Ex-Tyco Director Says He Didn’t Scrutinize Filings

A former Tyco International Ltd. director told a New York jury Tuesday that he didn’t closely scrutinize company public filings, including annual proxy statements to investors, saying he “relied on the people” who prepared them.

“I did not examine them line by line,” former board member Stephen Foss told jurors Tuesday at the fraud trial of former Chief Executive L. Dennis Kozlowski and ex-Chief Financial Officer Mark Swartz.

Foss’ credibility was repeatedly attacked during cross-examination by lawyers for Kozlowski and Swartz, who are accused of looting Tyco of more than $600 million and are on trial in state court in New York. Nearly every assertion made by Foss during his direct testimony Monday was challenged by defense lawyers.

Foss, who also was a member of Tyco’s compensation committee from 1998 to 2003, told jurors Monday that bonuses paid to the two men weren’t authorized by the board, echoing earlier testimony by two other former directors. Foss served on Tyco’s board from 1983 to 2003.

Defense lawyers contend that the bonus payments were authorized by the board and approved by the company’s outside auditor, PricewaterhouseCoopers, and have suggested that board members were not paying close attention to the details of major corporate transactions.

Foss said he generally didn’t scrutinize all the details in company proxy statements, including disclosures by Tyco of how much top executives owed under the Key Employee Loan Program.

Foss and other directors have testified that KELP loans were intended only to pay taxes owed when executives’ restricted stock vested.

Prosecutors say Kozlowski and Swartz raided KELP and other corporate loan programs to fund a lavish lifestyle, buying jewelry, houses, yachts and expensive artwork with Tyco’s money.

Swartz’s lawyer, Charles Stillman, said his client’s use of the KELP program for purposes other than paying taxes on stock sales should have been apparent from the size of his debt listed in Tyco proxy statements.

“I signed the proxy statement because I believed and trusted what was here,” Foss said.