Lord Conrad Black writes a good e-mail. “I am not prepared to reenact the French Revolutionary renunciation of the rights of nobility,” he wrote to his former colleagues after auditors had questioned the media baron’s use of a corporate jet for personal use. “We are proprietors after all, beleaguered though we may be.”
U.S. Attorney Jeffrey Cramer showed those lines today to the Chicago jury that will decide whether Black is guilty of bilking his former company, Hollinger International, of $84 million. “A proprietor is an owner,” Cramer said, turning to look at Black accusingly. “The shareholders own that company. The shareholders own the private jet. And the shareholders just picked up $600,000 for his private trip.”
At the heart of Black’s crime, according to the government, is Hollinger International’s 1998 decision to begin selling off hundreds of small community newspapers to focus on its major properties,the London Daily Telegraph,the ChicagoSun-Times, and the Jerusalem Post. Each of the sales included standard non-compete clauses. But instead of the proceeds going to Hollinger, the government charges, Black and his longtime partner F. David Radler drew up the agreements to divert the money into their personal accounts. And while he was slimming down the company, Black was also allegedly charging it for high-flying perks like his (aforementioned) private vacation flight to Bora Bora and a $42,000 birthday party for his wife at La Grenouille * restaurant in New York.
When a New York investment company began challenging Black, he wrote his colleagues another e-mail titled, “An epidemic of shareholder idiocy.” Cramer showed the jury that one, too. And he quoted Black telling another colleague, “It’s my company, and I’ll tell the board what I want and when I want.”
All of which made for a good opening day for the government. And in the prosecutors’ back pocket is Radler, who has pled guilty, paid $92 million in settlement fees, and agreed to testify against his former partner.
Still, the scheme the government alleges is complicated. Black’s media empire—at one point the third largest in the world with 5 million readers—was built like a Russian Matrushka doll. The outer shell was Hollinger International, a publicly traded company in New York with a star-studded board of directors. But 78 percent of Hollinger’s voting shares were held by a Canadian company called Hollinger Inc., and 78 percent of that company was held by an investment firm called Ravelston, of which Black and Radler (mostly Black) owned 80 percent.
Black is “our Donald Trump,” as Matt McLearn, of Canadian Business News, put it. (The Canadian press is all over this story; the American press not so much.) The defendant has palatial estates in London, Toronto, and Palm Beach and a controversial columnist wife, Barbara Amiel, who once boasted to Vogue of “an extravagance that knows no bounds.” She and her husband attend only A-list parties, she told the magazine. Many of their A-list friends wound up on Hollinger International’s board, including former Secretary of State Henry Kissinger, U.S. arms negotiator Richard Burt, and former Bush administration official Richard Perle.
Black is represented by two lawyers considered tops in their field: Canadian Eddie Greenspan, who went to law school with Black, and Ed Genson, a Chicago street lawyer who came up through the criminal courts to represent many high-profile cases in federal court. Genson opened for the defense. He described Black in Horatio Alger terms—never mind that his client’s father was a wealthy Toronto brewery executive—telling the story of how Black turned an initial investment of $500 in a weekly Toronto advertising sheet into an empire of 600 newspapers with annual revenues of almost $2 billion. Genson also emphasized the financial health of Hollinger International when Black was chief operating officer and the largest stockholder.
“This isn’t Enron. It’s not WorldCom,” Genson said. “There are no charges of financial impropriety. This was a healthy and successful company worth billions until a small group of people interested in corporate government—who’d done nothing themselves to grow this company—got a hold of it. This is not a story of theft by Conrad Black but theft from Conrad Black. … Now they are using the U.S. attorney as their tool to justify their takeover of the company.
Not surprisingly, given Radler’s upcoming appearance for the other side, Genson cast him as the central player in the most suspect deals covered in the federal indictment. They “were Radler’s baby,” the defense attorney said. “Radler negotiated these deals. Radler is responsible for them.” He also pointed out that Radler is serving a maximum of 29 months. In Canada, where the prisons just must be nicer.
Genson promised, when the defense gets its turn, that the jury will see Black as a visionary when he built the Hollinger empire, and when he decided to sell it. “He looked into the future, and the future was that newspapers were not the future.”
Correction, March 21, 2007: The article originally misspelled the name of the restaurant as La Grenoille. ( Return to the corrected sentence.)
