Black accused of 'fleecing' shareholders

A US prosecutor accused media mogul Conrad Black of systematically “fleecing” shareholders out of more than $60m (€44.7m) and creating an elaborate paper trail to cover his tracks.

Three other former Hollinger International newspaper executives were also accused.

“It was stealing, plain and simple,” Assistant US Attorney Julie Ruder said in a Chicago court yesterday.

Closing arguments got under way after three months of testimony at the Canadian-born former Daily Telegraph owner’s racketeering and fraud trial.

“We’re not here because somebody made a mistake, we’re not here because somebody forgot to dot the 'i's or cross the 't's,” she said.

She said Black and his co-defendants had created a cover story to hide the fact that they had been siphoning off millions of dollars in profits.

“It will be your job to expose this cover story for the lie that it is,” she said.

In seven hours of argument, Ruder portrayed the deposed Hollinger CEO as money hungry and ready to brush aside anything that stood in his way.

Near the finish of her marathon argument, Ruder reminded jurors how Black had removed 13 boxes of documents from his Toronto offices despite a ban on taking away anything that could be federal grand jury evidence.

“The rules don’t apply to Conrad Black,” Ruder said. “He wanted those documents out and he took them. Classic, classic Conrad Black.”

Black is charged along with former Hollinger vice presidents John Boultbee and Peter Atkinson and former corporate counsel Mark Kipnis with swindling the newspaper holding company out of more than $60m (€44.7m).

The case focuses mainly on the sale seven years ago of hundreds of Hollinger-owned community newspapers in the United States and Canada.

Millions of dollars were paid to Hollinger International in exchange for promises that the company would not compete with the new owners.

Black, Boultbee, Atkinson and former Hollinger No 2 man David Radler also got millions of dollars in what prosecutors see as the heart of the crime.

On the witness stand, several of the buyers testified that they did not care about the noncompete agreements but went along with them because it did not cost them anything more and the Hollinger executives wanted them.

Black is also accused of swindling the company by taking a company jet on a personal holiday to Bora Bora, billing the shareholders for a birthday party for his wife at New York’s swanky restaurant La Grenouille and buying a Park Avenue apartment from Hollinger for $3m (€2.2m).

A government witness testified it was worth $8.5m (€6.3m).

“That’s all you need to see how these men fleeced the shareholders,” Ruder said.

“These misleading statements to the shareholders, ladies and gentlemen, are the hallmarks of Mr Black’s approach,” Ruder said.

Ruder scoffed at the claim by Black’s Canadian defence attorney, Edward Greenspan, that the noncompete payments had been approved by the audit committee of the Hollinger International board of directors at a September 11, 2000, meeting.

Greenspan said that once shareholders caught wind of the payments and started to criticise them, the audit committee members including the chairman, former Illinois Gov James Thompson, “conveniently forgot”.

Thompson testified he didn’t remember what happened at the meeting. He also said he had not realised 11 documents provided to him had references to the noncompete payments.

He said he skimmed the documents rather than reading them carefully and as a result had missed the references.

“There is nothing, no evidence at all, nothing at all to suggest Mr. Greenspan’s allegation,” Ruder said, her voice rising to an angry shout.

“They (the committee) did fail the shareholders,” Ruder said. “They should have read these things word for word, paragraph for paragraph.

“But the biggest failure of Governor Thompson and the other members of the committee is that they trusted these guys too much.”

When the trial got under way yesterday morning one juror was absent from the jury box.

Lawyers declined to say why the juror was absent, although because she missed the prosecution’s argument her departure is permanent.

Greenspan is to address the jury when the trial resumes today. The schedule calls for him to deliver half of Black’s closing argument and the other half to be delivered by Chicago defence attorney Edward Genson.