Ex-Lawyer at Tyco Defends Bonus

From Bloomberg News

Prosecutors ended their cross-examination of Mark Belnick on Tuesday, as the former top lawyer for Tyco International Ltd. told jurors in his criminal trial that he never questioned former Chairman L. Dennis Kozlowski’s authority to give him a $17-million bonus.

“It didn’t occur to me to say to the chairman of the board -- my boss: ‘You’ve just awarded me a bonus. Prove it,’ ” Belnick said.

Belnick testified for almost six days, including three days of cross-examination, during his trial in state Supreme Court in New York. Defense lawyers are expected to put him back on the stand today for additional questioning.

Prosecutors contend that Tyco’s board didn’t approve the 2000 bonus, which they said was a payoff to buy Belnick’s silence about fraud at the company. Belnick said he earned the bonus for helping Tyco through a U.S. government investigation.


Belnick said Kozlowski told him during a meeting in a Washington hotel room that he would get a bonus of $5 million in stock and promised him an additional $12 million in cash and stock if the government closed an investigation into Tyco’s accounting without taking action against the company.

Prosecutors allege that Belnick, 57, is guilty of grand larceny for taking an unauthorized bonus. He has also been charged with defrauding Tyco shareholders and falsifying business records. If Belnick is convicted, he may be sentenced to as much as 25 years in prison.

Belnick testified that he didn’t read the minutes of the board’s compensation panel and relied on Kozlowski’s word that the bonus was authorized.

Several former Tyco directors have testified that they never approved the bonus. Belnick was fired in June 2002, after Kozlowski was charged criminally and forced out of the company.


Assistant Dist. Atty. John Moscow also asked whether Belnick checked with any of Tyco’s outside lawyers to see if he had to tell the Securities and Exchange Commission about nearly $15 million in no-interest company loans. Belnick testified earlier that he relied on Tyco’s former chief financial officer, Mark Swartz, who said the loans didn’t have to be reported.

“Mr. Swartz had the issue under control. He had received legal advice,” Belnick said. Belnick is charged with falsifying business records for failing to report the loans on Tyco forms used to prepare SEC filings.

Moscow, in an effort to cast doubt on Belnick’s truthfulness, also questioned him about statements that prosecutors claim were false.

Belnick was asked about a 2000 recommendation letter he wrote on behalf of Kozlowski’s daughter, Sandra, who was seeking admission into a combined law and business graduate program at Columbia University, where Belnick attended law school.

Prosecutors say Belnick told Columbia that Sandra Kozlowski had worked with him for two years when she had only worked as an intern one summer.

Belnick said he’d made “a mistake” and hadn’t intended to mislead anyone.

Moscow also asked Belnick about a letter he sent to “a public official” in August 2000 claiming Utah as his primary residence. Belnick had used $10 million of his loans from Tyco to buy a house there. Manhattan prosecutors say Belnick later testified in a civil matter that he lived in New York.

State Supreme Court Justice Michael Obus prevented Moscow, the lead prosecutor in the case, from telling jurors that Belnick sent the letter to get out of New York jury duty.


Testimony in the case, which began in April, is expected to conclude this week.