As Jack Boultbee’s attorney, Gus Newman, pointed out in cross-examination, “Fiduciarily — if there is such a word,” Michael Reed had a credibility problem of his own to overcome. The almost half-a-billion-dollar purchase price paid by CNHI came from a retirees’ fund in Alabama. The fact that Reed had entered into a sham non-competition agreement was never disclosed to the lending fund. For a prosecution that rested on a theme of an abuse of shareholders’ trust, the duplicity of their own witness tarnished their position. Of course, Reed did profess to have a moral compass. He balked at the suggestion in the final moments before closing the deal that $9 million of the non-competition payments be diverted to Conrad Black and other senior executives of Hollinger International.
I fail to see how a jury could extend a morsel of credibility to Reed’s testimony. It was a shaky start for the prosecutors’ case. Conrad Black was the invisible man in the CNHI deals. He never attended a single meeting or was involved in any conversation or email related to the deal. The deals were David Radler productions. Mark Kipnis signed the agreements on behalf of the Hollinger senior executives with “his anti-fraud pen,” as Ron Safer described it in his opening. If Black was anywhere in the vicinity of the two blockbuster deals with CNHI, his presence would have been unmistakable; Conrad Black never enters a room quietly.
After court concluded, the Black defence called an urgent meeting for that evening. Eddie Greenspan was concerned that the defence was mounting an untenable position regarding the non-competes. The jury would never accept the proposition that the purchasers desired the non-competition agreements. More importantly, it was unnecessary for the defence to travel down that tortuous road. The real battle lay in convincing the jury that Conrad Black and the other defendants were duped by David Radler into believing that the non-competition agreements with Hollinger Inc. were stipulated by the buyers as a condition of closing just as they were with Hollinger International. This was consistent with a plain reading of the language of the agreements and Black couldn’t be expected to be a mind reader. If the Hollinger International shareholders were victims of fraud, the culprit was David Radler and not Conrad Black. In any event, the agreements were ultimately approved by the directors of Hollinger International after receiving the blessings of the audit committee. Even if the non-compete payments to Hollinger Inc. were not an economic benefit to the shareholders and for the good of the company, they were properly disclosed and approved.
The notion that the non-competition agreements with Hollinger Inc. were genuinely requested by the buyers was discarded the next day. In two deals completed within a few days of each other, Hollinger had sold off a series of American community newspapers. The first deal was with Forum Communications in Fargo, North Dakota. A couple of Hollinger papers, including the Jamestown Sun, were sold for $14 million. In the second deal, about twenty newspapers from Hollinger International’s inventory were sold off to the Midwestern company Paxton Media Group. In both deals, the purchasers testified unchallenged that they had no interest in the non-competes with Hollinger Inc. (for $600,000 in total) and didn’t care if they were in or out. Lloyd Case, Forum’s president, stated that he had barely heard of Conrad Black and didn’t view either him or Hollinger International as viable competitive threats.
While his defence was meeting to discuss a dramatic shift in their approach to the buyers’ evidence, Conrad Black was in his hotel room at the Ritz-Carlton working through the quiet hours of the night preparing a list of footnotes for his biography of Richard Nixon that was soon due to be released. Black was supremely confident; the cocky air he displayed to the media outside the courtroom was entirely genuine. He was the most composed and self-assured criminal defendant that I have ever encountered in a legal career that has spanned more than twenty years. I became convinced that it wasn’t an act. Conrad Black seemingly had ice in his veins and remained unperturbed by the huge stakes that were involved with the trial, including the potential for a sentence that would secure him a place in prison for the rest of his life.
During a break I overheard him in the hallway discussing a recent provincial election in Quebec where the ruling Liberal party was confronted with forming a minority government. Black had a special connection to the province of Quebec. It was in Sherbrooke where he and Radler had bought their first newspaper and ran it successfully.
Perhaps Black’s supreme sense of confidence related to a mystery in the case that I believe I have solved. The special committee first reported that Conrad Black had stolen $400 million from the shareholders. From the moment that the indictment against Black was announced by Patrick Fitzgerald, the amount of money that he and his band of cohorts were alleged to have looted from the Hollinger International shareholders was roughly estimated at the far lower figure of $84 million. That figure stuck until Jeffrey Cramer’s opening statement, when it was announced that the amount of the fraud was $60 million. The substantial shrinkage of $24 million required an explanation.
Had Cramer simply misspoken? He was already under a surprising attack from the former lead prosecutor against Black, Robert Kent, for presenting “sort of a generic one-size-fits-all, relatively brief opening statement”[2] that left the prosecution open and vulnerable to attack. Eric Sussman was seething about Kent’s very public betrayal.
I rejected the contention that the $60-million figure was merely a slip of the tongue. Black’s prosecutors were far too diligent and hard-working to make such a grave error. The answer was fairly obvious. It could be traced to the non-competition agreement for approximately $24 million signed between Conrad Black and the CanWest Communications after the sale of a series of Canadian newspapers including the National Post. That would account for the difference. CanWest was canned. The prosecution had reluctantly accepted that it would never persuade a jury that the non-competition agreement between CanWest and Conrad Black involved any fraudulent conduct, since CanWest owner Izzy Asper had genuinely insisted that Conrad Black and David Radler be parties to an agreement not to compete because he feared them as competitors. Although Asper has since died, his son Leonard was expected to testify and support that position. An essential pillar of Conrad Black’s defence would therefore be established.
The dropping of CanWest from the case against Black marked a concession that non-competes in the Canadian and American markets were treated quite differently. Of course Radler was the catalyst for the agreements in the American media markets. Why wouldn’t Black insist on adopting the CanWest model if he was a party to the American agreements? If the jurors begin to ask this question, then the defence has moved one step closer to achieving a not-guilty verdict for Conrad Black.
April 4–5
Fred Creasey, Hollinger’s former controller, tells the court that Black’s use of a company jet for a Bora Bora vacation raised concerns but was eventually approved by Boultbee and written off as a business expense. The defence attacks him for exaggerating the cost of the flight.
Fly Me to the Moon
As I wait patiently each morning in line to get my precious seat in the courtroom, I keep waiting for one of the deputies to pass by with coffee and donuts. Alas, one arrives but only to admonish us that the judge said that there was to be no talking during sidebars, even when the jury was out of the courtroom. I can only pass the time in line chatting with the many colourful journalists assembled to cover the trial. Mark Steyn and I formed an early bond as courtroom companions. We were among the small group of bloggers attending the trial. Steyn was a successful writer and a definite insider in the Conrad Black camp. He was friends with Black and more closely with Barbara Amiel and they regularly dined together in Chicago during the trial.
My first encounter with Steyn occurred in line in the first couple days of the trial. I observed Tom Bower and Steyn engaged in a rousing discussion about the intricacies of the CanWest deal. It was like watching two Trekkies at a Star Trek convention debating the merits of a particular episode. At one point I felt the urge to shout, “Who cares?” but I doubted that would be greeted warmly by either man.
Steyn shared with me his first-hand knowledge that David Radler was still involved in the newspaper business. Radler contacted him to inquire about the possibility of carrying Steyn’s regular column in his local newspapers.