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Responding to the lawsuit filed by Tyco International Ltd. against Mark A. Belnick, its former chief corporate counsel, Belnick’s attorney Tuesday tried to throw the accusations back against the accusers. “They’re in the spotlight now,” said Stanley Arkin, “and they want the spotlight on someone else.” According to Arkin, the recently dismissed Belnick was the honest lawyer, seeking to obtain the best legal counsel available for the company, thereby winning the enmity of those on the company’s board who would have liked to see “millions” going to more favored law firms. On the other hand, Tyco, a diversified conglomerate based in Bermuda, is claiming Belnick was primarily concerned about diverting millions to himself. In its complaint filed Monday in the Southern District of New York, Tyco alleges that Belnick, a former partner at New York’s Paul, Weiss, Rifkind, Wharton & Garrison, breached his fiduciary duty by taking more than $30 million in undisclosed compensation, bonuses and interest-free loans, then conspiring with former Tyco chairman L. Dennis Kozlowski to conceal the terms of Belnick’s compensation as well as misconduct on the part of Kozlowski. Tyco is seeking to recoup those payments to Belnick. The complaint then charges Belnick, who worked out of Tyco’s offices in New York and Boca Raton, Fla., sought to obstruct an internal investigation of Tyco and its senior management being conducted by the Armonk, N.Y-based Boies, Schiller & Flexner, which was retained by the board, and bring aboard lawyers from another firm to conduct a separate inquiry. Belnick’s alleged failure to cooperate with the Boies investigation was cited by Tyco at the time of Belnick’s dismissal June 10. In a statement at the time, Arkin said Belnick had been the “victim of a legal turf war” initiated by David Boies and Tyco board member Joshua M. Berman, a partner at New York’s Kramer Levin Naftalis & Frankel until March 2000. Reached on vacation in Italy, Arkin said Tuesday he was considering arguments for his response and a planned countersuit. However, he reiterated his view that Belnick was being antagonized for his refusal to play ball with Boies and Berman, now joined by an anxious board eager to deflect attention in the wake of Kozlowski’s indictment for sales tax fraud by the Manhattan district attorney’s office. According to Arkin, Belnick had been engaged in bitter disputes with Berman over Tyco’s portfolio of legal work since becoming Tyco’s chief lawyer in 1998. Berman wanted to see the lion’s share of the work go to Kramer Levin, from which he would then receive an origination fee. In a 1998 interview with The National Law Journal, a New York Law Journal and law.com affiliate, Belnick identified Kramer Levin as Tyco’s primary outside counsel, a fact which the law firm subsequently highlighted on its Web site. But Arkin said Belnick shifted large amounts of work to other firms. Washington, D.C.-based Wilmer, Cutler & Pickering was the main firm for securities work, he said, and most litigation was handled by New York’s Cravath, Swaine & Moore. Belnick also used Atlanta’s King & Spalding and Paul Weiss, though Arkin said Paul Weiss received only a modest amount of business because Belnick did not want to give any appearance of impropriety. Sources close to Kramer Levin said Berman, when a partner at the firm, had his compensation determined by the firm’s compensation committee, which considered partners’ business origination, along with several other factors. Since 2000, Berman, who is still of counsel at the firm, has received no compensation for Tyco-related work at the firm. “Tyco has been a valued client for many years and continued to be so after Mark Belnick became general counsel in 1998,” said Paul S. Pearlman, the managing partner of Kramer Levin. “In 2001, we did more work for Tyco than in prior years.” Wilmer Cutler was the firm Belnick brought in to launch a probe shortly after the board retained Boies Schiller. Gary Holmes, a spokesman for Tyco, said Wilmer Cutler continues to handle a substantial amount of work for the company and has been working closely with Boies Schiller. According to the complaint, Tyco brought Boies Schiller aboard in May, initially for the purpose of investigating a $20 million payment to Frank E. Walsh Jr., a former member of Tyco’s board of directors, allegedly authorized by Kozlowski as a “finder’s fee” in connection with the company’s 2001 acquisition of CIT Group. Tyco filed a separate suit against Walsh Monday, also in the Southern District. DOCUMENTS NOT SHARED According to Tyco’s complaint against Belnick, the company’s lead director, John F. Fort III, asked Boies Schiller to launch an internal investigation relating to the criminal investigation of Kozlowski on June 2, with Belnick present via phone. The following day, the complaint alleges, Belnick began his own investigation and did not share documents or other information with lawyers from Boies Schiller, led by David Boies himself. On June 9, Belnick allegedly cancelled a conference call with lawyers from Boies Schiller and also failed to appear at meeting in Boca Raton the following day. That day, the complaint alleges, Belnick removed or destroyed files in his New York office. June 10 was also the day Belnick was fired. Apart from obstructing Boies Schiller’s investigation, Tyco is also charging that Belnick made over $35 million while at Tyco, much of which the company is claiming was through bonuses and grants made at the discretion of Kozlowski, without the knowledge of the board and its compensation committee. Tyco also claims Belnick improperly took $14 million in interest-free loans under a company relocation program, buying a Central Park West apartment and a vacation home in Deer Valley, Utah. Arkin said all of Belnick’s compensation had been approved by the board’s compensation committee. The prominence of the lawyers involved in the matter has captured the attention of the New York legal community. “Just the fact that you have Stanley Arkin and David Boies squaring off against each other is worth the price of admission,” said Dennis Orr, a partner in the New York office of Mayer, Brown, Rowe & Maw. “This is a soap opera that’s going to play out for a long time.”

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