Loan Forgiveness Not OKd, Tyco Jury Told

A former Tyco director testified Monday that the company’s board of directors never approved forgiving loans to L. Dennis Kozlowski, the one-time chief executive who is standing trial on corruption charges.

William Peter Slusser, who was also a member of Tyco’s compensation committee, joined several other former company directors who have testified that the board did not clear bonuses granted to Kozlowski in the form of loan forgiveness.

Slusser served on the Tyco board from 1997 until last March, when he became a $60,000-a-year advisor to the company. Notes taken by Slusser during his tenure are set to be produced today in the court where Kozlowski and Mark Swartz, Tyco’s former chief financial officer, are on trial.

Kozlowski and Swartz have been accused of looting $600 million from Tyco through unauthorized pay and fraudulent stock sales. Both men face up to 30 years in prison if convicted. They have denied any wrongdoing in the case.

Under questioning from defense attorney Charles Stillman, Slusser acknowledged there were instances when board members would have conversations that were not recorded in official company minutes.

Slusser then told jurors he took personal notes during some of those conversations -- notes that probably will be shown to the court today.

Stillman and other defense lawyers have sought to show that Tyco’s board and other committees often held unofficial meetings that were not recorded in company documents and minutes. During those meetings, defense lawyers have sought to show, decisions about bonuses and pay could have been made.

Yet Slusser made clear in his testimony that the board did not approve forgiving millions of dollars of loans to Kozlowski and Swartz.