More Fun From the Tyco/Kozlowski Trial

This is starting to play like one of those fascinating traffic accidents you can’t drive by without slowing down and taking digital pictures. And the only place I’ve seen coverage, oddly enough, is the Wall Street Journal. I haven’t done an exhaustive search, but our local papers sure aren’t givin’ it up.
At some point on Tyco’s corporate calendar, there among the board meetings, financial forecasting meetings, supply chain process improvement projects, the merger with ADT and screw the government out of hundreds of millions of dollars seminar, the annual audit by wink-wink independent auditors was - what’s this? - Mrs. Kozlowski’s birthday party!!!
Yeah, she’s not an employee of Tyco per se, but her 40th birthday might just be a good opportunity to get some of Tyco’s customers and friends together for some business-oriented face time if they happen to be in the area. On fucking Sardinia.

“Among the charges is that they committed grand larceny by stealing $1 million or more by using Tyco funds for the Sardinia bash for Mr. Kozlowski’s wife.”

Like the dumbest of perps, these guys were fool enough to make a video of the frivolities. The case is being tried in New York state Supreme Court, and prosecutors are seeking to show the video to a jury. They’ll get to see a heavily edited version of it, apparently, but won’t get to see:

  • a still image of guests “mooning” the camera
  • an ice sculpture of Michelangelo’s David urinating vodka
  • the life-size, female-shape birthday cake with the exploding bosom for Mr. Kozlowski’s wife

Other hijinks at the party include:

  • a $250,000 musical performance by Jimmy Buffett (parrotts…Tyco…Get it?)
  • Guests were greeted by chariots and a gladiator, and by what Ms. Jacques described as “male models” dressed in skimpy bathing suits
  • In the days prior to the birthday party, she said, guests could indulge in activities such as horseback riding, water skiing, an elaborate scavenger hunt and rides on Mr. Kozlowski’s yacht — at no cost to them
  • After the party, Karen Kozlowski and some of her friends hopped aboard a Tyco jet to take a course at a cooking school near Florence

Kozlowski supposedly told the corporate travel planner (and former paramour), Barbara Jacques, that he would pay half of the cost of the party personally. Prosecutors allege that he paid no more than 30%. The Internal Revenue Service regulations for the deductibility of business expenses state that such expenditures must be “ordinary and necessary” to the business being conducted. Raise your hand if you believe that Tyco DIDN’T deduct the remaining 70% of the $2 million party expense from the already truncated amount of taxable income it reported on its U. S. tax returns.
The ostensible business purpose associated with the birthday party boiled down to “a planned board meeting for one of Tyco’s subsidiaries, to take place one afternoon. In contrast to the elaborate party arrangements, she said, the board meeting required only a conference room and speakerphone.” The rest was merely prologue and denouement.
One question that comes to mind is, Why is this being tried in a New York State court and not in a federal court, since it appears to cross state lines and national boundaries? I’m not a lawyer, so I have no idea. It would seem that, if New York State laws were broken, surely some federal offenses were committed as well.
And, if these corporate piracy cases are strictly the purview of state courts, why haven’t we heard how fervently Texas is pursuing Kenneth Lay?
Here might be a hint on both counts:

In cross-examining Ms. Jacques, one of Mr. Kozlowski’s attorneys, Austin Campriello, elicited testimony from Ms. Jacques that other Tyco functions also mixed business and social events. In particular, he had Ms. Jacques discuss the agenda for a 1999 “state of the company” meeting in Boca Raton. In addition to business, the event featured a speech by Colin Powell, dinner cruises and golfing.

Ah. The cerebral internationalist, Colin Powell, moderate influence and conscience of the neo-cons, who should have known, if anyone did, about the Bermuda tax scam and the level of crap surrounding this company. Seems like wherever you look in these corporate scandals, a member of this administration has left tongueprints on the trough.