Tyco Treasurer Accused Of Looting. The former treasurer of Tyco International testified Tuesday that two former executives altered company documents to increase employee perks and benefits without reporting the changes to the company’s board of directors.
Barbara Miller, of Exeter, N.H., said the unauthorized changes were made in documents that set forth the rules of two programs prosecutors accuse the executives, L. Dennis Kozlowski and Mark H. Swartz, of looting.
Kozlowski, 56, Tyco’s former chief executive, and Swartz, 43, the company’s former chief financial officer, are on trial in Manhattan’s State Supreme Court on grand larceny and enterprise corruption charges. Accused of stealing $600 million, they face up to 30 years in prison if convicted.
Miller, Tyco’s treasurer until Kozlowski fired her in 1998, said as far as she knew, the board’s compensation committee never agreed to allow Kozlowski and Swartz to change the loan and relocation programs to add perquisites.
Miller said changes included paying a relocated employee’s rent for two years rather than one, while he sought housing, allowing loans to buy two houses rather than just one, and paying private school tuition.
She said Swartz used the program to send his three children to private schools.
She said the compensation committee, which represents the board of directors in setting executives’ benefits, saw the original documents but not the altered ones.
compensation committee
The program was meant to allow some executives to move to New York City, but two years later it was amended so some executives could move to Boca Raton, Fla., Miller said. She said the compensation committee was not consulted then, either.
Kozlowski said outside court that his parting with Miller was “reasonably amicable. I hadn’t known her very long.”
Miller said Swartz also expanded the terms that allowed Tyco employees to borrow money from the Key Employee Loan Program (KELP). That program was set up to allow employees who owned Tyco restricted stock to borrow money from the company to pay taxes that came due whenever the time limit on the sale of that stock was lifted.
Prosecutors say the defendants stole $170 million from Tyco by taking and hiding unauthorized compensation and misusing company loan programs. The defendants made another $430 million on their Tyco shares by lying about the conglomerate’s financial condition from 1995 into 2002, prosecutors say.
Miller, who said she has an “arrangement” with the Manhattan district attorney’s office, said her own severance package was three years’ pay, a $500,000 bonus, a New York co-op and forgiveness of a $400,000 loan used to buy property in Montana.
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