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The former Tyco chairman who anointed L. Dennis Kozlowski as his successor in 1992 took the stand Thursday in Manhattan as a prosecution witness in Kozlowski’s trial for, among other charges, enterprise corruption and grand larceny. John F. Fort, who served as Tyco’s chairman and chief executive officer throughout most of the 1980s, testified on direct examination by Assistant District Attorney Gerard Murphy that Tyco’s employee loan and relocation plans were not intended to allow executives to buy jewelry, artwork, multiple homes, yachts or private school educations for their children. The board only became aware of such purchases shortly before Kozlowski’s departure in June 2002, he said. “It seemed we had quite a few apartments in New York and other residences the board was not aware of,” said Fort, who was lead director on Tyco’s board and served as interim CEO after Kozlowski’s resignation. Fort took over Tyco in 1982 and said he intended to step down in 1992 because he thought a CEO should stay no more than a decade. He recommended Kozlowski when he retired, he said. Fort also testified that only the board’s compensation committee could authorize officer’s pay, not the officers themselves. The Manhattan District Attorney’s Office has charged Kozlowski and Mark H. Swartz, Tyco’s former chief financial officer, with stealing $170 million from the company through fraudulent use of its loan programs and self-payment of unauthorized bonuses. A clearly nervous witness, Fort often spoke haltingly and frequently stated that he did not recall presentations made to the board. He said he had no memory of the board authorizing multimillion-dollar “special bonuses” to Kozlowski, Swartz and other employees following the successful completion of certain corporate transactions. Fort said he and other board members only became aware of many of Kozlowski and Swartz’s transactions after the board hired the law firm Boies, Schiller & Flexner to conduct an internal investigation. Fort’s mention of the firm and its managing partner, David Boies, who led the investigation, drew objections from the defense lawyers. Justice Michael J. Obus said the conclusions of the Boies Schiller investigation were inadmissible hearsay, but he would permit Fort to testify about the fact of the investigation and actions taken in relation to it. Fort’s mild-mannered demeanor offered a striking contrast to the imposing Kozlowski. Indeed, Fort’s testimony about his own tenure as Tyco’s chief executive painted a picture of a frugal management style different in every respect from Kozlowski’s lavish world of executive perks. Discussing his decision when he was CEO to sell the company’s 42-foot yacht, helicopter, airplane and New York apartment, Fort said, “I didn’t think they were germane to the business of the company. I didn’t think they were necessary.” But Fort also paid extended tribute to Kozlowski’s prowess as an executive, recounting his stellar performance in a series of senior executive roles within the company. By 1990, Kozlowski was the clear choice to become the next CEO of Tyco, Fort said, further noting that Tyco’s annual sales have increased from about $3 billion in 1992 to about $35 billion today. The defense, who will cross-examine Fort this week, will likely seize upon such appraisals in arguing that Tyco’s board members happily authorized the disputed bonuses and loans to Kozlowski when times were good, and are now opportunistically turning against him. Kozlowski is represented by Stephen Kaufman, a solo practitioner. Swartz is represented by Charles Stillman of Stillman & Friedman.

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