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Tyco Witness: Loans Were Repaid

Accountant says the former CFO and CEO gave back to the firm millions of dollars.

November 13, 2003|From Reuters

Former Tyco International Ltd. finance chief Mark Swartz made it a practice to pay back millions of dollars in company loans and interest every year, a Tyco accountant testified Wednesday at the trial of Swartz and former Chief Executive L. Dennis Kozlowski.

Sheila Rex, a prosecution witness and accountant for Tyco, said during her second day of cross-examination that when Swartz left the company he owed nothing under a loan program that has played a prominent role at the embezzlement trial.

Swartz paid down the loans, which once climbed to $6.5 million, at the end of each business year, she said.

"Mr. Swartz made it a practice to pay down (the loans) by the end of each fiscal year?" defense attorney Jim Mitchell asked before showing records for September 1998 and 1999 indicating a zero balance in the Swartz account.

"Yes," Rex replied.

Mitchell later asked, "Is it fair to say over the life of the loans he probably paid millions of dollars in interest?" "Probably," Rex said.

Swartz and Kozlowski are standing trial on a 35-count indictment which essentially accuses them of granting themselves unauthorized loans and looting $600 million from Tyco.

Under questioning by one of Kozlowski's attorneys, James DeVita, Rex's testimony turned to purchases of expensive artwork.

DeVita introduced evidence showing that Kozlowski wrote out promissory notes to Tyco for nearly $13 million to cover payments the company made to art dealers for paintings, including a $4.7-million piece by Pierre-Auguste Renoir and a $3.95-million piece by Claude Monet.

Kozlowski later paid off the promissory notes.

"It's fair to say then that Mr. Kozlowski didn't just take the Monet and run?" DeVita asked to a mixture of chuckles and groans in the courtroom.

"Yes, it is," Rex replied.

The trial in New York state court, is expected to last several months.

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