Ex-Tyco CEO tells jury his perks OK

By Kevin McCoy
USA Today

NEW YORK — Former Tyco CEO Dennis Kozlowski took the witness stand in the retrial of his grand larceny case yesterday and insisted that millions of dollars in payments and perks he received from the firm had been properly authorized and disclosed.

After opting not to testify at his initial prosecution, which ended in a mistrial, Kozlowski rolled the legal dice with a decision to offer jurors explanations for his millions in salary, bonuses and expenses — including the $6,000 shower curtain in his $18 million Manhattan apartment and the $2 million Sardinia celebration the firm helped fund for his wife's birthday.

Kozlowski testified he had virtually unlimited individual authority over Tyco expenses and could approve up to $200 million in corporate acquisitions without approval from the firm's board of directors. Answering questions from defense lawyer Stephen Kaufman, who used the surprise testimony to address specific expenses prosecutors have alleged to be improper, he said:

• Although "an awful lot of money was spent" on the Manhattan apartment, he "did not" select the shower curtain, the $15,000 umbrella stand or other lavish furnishings that graced the Fifth Avenue unit. Instead, he said those decisions were left to a decorator.

• The Sardinia event was designed as "a combination birthday party and perk trip" to reward Tyco executives for hard work. He said he paid roughly half the cost, and participated in at least two corporate meetings on the island as other Tyco employees mingled and chatted about corporate events.

• The company properly paid and disclosed a controversial $20 million fee he authorized for then-Tyco director Frank Walsh for his role in the company's acquisition of corporate finance firm CIT.

"Did you intend to steal the money?" Kaufman asked.

"Absolutely not," Kozlowski testified.

The testimony marked the opening defense presentation in a Manhattan state Supreme Court proceeding in which Kozlowski, 58, and former Tyco CFO Mark Swartz, 44, stand accused of looting $600 million from Tyco. They allegedly pocketed unauthorized salary, loans and bonuses made possible in part by what prosecutors said were false statements the defendants used to inflate Tyco's stock price.

The first case ended in a 2004 mistrial after one juror said she had received threatening messages.

Kozlowski's decision to take the stand also means prosecutors will get an opportunity to question him about the money he got from Tyco.