Black made 'non-competition promise'

Media baron Conrad Black signed a contract promising not to compete with a company he himself controlled, an ex-employee of his Hollinger International newspaper empire, who said she sent him a £1.35m (€1.99m) cheque in return, told a court.

Angela Way, who worked in the Hollinger general counsel’s office, told the Chicago court she also sent cheques of £72,000 (€106,700) each to Hollinger executives John Boultbee and Peter Atkinson for signing similar non-compete contracts.

Way was executive assistant to Black co-defendant Mark Kipnis at Hollinger and left the company last year. She took the stand as a government witness as Black’s racketeering and fraud trial went into its third week.

Former Daily Telegraph boss Black (aged 62), is charged with racketeering, mail fraud and other offences. Prosecutors say the Canadian-born British peer siphoned millions of dollars out of Hollinger International that belonged to shareholders.

Black is accused of illegally billing the shareholders for a lavish birthday party for his wife, a holiday on the Pacific island of Bora Bora and a luxury apartment in Park Avenue in New York.

However, the heart of the charges against the former newspaper tycoon are that he sold hundreds of Hollinger-owned community newspapers in the US and Canada and pocketed payments from the purchasers.

The payments were in return for agreements not to re-enter the markets where the newly-purchased newspapers circulated and compete with them.

Non-competition payments are common in the newspaper industry. And while most of the money went to Hollinger International, Black and other executives received millions of dollars in non-competition payments. But prosecutors say that money belonged to the shareholders.

Black insists he did nothing wrong and his lawyers say that if anyone is to blame it is David Radler, the long-time number two in the Hollinger empire, who is expected to be the US government’s star witness.

Way said that on February 8 2000, she sent the cheques – and contracts promising not to compete with American Publishing – to Atkinson at Hollinger’s Toronto office.

“The consideration is also enclosed,” said a covering memo, referring to the cheques. Way said she received a memo back from Atkinson saying the signed non-competition agreements were enclosed.

American Publishing was a Hollinger subsidiary and as such was under the control of Black, who at the time was the company’s chief executive.

Prosecutors argue that such operations represented a grab for cash belonging to the Hollinger shareholders. But when Way returns to the stand today, defence lawyers are expected to portray that money as management fees wrongly characterised as non-competition fees.

Besides going to Hollinger International, based in Chicago, millions of dollars in non-competition fees went to Hollinger Inc, a separate holding company based in Toronto and controlled by Black.

Executives of media holding companies that bought Hollinger papers testified that they did want non-competition agreements with Hollinger International but had no interest in such agreements with Hollinger Inc.

However, earlier yesterday, David Paxton, president and CEO of Paxton Media Group, said under cross examination by defence lawyers that he may have received some legal benefit from the non-competition agreement he received from Hollinger Inc.