In 1968, while still in college, my cousin rigged a garbage can so that whenever a deposit was made therein, the contraption would say, ``Thank you.'' The memory of his invention makes me wonder about the US$2,200 wastebasket bought for Dennis Kozlowski's Manhattan apartment by Tyco International Ltd, which he ran at the time.
What, exactly, does a US$2,200 wastebasket do? When it receives a banana peel or an empty roll of toilet paper, does it mutter even a grunt of gratitude? For US$2,200, shouldn't it at least coo, "Merci"? Neither the trash can, special as it might be, nor any of the US$11 million in furnishings for his US$16.8 million Manhattan apartment can do that which Kozlowski now seems to want most. They can't be used to secure a US$100 million bond to keep him out of a far less spacious environment: jail.
A judge has frozen US$600 million in assets belonging to Kozlowski and Tyco's former chief financial officer, Mark Swartz.
PHOTO: AFP
That's how much the ex-Tyco executives are accused of stealing or swindling, according to an indictment last week, and they can't use illegally gotten gains to stay out of jail.
Kozlowski has tried to use some of his wealth. At an earlier hearing, his lawyer said Kozlowski wanted to use some of his art collection as the US$10 million in collateral needed to secure the US$100 million bond. Assistant Manhattan District Attorney John Moscow nixed the idea, alleging Kozlowski bought the art with money stolen from Tyco.
Poor Dennis Kozlowski. As chairman and CEO of Tyco until his ouster in June, he was one of America's most highly compensated executives. We're talking about a man who pulled in US$331 million over his last three years at Tyco in salary, bonuses and, mostly, in sales of stock options.
And that doesn't count the US$61.7 million in unauthorized, interest-free loans to Kozlowski disclosed this week by Tyco.
What good is it now? With all his wealth, his comforts, his Renoir and his Monet, his US$15,000 umbrella stand, his Fifth Avenue apartment and the US$30 million Boca Raton spread Tyco bought for him, he so far hasn't been able to put together a measly US$10 million to secure a US$100 million bond.
"He can't even go to an ATM machine," his lawyer, Stephen Kaufman, said in court this week.
State Supreme Court Justice Michael Obus has allowed Kozlowski and Swartz to remain free until their bail issue is settled. Swartz must post a US$50 million bond secured by US$5 million.
Kozlowski's hope for staying out of jail and, presumably, in one of his elegantly outfitted homes, now rests with his former wife. She has US$10 million in cash she wants to put up for his bail, Kaufman told Obus yesterday. The money comes from her divorce settlement, Kaufman said.
That won't happen without a fight, either. Any sums from the divorce settlement would have come from the ex-husband and therefore could be tainted, Moscow argued.
So the judge set a hearing for next week to let prosecutors try to block that source, too.
Kozlowski's defense says the money's clean because Angeles Kozlowski had no knowledge of her ex's allegedly criminal activities when they divorced.
"The whole issue is whether this is her money and did she acquire it in an innocent capacity," says Buddy Parker, a former federal prosecutor in Atlanta who has tried and defended financial crimes cases and the forfeiture actions that often accompany them.
It's hard to imagine Angeles Kozlowski didn't find something peculiar about Dennis's way of doing business.
One of the tidbits Tyco disclosed this week was that Kozlowski used interest-free relocation loans to buy from Tyco a US$7 million Park Avenue apartment in 2000 "at depreciated value and without appraisals," and then deeded it to Angeles Kozlowski.
The apartment went to her, according to an earlier report by Bloomberg News, the day before their divorce was entered into the court record in July 2000.
The current Mrs. Kozlowski also benefited from Tyco's largesse, according to the report Tyco filed this week with the Securities and Exchange Commission. In addition to enjoying the homes, the art, the furnishings Tyco bought for her husband, Karen Kozlowski celebrated her 40th birthday with a US$2.1 million party on the Italian island of Sardinia. Half the bill was footed by Tyco.
The party, the multiple homes, the US$6,950 spent for "lanterns throughout the house" in Boca Raton, and the US$2,685 for an "Italian fountain," none of those could have had legitimate business purposes, corporate governance specialists said. Besides, the purchases happened without board approval and without disclosure, says Tyco.
"It's a list of horribles," Charles Elson, director of the University of Delaware's Center for Corporate Governance, said about the Tyco report. He's especially troubled by the use of relocation money "to fund the lifestyles and vacation homes."
Remember the days when people used to complain that government should be run more like a business? The US$640 toilet seat cover the Pentagon was lambasted for buying in 1985 was a bargain compared to what's turned up in Kozlowski's shopping cart, courtesy of unwitting Tyco shareholders. If the Pentagon can pay US$9,609 for an Allen wrench, and Kozlowski can spend US$5,960 for two sets of bed sheets, surely there's a market for a talking garbage can.
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