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The securities lawyer hired by former Tyco International general counselMark A. Belnick to handle a 2000 Securities and Exchange Commissioninvestigation testified Thursday about an e-mail he sent Belnickafter the investigation in which he credited the in-house lawyer withsaving his Tyco bosses’ “ass.” In the February 2002 e-mail, William McLucas, the head of the securitiesenforcement and litigation practice at Washington, D.C.’s Wilmer,Cutler, Pickering, Hale and Dorr, suggested that Belnick’s workmanaging the SEC inquiry might not have been fully appreciated by formerTyco Chairman L. Dennis Kozlowski and former Chief Financial OfficerMark Swartz. Though he was called by the prosecution, McLucas’ testimony, likethe earlier testimony of his former partner Lewis Liman, may ultimatelyprove more helpful to the defense. Praising Belnick for possessing the right balance of “street-smarts, integrity, balls and lunacy,” McLucas concluded inhis e-mail: “You should have a nice bottle of wine. They don’t pay youenough and I hope they appreciate you.” How much Belnick was legitimately paid is at issue in his criminaltrial. Prosecutors from the Manhattan District Attorney’s Office havecharged him with grand larceny, securities fraud and several counts offalsifying business records in connection with receiving more than $30million in allegedly unauthorized compensation and loans. Kozlowskipaid him that much, prosecutors claim, because he covered for his boss’own corporate looting. The defense is claiming Belnick earned his pay through hisperformance, the chief example being the successful resolution of theSEC probe. Belnick worked closely in that investigation with a teamof Wilmer Cutler lawyers led by McLucas, a former head of the SEC’senforcement division and one of the nation’s most prominent lawyers insecurities regulatory matters. WORRIES AT TYCO Much of McLucas’ testimony Wednesday and Thursday touched on e-mailcommunications between him and Belnick. During the investigation, McLucas had alerted Belnick to anumber of things that worried him about business practices at Tyco.Prosecutors claim such communications show Belnick was aware ofmisconduct at Tyco. In particular, McLucas was concerned about Tyco executives’ use ofvarious cash reserves to beef up cash flow in order to meet forecasts.In one e-mail sent to Belnick on May 26, 2000, McLucas stressedthe need to change Tyco’s “culture.” But McLucas also says in the e-mail that he knows he’s “preaching tothe choir” in addressing Belnick, a statement he bolstered in histestimony Thursday. “My sense from my dealings with Mr. Belnick in this situation is that heunderstood what I was saying and why I was saying it,” McLucastestified, adding that he thought he and Belnick “shared the sameview” of how seriously the company should be taking such issues. Much of McLucas’ testimony depicted Belnick and the outsidelawyers at odds with Tyco management. McLucas said Wilmer Cutlerlawyers found their steadiest ally in Belnick, to whom they wouldturn when they had trouble getting cooperation from other executives. McLucas also testified that he had been satisfied with Belnick’sexplanation of how senior executives were using a company loan programas a “revolving credit arrangement.” McLucas had been concernedabout company loans for personal items being charged to reserves meantto cover mergers and acquisitions costs. “If I had a concern that there was something about the loan program thatwas inappropriate, SEC or no, there would have been further questions,”he said, adding that his response at the time was: “The loan program iswhat it is. There was disclosure. Fine, next issue.”

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