Source: Former Tyco chief executive spent millions in company funds on personal expenses
Thursday, August 8th 2002, 12:00 am
By: News On 6
CONCORD, N.H. (AP) _ Art and furniture in the New York apartment of former Tyco International chief executive Dennis Kozlowski were purchased with millions in company money, according to a person familiar with an investigation into the company's financial dealings.
Kozlowski used Tyco funds for several years to buy real estate and pay personal expenses, the person with knowledge of the investigation told The Associated Press on Wednesday, speaking on condition of anonymity. Few of the transactions were reported to shareholders, the source said.
The Wall Street Journal reported Wednesday that a total of $135 million in company money was given to Kozlowski, in the form of loans that were later forgiven.
Kozlowski resigned in June, a day before being indicted on charges that he evaded New York sales taxes on pricey works of art. He has pleaded innocent. His lawyer, Stephen Kaufman, didn't return calls for comment Wednesday.
Tyco spokesman Walter Montgomery said the company's board ``was not aware of expenditures that would have required disclosure at the time they were made. When the directors became aware, they took immediate action.''
Tyco and the Securities and Exchange Commission are investigating financial transactions at the company. The New Hampshire secretary of state's office, which is also investigating, said Wednesday that it issued a subpoena earlier this month for unspecified documents and information.
Another source has told the AP that the company's probe takes in all of its senior executives. Kozlowski is the only one facing criminal charges.
Kozlowski, 55, used more than $11 million in company money for art and other furnishings for his apartment, the source told the AP. The Journal said the furnishings included a $6,000 gold-and-burgundy, floral-patterned shower curtain.
Investigators are also trying to determine if Tyco picked up half the tab last summer for a $2.1 million trip to the Italian island of Sardinia or if Kozlowski paid for the trip personally, the source said. The central event was a 40th birthday party for Kozlowski's wife, Karen, with a performance by singer Jimmy Buffett.
The source said Kozlowski also bought new homes in Boca Raton, Fla., and Rye, N.H., with company money. The Journal said the Florida home was paid for with a $19 million, no-interest loan. Two years ago, Tyco quietly forgave the loan, people familiar with the company told the Journal.
A person speaking on Kozlowski's behalf, who was not identified by the Journal, disputed any suggestion that Kozlowski misspent Tyco funds for personal benefit or that he knew of any forgiven loans. The person said Kozlowski assumed the transactions were accounted for accurately.
Tyco, a conglomerate with 277,000 employees, is based in Bermuda but run from Exeter, N.H.