, voice cracking, "would they do it openly and visibly?"

Dunno. But after a decade in which top executives happily took credit for anything and everything, this defense--that others said it was okay and that the boss's say-so didn't mean much--rang hollow. So did the attempt to paint the trials as witch-hunts. "You are sitting in judgment of a man, not a symbol," cautioned Keker. "This case is not WorldCom or Enron," said Kaufman.