Former Trustee Kozlowski takes stand in court retrial

Author: Rachel Greenhaus

L. Dennis Kozlowski, ex-chief executive of Tyco International and ex-Middlebury College trustee, took the stand last week in his own defense at his retrial in New York State Supreme Court. Named one of BusinessWeek magazine's "Top 25 Managers to Watch" as recently as 2001, Kozlowski has been a media favorite since accusations of grand larceny to the tune of $600 million first brought him to trial in September 2003. That trial ended with a hung jury in April 2004. Now in the fifth month of its second trial, the defense offered Kozlowski himself to the jury last Thursday. The prosecution's cross-examination began the next day.

Kozlowski resigned from the Middlebury College Board of Trustees in 2002 when a formal indictment was first filed against him, although he denied any wrongdoing and pleaded not guilty on all 32 counts. He was credited with securing a $2.5 million donation from Tyco for the College, which became a fund in his name, as well as being directly responsible for The Cheryl M. '96 and Sandra L. '99 Kozlowski Financial Aid Fund, named for his daughters.

Upon his resignation, then-President of the College John McCardell was quoted in The Middlebury Campus, "I remain firm in my belief that Mr. Kozlowski was a good trustee and a strong supporter of Middlebury College. I regret that he finds himself in his current circumstances, but I will not presume to supplant our judicial system in determining the accuracy of the allegations made against him."

In his testimony last week, Kozlowski was called upon to explain a complicated chain of loans and salary deferments that he incurred while employed at Tyco. He is accused of improperly using the company's loan programs and then of improperly paying off the loans.

Presenting a simple explanation to prosecutor Ann Donnelly, Kozlowski claimed complete unawareness of any wrongdoing. "Ms. Donnelly, it may seem inconceivable to you that I may not know how that [a questionable $25 million allocation of funds] happened," he is quoted in the New York Times. "I am responsible for what I owe Tyco. I take full responsibility for that. But to sit down and to track the loans on a day-in and day-out basis, to reconcile loans, to make wire transfers, to take care of the things that I was doing, that responsibility I delegated to somebody else, simply because I was the Chief Executive Officer of Tyco and, you know, I was doing many, many other things at that time."

Calling Kozlowski's testimony "a choice that is fraught with risk," the Times speculated that the decision has something to do with the prosecution's case in this retrial, which they called "substantially stronger [and] more focused," in comparison with its case in 2003-2004. The newspaper further speculated that the defense is trying to humanize Kozlowski in front of the jury and is attempting to give him a chance to directly refute the charges against him.

What the actual effect of Kozlowski's testimony will be of course remains to be seen, but the Times quoted former federal prosecutor Jonathan Polkes on the effect defendant testimony has upon a jury: "Once a defendant decides to testify, in many senses everything that came before it in the trial becomes irrelevant. If the jury likes and believes the defendant, the jury will be inclined to acquit. If they don't, they'll be inclined to convict."