Newspaper article The Evening Standard (London, England)

Tyco Boss 'Spent Loan Fund Cash on Works of Art'

Newspaper article The Evening Standard (London, England)

Tyco Boss 'Spent Loan Fund Cash on Works of Art'

Article excerpt


THE criminal investigation into the tax affairs of former Tyco boss Dennis Kozlowski is focusing on claims that he used a company loan fund to buy art masterpieces, including works by Monet and Renoir.

According to the office of Manhattan District Attorney Robert Morgenthau, who is heading the inquiry, Kozlowski borrowed $35.7 million ([pound]24.4 million) from the fund during the two years to 30 September. It was originally set up to lend executives money to finance their share option purchases.

Filings from the Securities and Exchange Commission last year show that Kozlowski, who was indicted on Tuesday and faces charges of sales tax evasion on paintings worth $13 million, borrowed $23 million from the fund in the year to last 30 September and $12.7 million the previous year.

The Bloomberg financial news service said the company's compensation committee would have had to approve the loans, which were all repaid by the time of the filing.

The allegations open up the possibility of a full Securitiesand Exchange Commission investigation into the company's financial affairs as well as the criminal proceedings against Kozlowski.

Tyco, built into one of America's biggest industrial conglomerates through a string of aggressive acquisitions, has former Tory Party treasurer Lord Ashcroft on its board.

Kozlowski, 55, who quit as chief executive of the Tyco conglomerate last week, had been one of America's highest-flying and best-paid bosses, collecting a total of $325 million in pay, options, bonuses and share sales over the past four years.

The indictment against Kozlowski alleges that he was at the heart of a sophisticated tax evasion fraud involving galleries and art consultants in New York and London.

He is alleged to have escaped payment of New York's 8.25% sales tax on at least six paintings by pretending that the works were shipped to New Hampshire, where there is no sales tax. …

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