April 28, 2005 in Business

Kozlowski takes stand

Associated Press
 
Associated Press photo

Former Tyco International Ltd. chief L. Dennis Kozlowski exits Manhattan State Supreme Court with his wife Karen, on Wednesday in New York. Kozlowski took the witness stand today and denied he ever abused company loan programs or received a bonus to which he was not entitled.
(Full-size photo)

NEW YORK — Former Tyco International Ltd. chief L. Dennis Kozlowski took the witness stand Wednesday and denied he ever abused company loan programs or received a bonus to which he was not entitled.

Testifying in his own defense at his retrial on larceny charges — he did not take the stand at the first trial — Kozlowski said his intent was always to grow the company, never to commit a crime.

Still, asked by his lead lawyer why a $25 million bonus from the company did not appear on his 1999 tax return, Kozlowski said he could not explain why.

“I just was not thinking when I signed my tax return that I had a $25 million loan forgiveness,” he said. “Year in and year out at Tyco, my tax returns for the most part had been correct. I didn’t pick up on it.”

The $25 million forgiveness of loans from the company had come as part of $62 million in bonuses Kozlowski received at the time. Prosecutors say it should have been reported as income.

Kozlowski, 58, was the first defense witness in the trial of Kozlowski and former chief financial officer Mark H. Swartz, who are accused of looting the conglomerate of $600 million.

They are accused of stealing $170 million from Tyco by hiding unauthorized pay and bonuses and by abusing company loan programs and making $430 million by inflating the value of Tyco stock by lying about the company’s finances.

The defendants are being retried in Manhattan’s state Supreme Court on charges of grand larceny, falsifying business records and violating state business laws. Their first trial ended in a mistrial in April 2004 after a juror received menacing messages during deliberations as a result of her name being published.

The press customarily does not name jurors during a trial.

Kozlowski, whose appearance as a witness was something of a surprise, began by answering a series of questions posed by his lawyer, Stephen Kaufman. Had he ever taken a bonus to which he was not entitled? Did he abuse Tyco’s loan and relocation programs?

Kozlowski replied “no” to each question.

Swartz was the only defense witness in the first trial. On the witness stand for nine days, he explained in detail Tyco’s compensation plans, his and Kozlowski’s relations with the board of directors and actions that prosecutors said were illegal.

On Tuesday, after the prosecution rested, defense lawyers suggested that Kozlowski could testify, but they insisted no decision had been made.

Tyco, which has about 250,000 employees and $36 billion in annual revenue, makes electronics and medical supplies and owns the ADT home security business. Nominally based in Bermuda, its operations headquarters are in West Windsor, N.J.

© Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Get stories like this in a free daily email


Please keep it civil. Don't post comments that are obscene, defamatory, threatening, off-topic, an infringement of copyright or an invasion of privacy. Read our forum standards and community guidelines.

You must be logged in to post comments. Please log in here or click the comment box below for options.

comments powered by Disqus