Playing to a packed courtroom here Friday afternoon, press baron Conrad Black acknowledged that as chief executive of Hollinger International Inc. he signed off on financial documents that included erroneous information on millions of dollars he and other executives pocketed in non-compete fees.
That disclosure, prompted by cross-examination, contrasted with Black’s morning testimony in which he claimed the disputed payments were reported in public filings approved by members of the audit committee and auditor KPMG.
Alternating between victor and victim, Black testified for nearly six hours on the third and final day of a trial in Delaware Chancery Court to determine whether he can proceed with plans to sell his controlling stake in Chicago-based Hollinger International, which owns the Chicago Sun-Times and other newspapers.
Hollinger International is trying to block a deal Black struck to sell his shares to the multimillionaire Barclay twins from Britain. The company’s directors claim it violates an agreement Black made to Hollinger International not to do anything that would interfere with its process to look for a possible buyer for all or parts of the company.
Black stepped down as CEO in November amid a scandal that alleged he and other top executives pocketed at least $32 million in unapproved payments that stockholders claim should have gone to the company and shareholders. Black countersued, and on Friday he testified that directors pushed him into resigning and agreeing to repay disputed compensation.
“I have been horribly defamed. I’ve been stigmatized as an embezzler,” Black said. “I am now trying to retrieve my reputation as an honest man.”
On Friday, lawyers for Hollinger International attempted to show that Black knew what he was doing when he took the payments and then proceeded to withhold information about them from the board directors and shareholders.
Black, under heavy questioning by Hollinger International lawyer Martin Flumenbaum, said he believed that he did receive a non-compete payment related to a sale of newspapers in September 2000 to Forum Communications, even though no executive had signed non-competition agreements.
In addition, Flumenbaum strove to show that checks Black and other executives received for payments were backdated and disclosed in the wrong years in the company’s annual report on more than one occasion.
In his line of questioning, Flumenbaum painted a picture of an executive who felt it was OK to take the payments even though the company and shareholders contended the money belonged to the company.
“You feel that you were entitled to this money, isn’t that true, Mr. Black?” Flumenbaum asked at one point.
“No, that is not true,” Black answered.
Though at times combative, Black spent much of the early part of the day trying to convince Vice Chancellor Leo Strine that he had been a victim of deception by his own board.
Black said he agreed in November to step down and pay back nearly $7.2 million in unauthorized payments because he wasn’t given enough time to respond to the board’s charges fully.
“I was not in a position to refute their findings. I trusted them,” he said.
In light of that, Black said, he doesn’t believe he should pay back the money. “I do not think any reasonable person in my position at this time would conclude that I have a legal or moral duty to repay the money,” he said.
Black argued that Hollinger International auditors approved several of the payments. Yet, in the months since he signed that agreement, Black said he had come to realize he had been prevented from accessing information that might have convinced him to act otherwise.
Black also defended his right to sell his shares in Hollinger International to the Barclays, despite agreeing not to interfere with the company’s own strategic process through New York investment house Lazard LLC, arguing that Hollinger International’s audit committee had signed off on the disputed non-compete payments.
