The Trial of Lord Vader, I mean, Black
Eric Reguly sizes up the trial of Conrad Black. Added to the news that the British House of Commons voted to change the House of Lords to a 100% elected body, things are not going well for Lady Slatternly’s lover:
If Conrad Black fears for his freedom, his reputation, his wealth (what little may remain), his status atop society’s invitation A-list, he’s not showing it. He displays no fear. He says he is confident his criminal trial will declare the charges against him a sham. His supporters, some at the National Post, the paper he launched in 1998 and controlled until 2002, cheer him on — innocent until proven doubly innocent in the Chicago courtroom.
No thief he; a value-creation machine in truth. “Conrad didn’t lose his shareholders a billion dollars: he made them several billion,” National Post columnist George Jonas wrote the other day, apparently oblivious to the dismal shareholder returns of Lord Black’s Hollinger International. Between 1994 and 2003, when Lord Black’s troubles went from the annoying to the serious, shareholders earned an average return of 3.3 per cent a year, including dividends. The Dow’s equivalent return was 12.4 per cent.
Lord Black’s trial on eight counts of criminal fraud begins in six days. Specifically, the prosecutors will try to prove that Lord Black and his top colleagues enriched themselves by more than $80-million (U.S.) by disguising management bonuses as non-compete payments. Whatever he and his fans say or believe, the trial will be no stroll among the daisies, not least because the man in charge of the case is a certain Patrick Fitzgerald. The U.S. prosecutor has gone after bigger targets than Lord Black and is fresh from a jury trial that nailed Scooter Libby, the former right-hand man to U.S. Vice-President Dick Cheney, for obstruction of justice and other crimes.
Lord Black’s confidence is all the more remarkable when you consider the star witness for the prosecution is none other than David Radler, his business partner in Canada since 1969. Mr. Radler’s official title was Hollinger International’s chief operating officer. He was also publisher of the Chicago Sun-Times, the biggest holding in Lord Black’s American business. But he was more than an officer. Mr. Radler was Lord Black’s friend, adviser and partner, or was until 2005, when he negotiated a plea deal with Mr. Fitzgerald’s team. In exchange for the admission of guilt on a single charge of fraud, Mr. Radler will serve 29 months in prison and pay a token fine of $250,000. The kicker: The agreement would see him “co-operate” in the case against his former boss. Another top Hollinger insider, Dan Colson, the former CEO of the Telegraph newspapers in London, could also emerge as a witness.
Lord Black’s defence wasn’t helped when Peter Atkinson, Hollinger Inc.’s general counsel in Toronto, agreed to pay back $2.8-million of the alleged $32-million that he and other Hollinger executives allegedly skimmed from various newspaper sales (Mr. Atkinson is one of three co-defendants in the trial). Or when Ravelson’s receiver sought, and won, Ontario court approval for Ravelston to plead guilty to criminal fraud.
The prosecutors will no doubt try to sway the jury with tales of past misdeeds, including the removal, of 13 boxes of documents from Hollinger’s Toronto head office two years ago. Lord Black returned the boxes but U.S. prosecutors have, so far, not been able to secure their contents as evidence in the trial. Luckily for Lord Black, an old complaint made in 1982 by the U.S. Securities and Exchange Commission against him will not come up in the trial. The complaint dates from his time as chairman of Norcen Energy Resources and the company’s intentions for the ownership of Hanna Mining.
The timing couldn’t be worse for Lord Black and the co-defendants. The tolerance for executive greed is at an all-time low in the United States. Mention Tyco, for instance, and shareholders who lost fortunes immediately think of the $6,000 shower curtain bought with company money by Dennis Kozlowski. The former Tyco boss is now in prison. Lord Black too is accused of using company money to finance a lavish lifestyle, including some $60,000 allegedly spent on his wife’s birthday party in 2000.
The amount is trivial, given the size of Hollinger International at the time. But you can bet the prosecutors will exploit the birthday party to bolster the claim that Lord Black had a pattern of looting money that belonged to shareholders. Mr. Fitzgerald made this theme the centrepiece of his case against Lord Black in 2005, when the indictments were revealed. “Insiders at Hollinger . . . whose job it was to safeguard the shareholders, made it their job to steal and conceal.”
Lord Black seems calm. If he’s afraid of what awaits him in Chicago, he doesn’t show it. His outward courage is admirable. Courage is what he’ll need, because the trial could be painful and potentially disastrous for the defendants. The prosecutors are counting on David Radler to ensure that.