Dispatches From the Conrad Black Trial
David Radler, the star witness in the Conrad Black trial, started off well on the stand this week but left under the scalpel of Black's defense attorney, Eddie Greenspan. In the end, it was a pretty good testimony for the prosecution.
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StumbleUponBlack's partner for 38 years, Radler did what he was supposed to do as a witness. He tied Black to telephone calls during which the two agreed to funnel some $60 million from the sale of newspapers into personal fees for agreeing not to compete against the buyers. He admitted to hiding the transactions from the audit committee of the Hollinger International board and fessed up to his earlier lies to a special committee investigating Hollinger's management practices. All of these admissions are part of a deal Radler struck with the government. In exchange for his testimony, he will serve 29 months in a Canadian prison for a single count of fraud, versus the potential 101-year sentence Black faces if he is convicted on all 17 counts with which he is charged.
The government's case is complicated, as most financial crimes are, and centers on "noncompete" payments to the publicly traded Hollinger International that Black and Radler allegedly diverted to themselves, their Canadian holding company, Hollinger Inc., and two other executives, Jack Boultbee and Peter Atkinson, who worked in their newspaper management company, Ravelston. After seven weeks of difficult testimony by lawyers and accountants, the jury needed someone to put a face on the crime. Radler supplied one. "I did not make a major business decision without consulting Conrad Black," he testified. "I have no recollection of selling a newspaper anywhere in the world without a discussion with Conrad Black."
The prosecution's problem is that Radler is not particularly appealing. A diminutive man with a ferret face, he manages to look drab even in a dark suit with a hot-pink tie and a glowing tan. He has no friends in court—not at the defense table where Black steadfastly glares, looking away from him, and not in a press section filled with former employees who remember when he fired staff and shut down the escalators to save money while he was making millions from Ravelston.
Radler is renowned in the industry for buying distressed newspapers, cutting costs to the bone, and then turning into a feisty, foul-mouthed negotiator when it comes time to sell them off. He came to court well-prepared and followed the prosecutor's lead in describing his actions in language that mirrors Black's indictment. Greenspan eventually turned this to his advantage, though, by characterizing it as reading from the government's script.
Radler said he and Black started out in the business in 1969 buying the tiny Sherbrooke Record in Quebec for $20,000. "I was impressed with Mr. Black's knowledge and ability. I thought he would be a great partner to have," Radler recalled. At 27, Radler ran the business while Black, then 25, handled the editorial side. One of their first stories was "An Homage to LBJ," which Black sent to the White House and had inserted into the Congressional Record. "That was a big deal for you, wasn't it?" Greenspan asked. "Not as big as it was for Conrad," Radler responded. Their real reward, however, was turning the newspaper around in three months and finding a formula that would make other papers profitable as well. They started buying other small papers and eventually gained control of more than 300 publications, including the Daily Telegraph in London, the Jerusalem Post and the Chicago Sun-Times, where Radler served as publisher.
After Black decided in 1998 to sell Hollinger's small community papers, Radler said they both realized the company could not continue to pay Ravelston management fees that at one point reached $40 million a year. "It was a general concern that the financial situation was going to be difficult," he said. "The bulk of our income came from management fees, and if management fees went down, then income went down. We had bank commitments and salary commitments, and one had to have enough income to take care of both."
They discussed the crisis by phone, he said, and Black came up with a plan to take $12 million of $50 million in noncompete fees being paid by the company PrimeMedia to buy Hollinger's American Trucker magazine and to give it to Hollinger Inc., another company Ravelston controlled. "He confirmed that was the plan. He said yes, and that was it," Radler said in court, calling the plan a "template" they would apply in later deals. When CanWest Global Communications demanded that Black and Radler sign personal noncompete agreements, Radler balked and demanded $25 million. "It was just a number from my tummy," he said. Black called him, recommending they each take $19 million and give Boultbee and Atkinson $2.2 million each for signing noncompete agreements as well.
As three Hollinger board members have previously testified, Radler said he never brought the payments up to Hollinger's audit committee. "What do you tell them? It would have been impossible to tell them anything of that sort because they hadn't been asked for by the buyers," he said. Black's attorneys claim the payments were disclosed in the fine print of financial statements, but the directors skimmed over them.
When the prosecution finished with Radler after three days of testimony, Greenspan jumped in with the word he's been waiting to say: liar. The defense lawyer repeated it dozens of times to describe Radler's evasions before Hollinger's special committee and then with government investigators. "And you lied to your lawyer as well?" Greenspan said. "I was not totally truthful," Radler admitted.
Greenspan tried to dig the real Radler out from under the contrite one on the stand. Radler stonewalled as best he could. Consider this exchange, over Greenspan's effort to get Radler to admit he was a powerful man.
Greenspan: "You made a lot of decisions on your own. You weren't Conrad's right-hand man. You are nobody's right-hand man, isn't that right?"
Radler: "Right-hand man could have many meanings."
Greenspan: "Give me one."
Radler: "It could mean flunky."
Greenspan: "And you are not a flunky."
Radler: "I am not a flunky, but others have called me one."
So, now Radler has fingered Black, and it's his word against his former partner's. Which means that the big question until the trial's end will be: Will Conrad Black take the stand?
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