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Tyco ex-counsel says Kozlowski set pay

Testifies CEO claimed authority

NEW YORK -- Mark Belnick, Tyco International's former top lawyer, testified yesterday that the conglomerate's chief executive, L. Dennis Kozlowski, told him that he had the authority to set Belnick's compensation.

The testimony by Belnick, who took the stand in his own defense, is central to the prosecution's larceny case against him.

He is accused of accepting up to $17 million in bonuses granted by Kozlowski but not approved by Tyco's board of directors.

Belnick, 57, is on trial in Manhattan's state Supreme Court on charges of first-degree grand larceny, securities fraud, and falsifying business records.

He faces up to 25 years in prison if convicted on the top count, grand larceny.

The prosecution rested Monday after calling 26 witnesses over seven weeks.

Belnick, questioned by defense attorney Reid Weingarten, was the second defense witness, following former US Republican Senator Warren B. Rudman, of New Hampshire, who testified Monday.

Belnick, now of Park City, Utah, said he met with Kozlowski twice in New York in the summer of 1998. He said Kozlowski offered him a job as Tyco's general counsel, with an annual salary of $700,000 and millions of dollars in annual bonuses.

When Belnick asked Kozlowski who had final say on the compensation offer, Belnick testified that the chief executive replied, "I have the authority to negotiate your compensation and determine what your compensation will be, and I review it with the compensation committee" of the board.

The terms of Belnick's hiring and compensation were in a letter from Kozlowski dated Aug. 19, 1998. The letter was a court exhibit shown to the jury.

Weingarten has argued that Belnick understood Kozlowski was authorized to approve his compensation without the board's involvement. He asked Belnick whether any Tyco director had ever discussed his compensation with him.

"During my entire tenure at Tyco no director ever asked me what I was making," Belnick replied. "No director ever asked me anything having to do with my compensation, but they most assuredly knew I wasn't working there for free."

Prosecutors have also accused Belnick of abusing Tyco's interest-free relocation loan program. They say he received nearly $15 million in loans, approved by Kozlowski and Swartz, to which he was not entitled and which he has not repaid.

Belnick testified yesterday that he intends to repay every penny of the loans. He is expected to continue testifying today.

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