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Mark Belnick traded a seven-figure income and excitiing work for an eight-figure deal and constant humiliation at Tyco. Then things really headed downhill.

When the Securities and Exchange Commission launched an inquiry into Tyco International Ltd.’s acquisition accounting in December 1999–long before prosecutors last year paraded the company’s handcuffed executives into state court in New York–Dennis Kozlowski and Mark Swartz needed someone with Mark Belnick’s skills. At that point, Kozlowski, then Tyco’s CEO, and Swartz, then the company’s CFO, ranked as mere neophytes when it came to government scrutiny. By comparison, Belnick, the company’s chief corporate counsel, qualified as a seasoned veteran. During his 26 years at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison as the prot�g� of litigation legend Arthur Liman, Belnick had been through the Iran-contra hearings, the civil defense of junk bond king Michael Milken, and a host of other high-profile disputes. An SEC inquiry barely rated as a stress factor. But it had special meaning for Belnick nonetheless. After 15 months at Tyco–15 months of being excluded from the corporate inner circle and of seeing his authority undermined–Belnick spotted an opportunity to demonstrate his prowess and reassert his value to the CEO Kozlowski. For most of the SEC’s six-month investigation, Kozlowski and Swartz deferred to Belnick. Each time the Wilmer, Cutler & Pickering team that Belnick had selected to handle the government inquiry requested documents, the executives complied almost immediately. They balked, however, over a demand for one single-page memo. Belnick and Wilmer, Cutler didn’t know why. “They were doing a little bit of rope-a-dope,” recalls one lawyer who worked on that SEC inquiry. Frustrated, Belnick confronted Swartz. The memo, the CFO told Belnick, listed operations that he and Kozlowski had targeted to ax. It could embarrass the two top execs–not with the SEC, but with company insiders. “Don’t worry if my name is on there,” Belnick joked with Swartz. The CFO didn’t laugh. Instead, he assured Belnick that neither he nor anyone else had been singled out. When Wilmer, Cutler and Belnick finally got the memo a few days later, only one name–Belnick’s–appeared on it. Next to the words “BELNICK TERMINATION” was a $5 million figure. The meaning was anything but subtle: Belnick was expendable; the severance cost had been tallied. “You would never get rid of me that cheaply,” Belnick told Kozlowski at the time. Kozlowski never fired Belnick. And Belnick, who had told friends as early as three months after he started at Tyco that he had misgivings about the move, never quit. Instead, Kozlowski, Swartz, and Belnick patched things up, and the SEC in July 2000 cleared the company of any mishandling of its accounting for corporate acquisitions. But for Belnick, the suggestion that his job was on the line would pale in comparison to the humiliations the former Paul, Weiss partner would suffer in the two years that followed. By the middle of 2002, the blows would come in quick succession. On June 10 Kozlowski’s replacement fired Belnick and instructed security officers to escort the lawyer out of Tyco’s Manhattan offices. Ten days later, the company, represented by David Boies, filed a broad-ranging civil suit against Belnick, alleging that he had failed to stop Kozlowski from breaching his financial duties and failed to inform the board of the CEO’s improper conduct. On September 12 a disheveled Belnick appeared in court, unable to button his jacket over an ample paunch until a bailiff removed his handcuffs. He had been indicted on multiple counts of falsifying business records. Appearing alongside him, Kozlowski and Swartz, who had previously left the company, were indicted on charges that they conspired to loot some $170 million from Tyco. The same day, the SEC filed a civil suit in federal court against the three former Tyco executives. The claim against Belnick: that he had “defrauded Tyco shareholders of millions of dollars through egregious self-dealing transactions.” By their sheer number, the past year’s corporate scandals have lost their capacity to surprise. But the fall of Mark Belnick stumped the community of high-powered lawyers on the New York-Washington axis. How, they wondered, could one of their own merit a ranking among corporate America’s Most Wanted? It started when Belnick left Paul, Weiss for Tyco, putting him on a course that would make him the wrong man in the wrong place at the wrong time. Kozlowski hired Belnick to be his highly paid counselor, but then excluded him from the circle of decision makers. The CEO regularly belittled Belnick’s authority, and even persisted in mispronouncing the lawyer’s name, as Bel-a-nick. Shadowed by Tyco board member and lawyer Joshua Berman, who talked to Kozlowski almost daily and who dominated Tyco’s legal decisions, Belnick more than once threatened Kozlowski that he would quit. Despite all that, in February 2002 Belnick signed a three-year retention agreement. Lured by the CEO’s promise to make things right, Belnick re-upped at Tyco just when things were turning truly ugly. The price tag? Some $4 million a year in base salary and bonuses. The deal included perks befitting a senior executive at a giant company like Tyco, notably a $10.6 million lump sum payment, to be paid in late 2002 in lieu of other severance and bonus payments. Belnick planned to use the final bonus to pay back the interest-free $10.6 million he had borrowed six months before from the company to buy a two-story, 11,770-square-foot house in Park City, Utah. It was the richness of that deal that helped drag Belnick into the scandal that has decapitated Tyco’s executive ranks. Through his lawyer, Reid Weingarten of Washington, D.C.’s Steptoe & Johnson, Belnick denies the allegations against him made by New York state prosecutors, the SEC, and Tyco current outside counsel Boies. Belnick’s troubles are documented in the pleadings and discovery documents in the various cases, and were recounted in interviews (some not for attribution) with friends, executives, and lawyers inside and outside the company. No matter how his civil and criminal challenges are resolved, the details of his downfall will forever brand him as having been prideful or greedy enough to leave his skepticism or ethics behind. Schooled by the legendary Liman, Belnick was done in by a decision to stick with Kozlowski and Tyco, in a place where he was made to feel unwanted–but where he was paid enough to put up with it. Now 56, Belnick has always been a spiritually curious intellectual. The son of an accountant and an elementary school teacher, he was raised in an Orthodox Jewish family in Linden, New Jersey. As an undergraduate at Cornell University, he wrote thoughtful, deliberative essays for the student newspaper about the Vietnam war. One classmate remembers being more focused on the coeds at a nearby college, while Belnick was quoting the writings of German Jewish philosopher Martin Buber. At Paul, Weiss, which he joined in 1971, Belnick rose to partner in seven years. He was Liman’s first choice on all of the big cases, including the Michael Milken defense and the battle between Texaco and Pennzoil over Getty Oil. At the televised Iran-contra hearings, Belnick sat on a tier directly beneath Liman’s perch. The younger, physically trimmer, and darker-haired Belnick politely but effectively interrogated his witnesses, while the older, wiry-haired, and intense mentor looked on admiringly. As a senior partner, Belnick had national exposure and earned nearly $1 million a year. But the high-pressure work taxed his personal life. Belnick, like many of his partners, saw too little of his family–his wife, Randy, a medical social worker, and his three children. In 1994 Belnick made a quality-of-life leap. He returned to Cornell as its general counsel. But abruptly, within a week of starting, Belnick resigned, returning to Paul, Weiss. At the time, he told The American Lawyer, Corporate Counsel‘s sibling publication, “I began to realize I was more wedded to commercial litigation than I previously thought.” Three years after Belnick’s brief stint at Cornell, Arthur Liman died unexpectedly. Belnick, who delivered a eulogy at the older lawyer’s funeral in 1997, was deeply affected. He had lost his mentor. In more practical terms, says one former partner, Belnick no longer had an obvious ascent to the management team at Paul, Weiss. Restless in his career again, Belnick was quick to respond in July 1998, when his then partner Warren Rudman, the former senator, called with an intriguing lead. Tyco CEO Kozlowski wanted to interview Belnick for the general counsel post. Rudman knew Kozlowski from their service together on Raytheon Company’s board. A move to Tyco would represent a big step up from Paul, Weiss money. A month after the introduction, Belnick negotiated from Kozlowski a three-year contract that called for a base annual salary of $700,000, a signing bonus of $300,000, a guaranteed cash bonus of not less than $1 million in each of those years, 100,000 shares of restricted stock, and 500,000 options of Tyco common shares, which would vest during the three-year period. Belnick had even negotiated for a piece of a Tyco relocation loan program earmarked for employees who had to transfer when Tyco’s headquarters moved from New Hampshire to New York. Belnick’s no-interest loan, eventually totaling $4 million, would pay for a move to a renovated apartment on Central Park West, even though he and his family already lived in a nearby suburb. In his own pleadings, filed recently, Belnick estimates the value of that initial contract to be about $10.9 million. The money was good, and so was the chance to become an M&A player at an acquisitive company. Tyco set a furious dealmaking pace, taking its annual revenue from $900 million, in the mid-nineties, to $36 billion by 2001, and growing to 250,000 employees worldwide. They were involved in everything from disposable diapers to fiber optics. But it didn’t take Belnick long before regrets crept in. A few months into the job, Belnick fired a subordinate. The decision, made with Kozlowski’s approval, was announced in a companywide memo. The next day the CEO rehired the lawyer in a different division. The message was clear: Belnick lacked clout. The same message was sent whenever Tyco did a deal. Despite his title and his yearnings to be a part of the Tyco M&A machine, Belnick was a bystander to the dealmaking. He would sit in his office uninvited while others hovered elsewhere in the New York headquarters to work on deals. “He started having deep concerns that he was not going to have the kind of access a general counsel should have,” recalls a former partner, who talked to Belnick throughout his Tyco tenure. Personalities played a part, too. Belnick was not Kozlowski’s type. Both men grew up in New Jersey and are the same age, but the similarities stop there. Next to the clever, funny, and understated Belnick, Kozlowski is soft-spoken but blunt. He would not seek out conflict but would be unafraid to use his power as CEO. A 1968 graduate of Seton Hall University, the tall, lock-jawed, and balding Kozlowski started at Tyco in the seventies as an internal auditor and advanced through the ranks, getting experience in all operations. Along the way, Kozlowski acquired a new wife and some larger-than-life appetites. At a now notorious $2.1 million corporate retreat on the Italian island of Sardinia, Kozlowski threw a birthday bash for his new wife, Karen. Front and center was an ice-sculpture replica of Michelangelo’s David that didn’t just chill the shellfish and caviar piled at its feet. The frozen figure also dispensed vodka from its penis. The guest list included CFO Swartz, a Tyco director, and Irving Gutin, a former Tyco GC. But not Belnick. Barely a year after joining Tyco, friends say, Belnick talked about an exit strategy. He must have had to consider the career impact, however, of two fickle moves: first, a weeklong stint at Cornell, and, next, a relatively brief tenure at Tyco. Belnick, recognizing from the outset the mismatch between Tyco and himself, didn’t believe he had the option of appearing flighty about his job selection another time. Not that there weren’t advantages over his life at Paul, Weiss. By the fall of 1999, Belnick had moved his family into the renovated New York apartment, and he had escaped the breakneck hours of a litigator. With his wife and son spending more time in Utah–shortly after he started at Tyco, Belnick had bought a $2.4 million vacation home there–he made frequent trips out west, learning to ski moderately well. Belnick started to teach an intensive summer course about the legal system to Cornell undergrads, and he traveled to Tyco’s worldwide operations in Australia, Asia, and Africa. In October 1999 Belnick’s litigation skills were suddenly in demand. That month, Dallas-based money manager and noted bear David Tice reported in his newsletter that the company had boosted earnings with reserves established while making acquisitions. Tyco denied the allegations, yet the company’s stock price fell more than 50 percent. On December 9 the company disclosed that an SEC inquiry had begun. The inquiry provided ample proving ground for Belnick. This was his chance to show Kozlowski how effectively he could handle government investigators. He hired a lawyer with unquestionable qualifications, Wilmer, Cutler’s William McLucas, a former director of the SEC’s enforcement division, whose talent for unwinding messy corporate accounting would eventually include an analysis of Enron Corp.’s meltdown. With the Wilmer, Cutler team, Belnick addressed all of the agency’s questions and, as it turned out, persuaded the enforcement division by July 2000 that Tyco was not misusing its reserve funds from acquisitions. Belnick began to win more inter-necine battles at Tyco. With only two lawyers in New York and four in Tyco’s international offices who reported to him exclusively, Belnick nonetheless helped oversee five division GCs worldwide. He began hiring his own outside counsel. In addition to Wilmer, Cutler, his choices included the Washington office of Akin, Gump, Strauss, Hauer & Feld and New York’s Cravath, Swaine & Moore. “He was great to work for,” says Akin, Gump partner John Dowd. “He’s very smart. He made quick decisions, but he let you do your job.” The memory of the SEC victory faded quickly, however. Soon Belnick and Kozlowski were at odds again. One persistent cause was the Berman factor. Joshua Berman, a former partner at New York’s Kramer Levin Naftalis & Frankel, and then of counsel, had served on Tyco’s board for 30 years, longer than Kozlowski had been at the company. Berman had been instrumental in the CEO appointments of both Kozlowski and his predecessor, John Fort III. Berman himself had pinch-hit as a temporary CEO for the company in the seventies. Berman had more than just longevity over Belnick. “Tyco had not had a real general counsel before Belnick, but they had a legal oracle, and that was Josh Berman,” says one lawyer who worked for the company. Belnick’s arrival at Tyco, friends say, represented a threat to Berman’s pocketbook. Kramer Levin had historically served as Tyco’s outside counsel, getting much of the company’s legal business, including M&A. Even though Berman worked only two-thirds of his time for Kramer Levin, he was paid like a partner. And that meant business origination credits. When Berman retired from Kramer Levin in February 2000 to relocate to Europe, the law firm income stopped, and he started receiving a $360,000 salary from Tyco for what he considered a part-time job. Berman lacked a title and a clear job description. But he still had Kozlowski’s trust. The talk turned again to termination, in July 2000, but this time it was Belnick who played that card. The U.S. Consumer Product Safety Commission had tentatively approved a recall plan of sprinkler systems manufactured by a Tyco subsidiary. Encouraged by Belnick, the Tyco subsidiary had proposed to offer consumers replacements for the faulty sprinkler heads. In a conference call with Belnick and Swartz, Kozlowski had accused Belnick of purposely siding with the government. “Do you work for the government? Or Tyco?” Kozlowski had demanded of Belnick. Belnick responded with all the pent-up frustrations of his Tyco experiences. He threatened to leave. The CEO warned that Belnick would leave with nothing–no severance, no bonus. Belnick said he would sue and argue that he had been constructively fired because he was unable to do his job. He trotted out his list of grievances: the subordinate who had been rehired; the executives companywide who had hired Kramer Levin behind Belnick’s back. And now he was getting second-guessed on the company’s response to possible government regulatory questions about faulty sprinkler heads. The shouting actually repaired some of the damage for Belnick. Apologetic after the blowup, Kozlowski let Belnick call the shots on the sprinkler head recall. The subordinate he had fired was fired again. And executives were told they had to get the approval of the general counsel before hiring outside firms. During the first half of 2001, Kozlowski also began talking to Belnick about a new employment agreement to replace the one that would expire on September 30, 2001. At the same time, Belnick began looking for a new family home. Belnick’s wife and son, the only child still at home, were in Utah year-round now. Belnick wanted to spend more time there–but he wanted a bigger place. Since a fax, phone, and computer gave him access to everything he needed, he talked to Kozlowski about working from Utah. Sometime during the negotiations over a new employment contract, Kozlowski offered to help Belnick relocate, a proposal that surprised but also thrilled the lawyer. Banking on what he considered a promise from Kozlowski–including, not insignificantly, a new loan from the company of $10.6 million–Belnick closed on a contract for the new Utah house, less than a week before the terrorist attacks on the East Coast. House and loan in hand, Belnick had not yet signed the retention agreement on January 2, 2002, when he, Berman, and the company’s outside lawyers made an unsettling discovery. According to a description later published in the company’s proxy statement, Kozlowski had agreed in mid-2001 to pay board member Frank Walsh a $20 million finder’s fee (half of which went to charity) in return for making the introductions that led earlier that year to the merger between the company and CIT Group, Inc. The problem, according to Tyco’s suit against Belnick, was that Kozlowski had cut the deal without telling other board members. The transaction was only discovered when Walsh acknowledged it in a director-and-officer questionnaire required by the SEC. For both Belnick and Berman, the undisclosed Walsh payment raised all kinds of red flags about Kozlowski. Neither Belnick nor Berman wanted to let the other dominate how the company would handle the legal and investor-relations issues that that nettlesome arrangement created. Belnick took action, eventually trying to hire a Sullivan & Cromwell team to probe the matter. But Berman had an advantage as a board member, and he used it, insisting that only board members attend the meetings where the payment was discussed. Kozlowski apparently accepted the edict. Belnick was asked to leave a meeting in late January where Walsh refused to return the money and was not renominated to the board. At a meeting three weeks later, the message to Belnick was clearer still. When the board’s discussion turned to Walsh, Kozlowski beckoned Belnick to meet him at the doorway–and then firmly pushed him out of the room. Belnick telephoned Richard Cass, a corporate partner at Wilmer, Cutler, and told him in disbelief what had happened. Later, Berman called Belnick and told him to dismiss the lawyers from Sullivan & Cromwell. Berman told Belnick that he didn’t have the authority to hire counsel for the board’s governance committee, which would be investigating the Walsh payment. Once again, Belnick had every reason to believe that he wasn’t going to be able to function as the legal chieftain for Tyco. But he was also now the mortgage holder of a very expensive Utah house and owed $14.6 million to the company for his two relocation loans. So, in February 2002, Belnick signed the retention agreement. The deal, effectively retroactive one year, committed the lawyer to Tyco until October 2003–after which, say two friends, Belnick planned to leave. The retention contract called for a lump sum payment of $10.6 million if he stayed at Tyco through the term of the deal, or if he was fired without “good cause”–defined only as a felony conviction. The bonus payments were in lieu of a severance package. (Belnick filed an arbitration claim after his firing in June over the lump sum guarantee.) Berman learned the details of Belnick’s agreement on April 16. Berman was on his way to Bermuda, Tyco’s official headquarters for tax purposes, and where it holds board meetings. With him on a company plane was Patricia Prue, Tyco’s human resources director. She handed Berman a copy of Belnick’s deal. He was infuriated. Berman would try to kill the deal in the board’s compensation committee, arguing that all of Belnick’s other bonuses, loans, and compensation had not been fully disclosed to the committee. (Other key players deny that the board was kept in the dark.) By early May, having gotten wind of Berman’s aims against him, Belnick threatened Kozlowski that he would quit and claim he was constructively fired if his retention agreement didn’t go through. Belnick decided he needed a lawyer, and he turned to Stanley Arkin. In a New York arena where few are timid, Arkin is considered particularly bellicose, with an ego to match. The founding partner of New York’s Arkin Kaplan, who didn’t return telephone calls for this story, is well known for his white-collar criminal defense work. But for Belnick, the more relevant Arkin victory was the one he had achieved for financier Edmond Safra, getting American Express Company to turn over $8 million to avoid a suit alleging that it had run a secret smear campaign against him. As it turned out, Belnick didn’t need Arkin immediately. Berman never got the votes on the board to void Belnick’s retention agreement, and the agreement was disclosed by Tyco in a May 15 SEC filing. But Berman had another weapon on hand. As a member of the Tyco board’s governance committee, Berman helped retain Boies’s firm, on May 23, to investigate the Walsh payment. Berman also told the lawyer from Armonk, New York’s Boies, Schiller & Flexner that he wanted him to look at Belnick as well. Boies, who had worked with Belnick years earlier in the Milken defense, initially tried to dissuade Berman and others from pursuing Belnick. “When we were just brought on, I thought [Belnick] was someone we would work with,” Boies says about board members’ early requests for scrutiny about the general counsel. By then, however, Kozlowski’s and Tyco’s troubles were overtaking Belnick. On May 3 Manhattan assistant district attorney John Moscow had sent Belnick a subpoena. He was seeking records of Kozlowski’s compensation and all the documents related to any transaction between the company and two particular art dealers, as well as the accounting records for a $3.95 million wire transfer the company had made. Belnick once again turned to Wilmer, Cutler to represent the company. He also lined up separate counsel for Kozlowski, New York criminal defense lawyer Stephen Kaufman. For the next few weeks, according to the Tyco complaint, Belnick didn’t tell any board members besides Kozlowski and Swartz about the subpoena. Board members only learned about the criminal investigation when Kozlowski called at the end of May to tell them that his lawyer had informed him he was about to be indicted. Around the same time, Belnick asked Wilmer, Cutler to expand its inquiry. Under scrutiny now were Kozlowski’s other uses of corporate funds, including the interest-free loan program that the prosecutors have made a centerpiece in the indictments. Berman was incensed to learn of the art purchase subpoena so late in the game. He asked Boies to cover the same ground as Wilmer, Cutler. But he added an additional target: Belnick. Now he wanted the general counsel’s hide. The showdown between Boies and Belnick came in the Tyco general counsel’s New York office on June 7, the Friday after Kozlowski resigned and was indicted on charges of evading more than $1 million in sales taxes for his art purchases. “I went in and had a long conversation,” recalls Boies. Belnick struck Boies as emotional. Boies says he thought that giving Belnick a chance to vent would improve the relationship between Boies’s firm and the Wilmer, Cutler lawyers. “He was the general counsel, and he wanted to be in control of information,” Boies says. He says he told Belnick that he might be implicated in the investigation because there “was already some discomfort from the board about his retention agreement because it was granted without disclosure of bonuses in 2000.” Belnick’s account of the Boies meeting is quite different, says one person who heard Belnick’s version. He says Belnick was never told that he was a target of the Boies investigation. And he says that Belnick offered to take a leave of absence if that was the case–and that Boies insisted it wasn’t. Boies believes that the meeting ended with Belnick’s agreement to have his team get cooperation from the Wilmer, Cutler lawyers, who were scheduled the following week to conduct interviews with Tyco staff in Florida. But by the next day, Boies learned that Belnick would forbid Boies, Schiller lawyers from shadowing the Wilmer, Cutler team. “He said he changed his mind,” Boies recalls. “I said, ‘Mark, you’ve got to understand this is not going to be acceptable to the board.’ His reaction was, as long as he was going to be general counsel, he was going to control information. He said they could fire him, and he said, ‘I’ll take my $20 million.’ He thought we wouldn’t want to fight the general counsel.” Berman now had what he needed to get the board to dump the Tyco general counsel. There was discussion about giving Belnick administrative leave. But Boies recommended he be fired. Fort, the Kozlowski predecessor who had now stepped in as acting CEO, went into Belnick’s office on Monday morning, June 10, and did the deed. That same day, Arkin, whom Belnick would soon replace with Weingarten, issued raging press releases, howling about his client having been framed. Boies’s team responded for Tyco in kind. “One of the great tragedies for Mark Belnick is that if he had handled things differently, he might not have been prosecuted for a long time,” says Boies. Ten days after he was fired, Belnick was hit with the Tyco suit. Despite the Tyco suit, Boies no longer ranked as Belnick’s biggest problem. Belnick also faced John Moscow, who, like his boss, District Attorney Robert Morgenthau, stresses his desire to keep corporate executives across America awake at night with fear. A rambunctious 20-year veteran in the D.A.’s office, Moscow can put a visitor on edge with his energy. He cannot, for any length of time, stay seated in a chair, preferring instead to stand and rock back and forth on his heels. In the past Moscow has flamboyantly and ultimately unsuccessfully pursued lawyers in white-collar cases, including the legendary Clark Clifford in the Bank of Credit and Commerce International scandal of the early nineties. Moscow says he can’t pinpoint when his criminal investigation began to include Belnick. But when the investigation did expand, the D.A.’s attention was focused on Belnick’s final agreement with Tyco. The crux of the allegations is lack of disclosure. The Boies-prepared suit contends that the employment deal was improperly vetted, and the SEC and prosecutors claim that the relocation loan for the Utah house was not properly disclosed in a director-and-officer statement. Moscow contemplated filing broader conspiracy allegations, like those against Kozlowski and Swartz. But he managed to get Morgenthau’s approval only for the relatively narrow indictment against Belnick. Even that charge will be difficult to prove. Given that 50 other Tyco employees got relocation loans (though none as large as Belnick’s), Weingarten argues that his client believed SEC disclosure was not required because the loan was part of the “normal course of business.” In his unusually detailed motion for dismissal of the criminal charges, Weingarten claims that Belnick initially had assurance from the company’s lawyer in employment matters, Marian Tse, a partner at Boston’s Goodwin Procter, that the house loan didn’t have to be disclosed. But once he learned from Tse in January that disclosure was required for the retention agreement, Belnick insisted that all the details–the loan included–come out in the company’s 10Q filing on May 15. Moscow’s criminal prosecution is not the only case of possible overreaching. In the civil complaint against Belnick, Boies includes allegations about Belnick’s original employment deal in 1998. The company alleges that Kozlowski and Belnick submitted one copy of the first employment contract to the human resources department, and “secretly agreed to additional terms” in another pact. The allegedly secret contract had the apartment loan and a commitment to keep Belnick’s bonus at no less than one-third of Kozlowski’s. Ernest Rubenstein, the 74-year-old retired Paul, Weiss partner who helped Belnick draft that first agreement, labels the Boies allegations as “outrageous, irresponsible, and indifferent.” He personally inserted the changes and recalls that the date on both versions was the same–with no significant import. No one intended to conceal the contract, Rubenstein says. By making the accusation without getting the full story, Rubenstein says, “Boies and his law firm filed a complaint with a factual error in which it had the effect of destroying a man’s reputation.” Boies labels Rubenstein’s argument as “irrelevant information,” and vigorously disputes the notion that his complaint contains errors. “We’re ready to go to trial on that complaint right now,” Boies says. Berman’s pursuit of Belnick upset Tyco human resources director Prue. In a June 7 letter to the new CEO, Prue complained that she was “pressured by Josh Berman to engage in conduct which I regarded as dishonest.” Her beef: Berman wanted her to amend the compensation committee’s meeting minutes to rescind approval of Belnick’s retention agreement. Berman responds that Prue wrote that memo because “she was determined not to give me what I asked for.” Berman says he had sought a list of the company’s relocation loans. Tyco’s subsequent SEC filings show that Prue had herself received and was later forgiven some $748,000 in interest-free loans. But Prue, who still has her job and, like board member Berman, has been accused of no wrongdoing by the prosecutors, denies through her lawyer that such was the case. David Spears, Prue’s lawyer, says, “Her memo [to Fort] had nothing to do with any request for information.” What it all comes down to, for Belnick, is a swearing match over who knew what about his compensation and when they approved it. A key witness–the chairman of the compensation committee at the time of some of the key decisions–died last year. Now Belnick is awaiting his criminal trial, which Weingarten has asked the judge to schedule as soon as possible. At this point, no one, not even Belnick or his lawyer, would argue that Belnick should have signed the new employment agreement, given the price he has paid for doing so. To Moscow, the prosecutor, the case boils down to this: how a lawyer of Belnick’s caliber could swallow so much without taking a stand. “Why didn’t he quit?” says Moscow. “It was a tough decision. He failed.” Friends and former partners say that ascribing his predicament to greed is an oversimplification. “One should be careful about being too sanctimonious,” says Rubenstein, the retired Paul, Weiss partner. Belnick’s decision to stay at Tyco, even to take the retention agreement, made sense. “He liked the deal. It was attractive. If he walked, he would give up a lot of economic benefits. He had a lot of economic incentive to stay. The question is, what is the responsibility of counsel?” Rubenstein says. Another friend says that Belnick indeed felt a responsibility to stay so that it wouldn’t have appeared as if the general counsel bailed just as Tyco’s stock started to tank. No one, after all, promised Belnick an easy ride into the world of corporate politics. “Mark knew he was hired to do a job, and, in order to do it properly, some china would have to get broken,” says the friend. Some china, yes. But $14.6 million in loans later, Belnick has broken the sterling ethical reputation he earned at the feet of Arthur Liman. No verdict will be able to restore that. Rozen is a freelance writer in Dallas. E-mail:[email protected]

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