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Tyco Exec Denies Hiding Loans

June 23, 2004|From Reuters

Mark Belnick, Tyco International Ltd.'s former general counsel, addressed jurors at his fraud trial for the first time Tuesday, denying charges that he tried to hide millions of dollars in loans from the company's board of directors.

Belnick, facing up to 25 years in prison if convicted of grand larceny, struggled to restrain his emotions as he described his early career and the death of his mentor -- an event that led him to consider the "very, very generous offer" to become Tyco's top attorney in 1998.

Prosecutors in New York State Supreme Court charge that Belnick committed securities fraud and grand larceny in receiving about $32 million in loans and payments without authorization from Tyco's board.

Among those loans and bonuses was an approximately $4.5-million relocation package that then-Chairman L. Dennis Kozlowski gave Belnick to move to Manhattan from the suburbs upon joining the conglomerate.

Belnick told jurors that Kozlowski first brought up the relocation loan during a lunch meeting in fall 1998.

Passing Belnick a pen and a napkin, Kozlowski offered him a three-year deal with a base salary of $700,000, a $300,000 signing bonus, stock and options along with guaranteed bonuses over the life of the contract, according to the testimony.

Belnick said Kozlowski then told him: "You mentioned that you would be interested in moving to Manhattan. Well, the company will help you do it. We'll give you an interest-free relocation loan to buy an apartment in Manhattan."

Belnick said he discussed the loan with Mark Swartz, Tyco's finance chief at the time.

He said at least half a dozen other employees knew about the loans, as did the company's outside auditor.

Belnick also testified that he never tried to hide from Tyco's board the loan that he used to purchase an apartment overlooking Central Park.

"During my entire tenure at Tyco, no director ever asked to see my compensation agreement, no director ever asked to see my pay package," he said. "But they most assuredly knew I wasn't working for free."

Still, Belnick failed to disclose the relocation loan on questionnaires that directors were required to complete for regulatory filings.

He told jurors that Swartz informed him that the loans did not need to be disclosed.

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