Tyco replaces top lawyer
CONCORD, N.H. (AP) – Tyco International Ltd., the industrial conglomerate under investigation after its chief executive was indicted on sales tax evasion charges, announced Monday that it has replaced its top company lawyer. Tyco said Irving Gutin would replace Mark A. Belnick as its general counsel. Belnick’s lawyer said his client was fired. Gutin previously held the same position at Tyco. Tyco shares rose almost 11 percent Monday afternoon, after being pummeled by investors last week when chief executive Dennis Kozlowski resigned and was charged with illegally avoiding more than $1 million in sales taxes on paintings, including works by Renoir and Monet. In a short statement announcing the change, Tyco did not disclose why Belnick was replaced. Repeated messages left with Tyco seeking more details were not immediately returned. But Belnick’s lawyer, Stanley Arkin, said in a statement that Belnick was fired, and he lashed out at Tyco for its handling of the situation. “This episode is nothing more than an opportunistic assault by David Boies and Josh Berman … to strip Mark Belnick of his legal authority within the company and take control of Tyco’s ongoing legal business,” Arkin said. “It is unfortunate that a superb legal talent such as Mr. Belnick has been a victim of this type of legal turf war.”
Boies was hired by Tyco to help conduct an internal investigation of company finances announced after Kozlowski was indicted.
Berman is a Tyco board member.
Arkin called Belnick’s firing unfair and irrational, noting that he has been assisting New York prosecutors in their investigation of Kozlowski.
According to filings with the Securities and Exchange Commission, Belnick signed a 16-month retention agreement in February calling for him to receive $10.6 million if he was fired by the company without cause.
A source familiar with the investigation into Kozlowski and Tyco said Friday that New York prosecutors are investigating whether Tyco bought Kozlowski’s New York and Florida homes and improperly paid other expenses.
The source, who spoke on condition of anonymity, suggested that others within Tyco might be involved in Kozlowski’s alleged wrongdoing, but would not say whether they will face charges.
Interim Tyco chief executive John Fort and chief financial officer Mark Swartz have promised to disclose details of Tyco’s internal probe this week.
Before Kozlowski resigned, Tyco was already under fire for Enron-inspired questions about how it accounted for the huge number of acquisitions he made in the 1990s. The deals turned Tyco into a 277,000-employee behemoth producing everything from undersea fiber-optic cable to coat hangers.
But the company’s stock is down about 80 percent this year, and analysts say its survival depends on a plan to sell or spin off its lending unit, CIT, to help pay down $27 billion in debt.
Tyco said the deal, originally planned to be completed by the end of June, could be delayed a week.
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