Former Tyco Human Resources Head Gives Evidence In Kozlowski Trial

by Glan Shapiro, LawAndTax-News.com, New York

31 October 2003

Testifying at the grand larceny trial of former Tyco International chairman, Dennis Kozlowski and finance chief, Mark Swartz, the firm's former head of human resources, Patricia Prue revealed that the two men had wiped out home loans paid to them by the Bermuda-based company worth many millions of dollars.

Ms Prue explained to the court that she was informed in 2000 that Tyco would be forgiving relocation loans worth $96 million, which were paid to 40 staff who had relocated from the company's old headquarters in Exeter, New Hampshire to Boca Raton in Florida.

Kozlowski and Swartz reportedly told her that the Tyco board had approved the move, and she explained on Wednesday that she had no idea that what they were doing was illegal.

According to reports, as part of the relocation loan program, Swartz received $16.6 million, and Kozlowski $32.9 million.

The prosecution has alleged that the board did not know of the executives' decision to forgive their loans and those of other employees, and pointed to the fact that those who received the perk were made to sign confidentiality agreements as highly suspicious.

However, the former human resources head explained on Wednesday that the letters were intended to stop those who had received the bonus from talking about it with those who had not, a situation which had the potential to create a morale problem.

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