Ex-Executive Tells of Paying Tyco Outsider

A former Tyco International Ltd. treasurer testified that she approved a $100,000 wire transfer for then-Chairman L. Dennis Kozlowski’s girlfriend and said the payment was available for review by auditors and the company’s compensation committee.

But whether Tyco’s compensation committee actually approved the payment remained a key area of dispute in the trial of Kozlowski and Tyco’s former finance chief Mark Swartz.

Barbara Miller, who worked closely with Kozlowski and Swartz until she was fired in 1998 after Kozlowski lost confidence in her, said the wire transfer was charged to Tyco’s Key Employee Loan program. The payment went to Karen Mayo, a former New Hampshire waitress whom Kozlowski later married, Miller said.

Prosecutors claim that Kozlowski and Swartz abused the loan programs.

They say the Key Employee Loan program, for example, could be used only to pay federal income taxes on vested restricted stock so executives would not have to sell company shares. Defense lawyers deny the program was only for that narrow purpose.