Tyco Paid Manager of Execs’ Finances

A former Tyco International Ltd. employee Monday told a New York jury that she ran a three-person department that managed the personal affairs of former Chief Executive L. Dennis Kozlowski and ex-Chief Financial Officer Mark Swartz.

Kathleen McRae, testifying at their trial on fraud charges, said her job as director of the executive treasury involved various duties, including tracking the cattle inventory at Swartz’s Virginia farm and updating Kozlowski on the status of his divorce case.

“Whatever I was asked to do, I tried to do it,” McRae said. “What was great about my job was that I never knew what I was going to do during the day.”

McRae is the second former Tyco employee in a week to testify to performing personal work for Kozlowski and Swartz while on the company’s payroll. Last week, former Tyco construction director John Taylor told jurors the two men asked him to “look in” on a number of building projects at homes they owned.

Kozlowski and Swartz are accused of raiding company loan programs to steal $170 million, using the money to buy homes, yachts, jewelry and artwork. They also are accused of making $430 million from sales of Tyco stock whose price they manipulated by misleading investors.

McRae told jurors she was working in Tyco’s finance department managing corporate accounts -- including tracking corporate loan programs the two men are accused of corrupting -- when Swartz approached her in 1998 about a new job. She joined Tyco in 1985 as an $18,000-a-year accounting clerk.

McRae said Swartz told her that “he and Mr. Kozlowski were both very busy gentlemen and did not have time to make sure their light bill got paid or their phone bill got paid.”

McRae said she took care of their household bills, reconciled their bank and brokerage accounts, tracked their partnership and trust accounts and kept insurance policies updated. Eventually, the job demanded “100%” of her time, she said.

McRae said she had to hire two more people in November 2000 to help her handle the growing workload. “Their lives were more complicated,” she said.

McRae said she paid bills for Kozlowski’s girlfriend, Karen Mayo, whom he later married, and wired money to his ex-wife, Angie, after their divorce.

McRae said Kozlowski and Swartz initially paid some of her salary when her job was created in 1998.

In 2000, they stopped reimbursing the company after Kozlowski told her Tyco’s board had approved the arrangement.

McRae said that when she left Tyco in June 2002, her salary was $100,000 a year, with a bonus of $60,000. Tyco also forgave a mortgage loan of $225,000 she got when she moved to Boca Raton, Fla., in 1998 as part of the company’s relocation, she said.