Former Tyco chief financial officer Mark Swartz defended a glitzy $2 million birthday bash held in Sardinia for the wife of Dennis Kozlowski, then chairman of Tyco International Ltd.
Testifying for the second day at his and Kozlowski’s trial, the former finance executive insisted that the party mixed business with pleasure, according to Reuters, pointing out he and his boss approved a $3.5 billion debt offering while on the island.
Speaking of the get-together in general, the “only common interest we had was business,” Swartz reportedly said. “When we sat or stood around, we talked about what was happening at the company.”
The 40th birthday party for Kozlowski’s second wife, Karen, has become a symbol for the excesses at Tyco and many other companies that have found themselves the subject of scandal. The most notable party decoration was an ice sculpture of Michelangelo’s David that issued a stream of vodka from a bodily part that, at a more decorous event, might have been covered by a fig leaf.
Swartz testified that Tyco paid about $1 million of the cost for the Sardinia trip, based on the percentage of party guests who were Tyco employees. Kozlowski paid the rest.
“Did you believe there was anything wrong with Tyco paying a portion of the Sardinia event?” asked his defense lawyer, Charles Stillman. “No, I did not,” replied Swartz, according to the wire service’s account. “I believed Tyco shouldn’t pay the full amount because not all of the guests were Tyco related.”
Swartz nonetheless tried to distance himself from the party, saying that he was not involved in the planning of the Sardinia trip. He explained that he and his wife flew to Milan, Italy, on a commercial airline and then hopped on a Tyco corporate jet that took them to Sardinia.
Swartz said that he and Kozlowski were the only directors present at an executive board meeting on the island, when they wanted to issue some debt in connection with a planned acquisition, according to Reuters. He added that Tyco’s other directors were notified before and after the meeting of their intent.
About four months later in Montreal, he noted, the full board approved the debt financing. Stillman then reportedly introduced the minutes of the Montreal meeting as proof of the approval. Reuters observed that the meeting between Kozlowski and Swartz is noted, but not the Sardinia location.