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$65,000 Golf Club Membership Under Scrutiny

Oct 1, 2002 | USA Today

Manhattan prosecutors plan to explore whether any Tyco International funds were improperly used to fund yet another pricey perk for ousted CEO Dennis Kozlowski, a New Hampshire golf club where memberships cost $65,000, according to two people with knowledge of the issue.

The potential new facet of the Tyco case surfaced as prosecutors separately expanded their investigation to focus on whether Tyco's auditing firm, PricewaterhouseCoopers, knew about allegedly improper bonuses paid to Kozlowski and other executives.

The latest investigation path involves The Golf Club of New England, a 450-acre course and clubhouse that includes Kozlowski as a founder. Other founding members include Stephen Foss, a Tyco board member, and Neil Garvey, ex-president of its TyCom unit.

Kozlowski and former Tyco CFO Mark Swartz were indicted last month on charges that they illegally obtained more than $600 million from Tyco since 1997. They allegedly used the money for yachts, multimillion-dollar homes and other personal expenses.

The people familiar with the Tyco investigation, headed by Manhattan District Attorney Robert Morgenthau, said prosecutors until recently were unaware of the golf club and Kozlowski's founding role. The review may find no wrongdoing, they cautioned.

An office assistant to John Kehoe, president of the golf club and CEO of the General Chemical Group, said he was traveling and was not immediately available. Morgenthau declined to comment. Kozlowski's attorney, Stephen Kaufman, did not respond to a phone message. ''We're not aware of any improper transactions involving company money relating to the golf course,'' said Tyco spokesman Gary Holmes.

The club features a course shaped by the design firm of links legend Arnold Palmer. Its Web site describes the 450-acre course and clubhouse straddling Stratham and Greenland, N.H., as an exclusive facility where ''members can be assured of playing golf any time they wish without having to plan ahead.''

The separate investigation of PricewaterhouseCoopers focuses on whether Tyco's outside auditors at the accounting giant knew about reporting tactics used to hide allegedly improper bonuses paid to Kozlowski, Swartz and others, the people familiar with the investigation said. Prosecutors are also investigating whether the auditors knew that Tyco's annual proxy statements were inaccurate, the people said, confirming a report by The Wall Street Journal.

So far, Morgenthau's investigation chiefly has concentrated on individual PricewaterhouseCoopers auditors who worked on the Tyco account, rather than the accounting company itself. Evidence reviewed by prosecutors shows the auditors may have had reason to know about the alleged improper bonuses and reporting inaccuracies, according to one of the people familiar with the investigation.

PricewaterhouseCoopers said it is cooperating with prosecutors ''on the basis that the firm is simply a witness, a provider of information in these proceedings.'' Holmes said PricewaterhouseCoopers' work is being rechecked as part of a review by Tyco itself.

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