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Defense lawyers for former Tyco International Ltd. General Counsel Mark A. Belnick tried to show Tuesday that a former Tyco director who testified for the prosecution had self-dealings of his own. Joshua M. Berman, a former partner at Kramer, Levin, Naftalis & Frankel and a former member of Tyco’s board of directors, testified last week that more than $30 million in bonuses and loans awarded to Belnick by ex-Tyco Chairman L. Dennis Kozlowksi had never been approved by the board. The Manhattan district attorney’s office has charged Belnick, a former partner at Paul, Weiss, Rifkind, Wharton & Garrison, with grand larceny, securities fraud and several counts of falsifying business records in connection with the allegedly stolen compensation. But under cross-examination Tuesday by Belnick’s lawyer, Reid Weingarten of Steptoe & Johnson, Berman said he did not know if his own deal with Kozlowski for $360,000 per year in compensation had been approved by the board. He also acknowledged he had not disclosed the payments in the director and officer questionnaires used by the company to prepare its proxy statements. Citing a June 2002 board memo which said the directors had only “recently found out” about the payments, Weingarten challenged Berman on the stand. “In truth, you were between a rock and a hard place in June 2002, weren’t you?” Weingarten asked. Berman appeared unfazed by the question, however. “I don’t think so,” he replied. Berman countered that he told individual board members about his arrangement. Noting he was given the title of vice president in 1997, he testified that he thought he was an employee and his payments would be considered salary not subject to disclosure on the director and officer questionnaires. He said he also consulted Tyco in-house lawyer Fatemeh Sadeghi-Nejad about whether to disclose the payments, as well as Kramer Levin corporate partner Abbe Dienstag. From the beginning of the trial before Manhattan Supreme Court Justice Michael Obus, the defense has sought to portray Berman as Belnick’s nemesis. Weingarten has argued that Berman resented and sought to undermine Belnick because he saw himself as the chief legal authority at Tyco and sought to protect Kramer Levin’s status as chief outside counsel for the company. The defense has also argued that Berman and other directors engineered Belnick’s dismissal and cooperated in his prosecution to divert attention from their own wrongdoing. RELATIONSHIP WITH BELNICK Berman’s testimony certainly depicted a somewhat confused legal department. He said he considered himself a member of Tyco’s legal staff but said he did not report to Belnick as general counsel. But he played down the notion that he and Belnick constantly clashed at Tyco. While he acknowledged differences of opinion with Belnick, Berman steadfastly denied an assertion by Weingarten that he had opposed Belnick’s strategy of cooperation with a 2000 SEC inquiry. Berman also described his reasons for occasionally questioning Belnick’s choice of counsel. He said he initially felt Lewis Liman, then of Wilmer, Cutler & Pickering, lacked the experience to handle Tyco’s SEC investigation. Berman said he was mollified when he learned William McLucas, a more senior securities partner in Wilmer Cutler’s Washington, D.C., office, would be directing the case. In early 2002, Belnick tried to hire Michael Cooper of Sullivan & Cromwell to advise the board on how to handle the fallout from the payment of a $20 million “finder’s fee” to board member Frank Walsh in connection with Tyco’s acquisition of the CIT Group Inc. Berman said he objected because he felt the board needed independent counsel with some expertise in Bermuda law. He also said he was concerned about Sullivan & Cromwell’s close relationship with investment bank Goldman Sachs & Co., which had advised Kozlowski on numerous deals. “I thought the governance committee should be represented by a firm that did not have those connections,” he said, adding that the board hired Kramer Levin and Allen & Overy. Berman acknowledged that he sought Belnick’s ouster. He testified both last week and Tuesday that he had gone so far as to interview a candidate to replace Belnick as Tyco general counsel. He said he introduced the candidate to Kozlowski, who had also interviewed the man. Weingarten tried to draw Berman out about some purchases of antique chairs at Sotheby’s, asking whether Berman had asked that the sales tax on the chairs be calculated as if they were being shipped to Tyco’s offices in Boca Raton, Fla. Sales tax evasion on art purchases had been the subject of the Manhattan district attorney’s office probe of Kozlowski. Weingarten’s attempt to introduce evidence on the Sotheby’s purchase drew objections from prosecutors though, and Justice Obus did not permit the evidence to be introduced. Berman denied ever attempting to have sales tax calculated based on a Florida shipment.

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