Eleven weeks into the federal fraud trial of Conrad Black and three other former Hollinger International Inc. executives, the prosecution rested Wednesday. The defense starts Thursday.
The case against Black, an international media baron, was a guaranteed sensation because of its colorful plot line: A rich and powerful publisher with a jet-setting lifestyle, an outsize personality and a glamorous wife, accused of looting the company he built from scratch almost 40 years ago. While living mainly in Canada and named a lord in Britain, Black had a significant Chicago footprint: Hollinger International, now known as Sun-Times Media Group Inc., is based here and owns the Chicago Sun-Times.
But testimony, while focusing at times on a lavish New York dinner and a trip to Bora Bora, is exceedingly complex, presenting prosecutors with a difficult challenge of proving wrongdoing.
It has been a marathon for jurors, who have endured days of tedious testimony from auditors and outside attorneys who advised the company about whether $60 million in so-called non-compete payments to Hollinger’s top executives had to be disclosed to shareholders.
They also listened to prominent Hollinger directors, including former Illinois Gov. James Thompson, who said they were kept in the dark about the payments. But the directors couldn’t explain how they had missed repeated written disclosures of the non-competes that were included in documents they were supposed to review.
The biggest showdown was the appearance of Black’s longtime No. 2, now the government’s star witness, former Hollinger President F. David Radler. He presented crucial testimony about Black orchestrating a scheme to steal money from the company, but he also confessed to being a serial liar.
Despite his legal troubles, Black has maintained his high profile, giving interviews about his new biography of Richard Nixon and speaking out about his innocence on the courthouse steps to reporters. His co-defendants, John Boultbee, Peter Atkinson and Mark Kipnis, have been overshadowed by Black’s persona and performance.
The Tribune asked Hugh Totten, a Perkins Coie attorney who has been observing the trial, and Steven Skurka, a Canadian legal analyst who has been writing a Conrad Black blog, to offer their thoughts on how the prosecution fared.
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THE WITNESS AND HIS TESTIMONY
F. David Radler, former president and chief operating officer
He is the star witness because he is the only senior executive charged who has pleaded guilty in exchange for a reduced sentence. Black’s longtime business partner testified that during their phone conversations Black came up with a “template” to divert money from the company. He also said he kept the board’s audit committee in the dark about the non-compete payments. Defense lawyers attacked his credibility, pointing out numerous times he lied before he cut a deal with prosecutors. The defense’s assault went on for the better part of six days, and Radler frequently challenged questions, prompting rebukes from the judge.
KEY MOMENT
“Once again the only evidence we have of this private telephone call is your word?” asked Edward Greenspan, one of Black’s lawyers.
“That’s correct,” Radler replied.
“Your word. Your word is the word of a liar,” Greenspan said.
“That’s your interpretation,” Radler answered.
OBSERVERS’ TAKE
Radler may not have come across as an honest guy, but he buttressed the prosecution’s argument that he and Black conspired to line their own pockets at the expense of shareholders, Totten said. It was disappointing that there is no smoking-gun documents to back up Radler’s testimony. “I think he did what he needed to do, but there’s no question he was a beaten man by the time he left the stand,” Totten said.
THE WITNESS AND HIS TESTIMONY
Paul Healy, former vice president of investor relations
His testimony established that there was something fishy about the New York apartment Black bought in 2000 from Hollinger for $3 million, the same price the company paid for the home six years earlier. Healy also described Black’s disdain for activist shareholders who were questioning the non-compete payments. In audio recordings introduced through Healy, jurors heard Black fend off angry investors at two shareholder meetings. Healy testified under a grant of immunity.
KEY MOMENT
In an e-mail exchange between Healy and Black, Black dismissed complaints from Laura Jereski, an analyst at one of Hollinger’s largest shareholders: “Laura’s letter is nonsense, but obviously a number of shareholders are holding hands on this,” he told Healy. “Much as I would like to just blow [them] off, I don’t want a sour atmosphere at the shareholder meeting.”
OBSERVERS’ TAKE
Healy’s portrayal as a corporate governance crusader took some hits as the defense showed sycophantic e-mails he sent to Black. The prosecution also did not call any shareholders to bolster Healy’s testimony. But a real estate expert did support Healy’s statement that Black did not pay fair market value for the apartment. “There’s just nothing compelling enough about Healy’s testimony to convict somebody,” Totten said.
THE WITNESS AND HIS TESTIMONY
James Thompson, four-time governor of Illinois and chairman of Hollinger International’s three-person audit committee
KEY MOMENT
Thompson testified that he was never informed about non-compete payments to Hollinger executives other than in the sale to CanWest of Hollinger’s Canadian newspapers. Because the non-competes were “related party” transactions, they should have been brought to the attention of the audit committee. But Thompson also admitted he had missed written disclosures of the payments in numerous Hollinger financial statements and regulatory filings that were sent to him because he had “skimmed” the documents.
“Yes, I should have read them word for word. I didn’t. I skimmed them,” Thompson said under cross-examination.
“When you’re skimming a document, you don’t see everything in every paragraph,” Black’s lawyer Edward Greenspan shot back. “You were taught this? Is there some kind of skimming school?”
OBSERVERS’ TAKE
Thompson did not help the prosecution, and he actually created confusion. He could not explain how he missed repeated written disclosures of the non-compete payments, sticking to the contention that “skimming” the documents didn’t mean he was negligent in his duty to look out for Hollinger shareholders. In walking that tightrope, “Thompson became his own worst enemy,” Totten said. By the time Thompson’s cross-examination was over, “His credibility was in tatters,” Skurka said.
