RELEASE OF TYCO E-MAILS SMEARS BELTWAY LAW FIRM
By JESSICA SOMMAR
December 28, 2002 -- Outside lawyers knew for years that Tyco International chairman Dennis Kozlowski was raiding company coffers for his own personal use and did nothing to stop it, according to newly uncovered e-mails.
A March 23, 2000, e-mail to Tyco general counsel Mark Belnick shows that Lewis Liman, a partner at the well-connected Beltway law firm of Wilmer, Cutler & Pickering, was aware of $100,000 in payments made to "Dennis's girlfriend."
The money was given in the form of a "loan" to Karen Mayo, now Kozlowski's wife, the Wall Street Journal reported Friday.
In the e-mail, Liman called the payments "an embarrassing fact," adding he believed they couldn't be withheld from the SEC, which at the time was probing accounting problems at Tyco.
But Tyco's Belnick disagreed, saying in his return e-mail that the fact was "non-responsive" to the SEC request and therefore didn't need to be disclosed.
The damaging e-mails - written by both Liman and former Securities and Exchange Commission enforcement chief William McLucas - were obtained by the Manhattan district attorney's office and the SEC.
Bermuda-based Tyco was rocked earlier this year when prosecutors filed criminal charges against Kozlowski, former chief financial officer Mark Swartz and former general counsel Belnick. All are accused of looting the company for unauthorized pay.
The lawyers didn't break the law by not blowing the whistle on the corruption they found, legal pros said.
"A $100,000 loan made from a multibillion-dollar company is not sufficient injury," explained John Coffee, securities law expert at the Columbia School of Law. "It does show a weakness in internal controls, but the appropriate action is to tell the audit committee - not to signal to the world that there is some scandal in progress."
Both the DA and SEC declined to comment. Wilmer Cutler & Pickering officials declined to comment. |
