The Canadians have gone back to Canada (all but the hard-core) and, with them, the scrum of TV cameras and microphones that enveloped Conrad Black on opening day. Now begins the long, hard slog to determine who stole what from whom.
The prosecution opened its case by putting on the stand Gordon Paris, who succeeded Black as CEO of Hollinger International. Prosecutor Eric Sussman got no further than Exhibit 2—out of nine volumes of documents—before the defense objected and Judge Amy St. Eve called up more than a dozen lawyers to argue over procedure. The judge has set aside four months for this trial. It looks like we’ll need every bit of it.
When questioning resumed, Paris made clear it that Black and his partner David Radler, who has turned state’s evidence, weren’t exactly making scale when they ran their media conglomerate. Rather than taking salaries, Paris said, they got annual management fees totaling between $25 and $40 million through their Canadian company, Ravelston. That’s four times what the New York Times or Washington Post Co. pay their executives who do the same jobs, according to a report prepared for Paris. Co-defendants Jack Boultbee and Peter Atkinson, other top Hollinger and Ravelston executives, got the same sweet treatment. A fifth defendant, former Hollinger general counsel Mark Kipnis, was out man out in the Ravelston group. He approved all the noncompete contracts that are central to this case, but never shared in the fees they generated.
Paris told the jury that Black brought him onto the Hollinger board in May 2003 to investigate shareholder complaints that the Ravelston fees were excessive. Six months later, he reported back to the board that the fees weren’t the worst of it. Black, Radler, Boultbee, and Atkinson had also taken $84 million in personal noncompete fees on the sale of Hollinger newspapers, and Black was receiving personal perks worth millions more. By November, Black was out and Paris was in as CEO, a job he filled at an annual salary of $2 million until he resigned at the end of last year.
Black’s Canadian attorney Eddie Greenspan, who is making his debut in a U.S. court, tried on cross-examination to bring in how poorly Hollinger—now renamed the Sun-Times Media Group—has fared under Paris. But he hit another procedural snag. In the process, he questioned Paris’ own “perks.” That allowed Sussman to ask pointedly whether the company ever paid Paris for his vacations, his clothing, his apartment, tips to doormen, birthday parties, opera singers, and piano players—all charges Black billed to Hollinger. Paris’ answers, in quick succession, were no, no, no, no, no, no, and no,
Black’s flair for e-mail obloquy—”his late-night musings,” as his attorney Ed Genson calls them—were projected on a huge video screen when the jury returned from lunch. In an e-mail sent off at 1:02 a.m. on April 30, 2003, Black assured two board members that Paris, then-newly appointed, would settle the concerns of shareholders who had challenged his fees. “This practice of certain institutions holding hands with elements of the competing press and representing us as nestfeatherers suffering from financial strain should be rebutted,” he huffed.
A day later, at 12:57 a.m., Black was still steaming. He wrote investor-relations adviser Paul Healey: “I will take on the task of hosing down shareholders in need of it as a matter of some priority. We don’t want a large shareholder like Tweedy Brown flapping about in such an agitated and indiscreet state.” In the end, it was Black who took the hosing, since Paris agreed with almost all of the shareholder assertions.
In the afternoon, the prosecution began putting on testimony about the properties that Hollinger sold off when Black controlled it. The highlight was the account of Craig Holick, a financial officer in Hollinger’s Chicago headquarters. He testified about noncompete fees relating to two newspaper sales, one in 1998 and the other in 1999. The fees of $2 million and $50 million respectively were originally set to go to Hollinger International. Eight months after the first sale, Holick said, he was instructed to redirect the $2 million to Black’s holding company, Hollinger Inc. Just before the second sale closed, instructions came down to split the fee so that Hollinger Inc. would receive $12 million of the $50 million. Holick said he acted at the direction of Kipnis, who worked with him in the corporate headquarters.
One of the most acute observers of the Black trial is Tom Bower, author of a Black biography called Outrageous Fortune. Last month, Black sued Bower in Canada for defamation, asking for $11 million in damages. During breaks, the two eye each other warily in the hallway but don’t speak. Bower says the Canadian press has started to divide into Black loyalists and detractors. “The Black Team vs. the Vermin and Sluts,” he calls them. That’s because earlier this week, a reporter overheard Black’s wife, Barbara Amiel, snarl at a Canadian TV producer who tried to follow her into an elevator, “You slut. You reporters are all vermin. I’m sick of it. I used to be a reporter and we never doorstepped anyone.” The anecdote appeared on deadline in the London Times and was quickly inserted into the day’s story in the Toronto Globe and Mail. Bower is the Vermin’s eminence grise.
