Ex-Tyco CEO Kozlowski Seeks Insurance Broker’s Documents

By | June 4, 2006

Former Tyco CEO L. Dennis Kozlowski is asking a court to force a Bermuda insurance broker to hand over documents related to whether an insurer must pay his legal bills of almost $17.8 million (euro14 million).

In papers filed in Manhattan’s state Supreme Court, Kozlowski says he needs the documents from Bermuda’s Willis Ltd., the insurance broker, to file June 30 in London in an arbitration over who is liable for the fees.

Kozlowski ran up the legal bills over the course of two trials in which he was accused of stealing hundreds of millions of dollars from Tyco International Ltd., the manufacturing conglomerate best known for its home alarm system ADT Security Services.

The insurance policy was written by a Bermuda insurance company, Corporate Officers and Directors Assurance Ltd. (CODA), which has refused to reimburse Kozlowski for the legal fees. Court papers say Willis Ltd., a unit of Willis Group Holdings Ltd., as is Willis of New York Inc., has the policy files.

Willis spokesman Dan Prince said he could not comment on Kozlowski’s petition because of client confidentiality requirements.

Kozlowski lawyer Jeffrey E. Glen, in a letter to CODA dated July 19, 2005, said Kozlowski demanded payment of $17,771,361 (euro13,953,644) and acknowledgment by CODA that it will pay additional defense costs that have been incurred but not yet billed to him.

Justice Helen E. Freedman, who now has two related cases before her, has scheduled a hearing concerning Willis for June 14.

In another case before Freedman, Federal Insurance Co., is suing Tyco, Kozlowski and other former executives. The insurer does not want to reimburse Tyco for legal fees and other losses and to avoid paying the defense costs of Kozlowski and others.

The state Supreme Court’s Appellate Division has upheld Freedman’s ruling that Federal, a unit of Chubb Group, must pay Kozlowski’s legal fees. The panel said Federal was obligated only to pay legal costs of defending covered claims and could later be repaid for the legal costs of defending noncovered claims.

Kozlowski and Mark H. Swartz, Tyco’s former chief financial officer, went through a mistrial and then were convicted in their second trial of stealing hundreds of millions of dollars from Tyco by hiding unauthorized pay and bonuses and by abusing loan programs.

They also were convicted of reaping huge profits by inflating the value of Tyco stock by lying about the company’s finances.

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