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The man depicted by defense lawyers as the architect of Mark Belnick’s downfall took the stand Thursday as a prosecution witness in the criminal trial of Belnick, the former general counsel of Tyco International Ltd. Lawyer Joshua M. Berman, a former member of Tyco’s board of directors as well as a former counsel at New York’s Kramer, Levin, Naftalis & Frankel, testified he had never been informed about the more than $30 million in compensation and loans paid to Belnick. He said such payments would have struck him as “extraordinary.” The Manhattan district attorney’s office has charged Belnick with grand larceny, securities fraud and several counts of falsifying business records on the grounds that the millions paid to him were not authorized by the board. Prosecutors claim Belnick received the money for helping former Tyco Chief Executive Officer L. Dennis Kozlowski conceal his own, much larger thefts from the company. But lawyers for Belnick, led by Reid Weingarten of Washington, D.C.’s Steptoe & Johnson, have said Belnick received large bonuses and favorable loans because of his stellar performance in handling a Securities and Exchange Commission inquiry of the company in 2000. Instead, defense lawyers have sought to cast Berman as the villain. In his opening argument, Weingarten said Berman was consistently hostile to Belnick because he regarded himself as the chief legal authority at Tyco and had a financial interest in having Kramer Levin handle much of the company’s legal work. Weingarten has accused Berman of being the driving force behind both Belnick’s dismissal from Tyco and his subsequent criminal prosecution. But Berman said Thursday he initially thought highly of Belnick, chiefly because of the latter’s long working relationship with the late litigator Arthur Liman. Berman said he knew and respected Liman, who was a partner of Belnick’s at Paul, Weiss, Rifkind Wharton & Garrison. Berman said he supported Belnick’s hiring at Tyco and regarded him as the sort of “first-rate, big-league lawyer” the expanding company needed. OPINION CHANGED Berman said his opinion of Belnick changed because many Tyco executives began expressing dissatisfaction with the new general counsel within six months of his joining Tyco. He said he talked several times with Kozlowski about replacing Belnick, including after the successful conclusion of the SEC investigation in July 2000. Defense lawyers have acknowledged that Kozlowski had wanted to fire Belnick but have argued that the lawyer’s successful handling of the SEC investigation reversed his fortunes at the company and convinced Kozlowski to keep him aboard. Berman testified that Kozlowski expressed some interest in replacing Belnick in 2002 but never acted to do so. He said Kozlowski once explained his failure to terminate Belnick by pointing to the lawyer’s work on ongoing shareholder litigation. On another occasion, he said he wanted to avoid offending Warren Rudman, the former U.S. Senator who first recommended Belnick for the Tyco position. Berman’s testimony followed that of former Tyco in-house lawyer Fatemeh Sadeghi-Nejad, whose responsibilities included preparing proxy statements from information provided by the company’s director and officers in internal questionnaires. Sadeghi-Nejad testified that Belnick did not include his loans or bonus on the questionnaire. Seeking to demonstrate shareholders’ interest in such information, the prosecution introduced proxy cards sent in by shareholders which complained about Tyco executives’ lavish compensation and urged the company to raise its dividend. The jury chuckled at some of the cards, prompting defense lawyers to argue the cards had been prejudicial, playing to public animosity towards wealthy corporate executives. Manhattan Supreme Court Justice Michael J. Obus later reminded the jury to put aside any personal feelings about the subject of executive compensation.

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