Tyco exec questioned about loans

NEW YORK — Prosecutors Wednesday peppered Mark H. Swartz, Tyco International Ltd.’s former chief financial officer, with questions about his use of internal loan programs as they began cross-examining him.

In their initial questioning, prosecutors focused on Swartz’s understanding of the proper usage of the conglomerate’s so-called Key Employee Loan Program and its relocation programs.

The government has claimed that Swartz and L. Dennis Kozlowski, Tyco’s former chief executive, misused the relocation program to buy second homes and improperly used the KELP as a personal line of credit, rather than for its original purpose of loaning money to executives to cover taxes on the vesting of shares.

“(An executive) could borrow that money for any purpose he wished?” Assistant District Attorney Owen Heimer asked, regarding KELP.

“That’s correct,” Swartz said.

After Swartz said the money could be used for car or jewelry purchases or to pay school tuition, Heimer asked: “There was no restriction?”

“That’s correct,” Swartz said.

Swartz, 44 years old, and Kozlowski, 58, are on trial in New York State Supreme Court, facing charges of grand larceny, securities fraud and other crimes in connection with giant bonuses and other compensation they received while working as Tyco’s top executives.