'Dead Men Don't Wear Plaid' — but one vetted ex–Tyco CEO Dennis Kozlowski's $25 million bonus

I like it!

Stephen Kaufman, Kozlowski's defense attorney, yesterday took the risky course of putting the once–mighty, now–humbled former grand panjandrum of Tyco on the stand in Kozlowski's ongoing trial for grand larceny, conspiracy and fraud, with a potential sentence of 25 years — essentially, life — in prison.

In his direct examination of Kozlowski, Kaufman elicited the information that all but one of Kozlowski's grotesquely inflated bonus payments "... were vetted by Philip Hampton, a lead director who died in 2001," according to Christopher Bowe's story in this morning's Financial Times.

How convenient, really, and what an creative approach to testimony: say you revealed everything as you should have, only the person you told died.

Probably from an intestinal obstruction due to the homework he ate — or maybe it was a grand mal seizure related to ketoacidosis and a critically elevated blood sugar level after ingesting too many Twinkies.

Hey, you could even call that one the "Twinkie defense."

Oh, someone already did that?

Better stick to the homework theory then, huh?

None of the other directors at Tyco said they were told about Kozlowski's bonuses: I guess he just happened to tell the one guy who happened to die afterward.

Gimme a break.

Kozlowski also couldn't explain why a $25 million loan from the company that was forgiven in 1999 hadn't made an appearance on his tax return.

"He said he forgot," wrote Bowe in The Financial Times.

I don't know why he didn't simply tell the court and the jury, whom I have a feeling weren't swallowing this all too easily, that he was far too busy informing the now–deceased Tyco director of the details of his bonuses to look closely at his tax return.

I mean, this was a very important — well, at least self–important — man with many important things to attend to: he couldn't be expected to be checking his tax forms line by line, could he?

It seems the British aren't nearly as withholding of judgment re: Kozlowski's looting of his company as is the American press.

For example, the Wall Street Journal coverage of the trial doesn't have nearly the incredulous tone of the British stories.

Here's Bowe's Financial Times story.

Kozlowski Says Bonuses Vetted By Dead Man

Dennis Kozlowski, the former Tyco chief executive on trial for fraud and theft, testified yesterday that he told a now-deceased board member about bonuses that prosecutors allege are illegal.

Mr Kozlowski and Mark Swartz, former chief financial officer, are accused by New York City prosecutors of stealing $150m in unauthorised compensation, and benefiting from $575m in share transactions under false pretences.

Mr Kozlowski said that all but one of the disputed bonuses had been vetted by Phil Hampton, the dead board member.

"Phil said he would handle it," Mr Kozlowski told the court. He said the final disputed bonus was discussed with another director, Stephen Foss.

Several former Tyco directors have testified that they had no idea that Mr Kozlowski and Mr Swartz were receiving the bonuses and that the board did not approve them.

Mr Kozlowski's testimony in his retrial represents a reversal of his strategy in the first trial, in which he did not take the stand.

The first trial ended in a mistrial last year when the jury stalled after a juror's behaviour in court led to threats against her.

In his testimony, Mr Kozlowski said he could not explain why $25m in loan forgiveness had not appeared on his tax return.

He said neither his assistant nor his tax adviser noticed the missing information despite filing for two extensions for the tax return in the late 1990s.

"It did not appear on my W-2. I cannot explain why not," Mr Kozlowski said.

"I was just not thinking when I signed my tax return that I had loans forgiven."

Mr Kozlowski told the court he had not stolen money from Tyco.

Forgiven loans and bonuses are at the heart of the case against Mr Kozlowski and Mr Swartz, who did give testimony during the first trial.

In earlier testimony at the start of the retrial, defence attorneys argued that Mr Kozlowski and Mr Swartz earned every penny of compensation taken, did not lie about pay and recorded their actions in company records.