(Bloomberg) ? Tyco International Ltd.?s former top lawyer, Mark Belnick, testified that former chief executive officer L. Dennis Kozlowski said that he, not the company?s board, was responsible for approving Belnick?s pay.

Belnick, testifying at his trial in criminal court in New York on charges he stole an unauthorised $17 million bonus, said he asked Kozlowski when he was hired as general counsel in 1998 whether the board?s compensation committee had to approve the pay package he had negotiated with Kozlowski.

?`I determine your compensation, and I review it with the board,?? Belnick said Kozlowski told him. ?`That?s how it works at Tyco.??

Prosecutors claim the board was required to approve the bonus, which they say Kozlowski gave Belnick in 2000 in exchange for keeping silent about Kozlowski?s improper financial actions. Belnick, 57, says he got the bonus as a reward for heading off a government inquiry into the company?s accounting.

Belnick is charged with grand larceny ? for taking the bonus ? and with stock fraud and falsifying business records. He may be sentenced to as many as 25 years in state prison if convicted.

Belnick was fired in June 2002, after Kozlowski was indicted on criminal charges and forced out as chief executive. The prosecution of Kozlowksi, who didn?t testify at his trial, and former chief financial officer Mark Swartz ended in a mistrial in April. Several jurors said at the time they had voted to convict the two former executives. Their retrial is scheduled for January.

In testimony that began this morning, Belnick said Tyco?s directors never asserted authority over his pay.

?No director ever asked me anything about my compensation,? said Belnick. ?But they most assuredly knew I wasn?t working there for free.?

Several former Tyco directors testified for the prosecution that the board was required to approve the bonus. One, former director Frank Walsh, testified that Kozlowski had full discretion to set Belnick?s pay.

Under questioning by defense lawyer Reid Weingarten, Belnick told jurors that Kozlowski offered him the general counsel job over lunch in 1998.

?He took out a napkin and pen and said `write it down,?? Belnick told jurors.

The offer included a $700,000 base salary, $300,000 signing bonus, restricted shares of Tyco stock and options. Kozlowski promised Belnick a bonus of one-third of Kozlowski?s own annual cash bonus, he said.

?I wouldn?t have had the nerve to ask for it,? Belnick said he told Kozlowski of the offer, which Belnick described as ?very, very generous.?

In addition, Kozlowski offered Belnick a no-interest loan to move from the New York suburbs to Manhattan, where Belnick and his wife had been looking for an apartment, he testified.

Belnick eventually borrowed almost $15 million in no-interest loans from the company, to buy and renovate a Manhattan cooperative apartment and then to build a home in Park City, Utah, where Tyco had no corporate offices, records introduced by the prosecution showed.

Belnick is charged with falsifying business records for failing to disclose the loans on Tyco forms used to prepare filings with the US Securities and Exchange Commission.

His lawyers claim he had no reason to hide the loans, which were known to people at Tyco and to the company?s outside accountants.

Belnick said Swartz told him that the loans did not have to be disclosed. He testified a number of times that he is not an expert in securities law. ?I was not a corporate lawyer; I was not a straight commercial lawyer; I was not a securities lawyer. I was a litigator,? Belnick said.

Belnick testified that he confirmed the existence of the loans to PricewaterhouseCoopers LLP, Tyco?s auditor, in 1999 and again in 2001, when he corrected what had been a $275,000 error in his favour, he said.

In contrast to other Tyco executives, including Kozlowski and Swartz, whose loan balances were forgiven by the company, Belnick still owes the money, he said. Belnick?s wife and three children were in the courtroom, as were some former partners at Paul, Weiss, Rifkind, Wharton & Garrisson LLP, his former firm.Tyco, the world?s biggest maker of security systems, is based in Bermuda and run from offices in West Windsor, New Jersey.