Conrad Black

by A Matter of Principle

  Eddie Greenspan’s debut had not been auspicious, and there were audible concerns at the defence tables, though in their desire to pretend they were in a different company, if not on a different planet, from me, the other counsel gave Paris almost a pass. He had not been a successful witness, but my star lawyer was obviously vulnerable to the prosecution’s hyena attacks. It was curious to see Gordon Paris again. I had grown accustomed to his swagger at Breeden’s side. At the trial he was diffident, inarticulate, and had no presence at all, not even the upbeat cheerfulness he had had when I first knew him, as a bond salesman for the Toronto-Dominion Bank.

  After Paris’s ineffective opening, the prosecution brought on a sequence of buyers of Hollinger International assets, all primed to say that they had not requested and did not care about non-compete agreements from individual Hollinger executives. None of them mentioned me, other than saying that they had heard of me, but that we had had no contact of any kind. All the negotiating was with Radler and Mark Kipnis. The principal lawyer in two of the biggest deals, Jim Henson, a courtly southerner, made it clear that he found Radler vulgar and abrasive.

  The buyers were a pretty phlegmatic group. Mike Reed of Community Newspaper Holdings Inc., who had paid out more than $500 million to us and was subsequently dismissed from his job, in large part, no doubt, because he was taken over the barrel by Radler, was dismantled quite effectively by Genson. While Reed said he did not want the executives’ non-compete agreements, and started out rather jokily responding to Genson, he acknowledged that in the non-competition clause, by asking for “affiliates” as well as the vendor company, he meant the executives and corporate affiliates of the vendor company. (In the midst of the trial, the Chicago Tribune changed hands, along with its television and radio and cable properties; the Los Angeles Times, the Baltimore Sun, and Newsday [Long Island]; the Fort Lauderdale, Hartford, and other newspapers; extensive real estate, and the Chicago Cubs, for $311 million, plus a special dividend and a large participation by the Employees’ Share Ownership Plan, though the buyer assured the press that he would dismiss a large number of the employees. This illustrated the tremendous payoffs Radler had negotiated in the sale of these community newspapers. The newspaper industry had gone into steep decline; we had started into and out of the business at good times, and Radler, however objectionable they found his personality, had dealt very cleverly with these provincial buyers.)

  Gus Newman and Ron Safer further extracted that Reed had signed an agreement stating that the non-competition clauses were required conditions of sale. He wanly said that he did so because it didn’t cost him anything, but Safer eventually produced the fact that the funder of the deal, the Alabama state pension fund, had required these clauses as a condition of advancing the money to make the acquisitions. Reed, though well-rehearsed, had not scored for the prosecution.

  The representative from Forum, owner of the leading newspaper in North Dakota, was a straightforward but cautious Midwesterner, even refusing to let it be known if the company had borrowed money to pay us $14 million for the newspaper in Jamestown, North Dakota. He, too, was clearly taken for quite a sleigh ride by Radler, but at least he had held his job. He, too, claimed that they had not cared about competition from individual executives but could not adequately explain why he wanted the inclusion of “affiliates” in the language of the agreement. He, too, was routed on cross-examination, as he acknowledged that Radler had bought, just after the non-competition agreements expired, a newspaper in a neighbouring county to Jamestown.

  Radler had made huge gains for our shareholders with these deals at the very brink of the great newspaper decline. The buyers had not done their due diligence properly and had no idea that the senior executives of Hollinger International – key players in creating and then maintaining these properties – were in fact employees not of International but of the ultimate parent company, Ravelston. Since a subsidiary could not bind its parent, the “affiliates” reference in the non-competes did not achieve what they had hoped. Radler had certainly not disguised these arrangements, which were publicly disclosed. Having been carefully prepared by the prosecutors, and angry at having been clearly foxed by Radler into over paying, they all repeated their lines, but they all disintegrated under serious cross-examination. Genson and Safer, and to some degree Newman, accomplished this. Atkinson, who was not mentioned, continued to fly just above the treetops, sharing with his counsel the fantasy stratum that this would liberate him from suspicion.

  The best of the community newspaper buyers was David Paxton, an alumnus of Oxford University from Paducah, Kentucky. He answered all questions in a forthright manner and acknowledged that there could have been some utility to the non-competition payments to executives after all. The buyers had not made the case the government promised, and Newman, in particular, had made the point that whatever the buyers now claimed had been their wishes eight years before, they had signed binding and enforceable contracts containing a precise wording about the contested payments, and their verbal revisitation of the deals after government tutorials could not trump signed written contracts that had been publicly disclosed and discussed for years without any comment from them. The non-compete payments in each case had been stated to be “conditions of closing.” This was a promising start for the defence.

  GUS NEWMAN, ALWAYS A GENTLEMAN, committed an astounding breach of professional etiquette by approaching me, another attorney’s client, and expressing his concern about whether Greenspan, for whom he said he had great respect, could carry the weight placed on him in the trial. I answered noncommittally but made hopeful sounds. Barbara had been watching the manoeuvrings and facial grimaces of the other defendants’ counsel whenever Greenspan was on his feet and thought that Newman was simply reflecting the concerns of all the other lawyers. I had the same concerns, but I didn’t think it was for Newman to raise it with me, and suggested he raise it with Eddie directly. He did so, at a stormy Easter weekend luncheon that offended Greenspan and raised his paranoiac instincts but did not advance the cause of his adaptation to American courtroom rules.

  Greenspan told me that the reason for Newman’s criticism was concern that Mrs. Newman was unwell. She may have been, but she appeared pretty chipper in her many appearances at the trial. And I think the reason for Newman’s concern about Greenspan was that Greenspan’s ponderousness and vulnerability to Sussman’s harassments warranted concern.

  At the end of the parade of buyers, we had made the point that non-competition payments were normal and regular in the newspaper industry, frequently paid to individuals, and that these buyers wanted comprehensive guaranties against competition from the companies and people who were the vendors in these cases for good commercial reasons. It had gone quite well, and some journalists who had been at Delaware and presumed that such payments were a scam were now of another mind.

  The government thought it could make its financial case, and especially the allegation about misusing corporate funds, with the infamous trip to Bora Bora, with Fred Creasey. I was pretty confident that they would find him a disappointing witness. As always with government witnesses throughout this long trial, they performed quite persuasively as long as they were repeating back the catechism they had been taught to answer prosecution questions.

  I knew that Creasey was a man of collapsible nerves. He had fainted to the floor of his office when informed that the SEC wanted to interview him, though he was not suspected of wrongdoing, and had never returned to work, being mentally unfit for more than three years. Though easily frightened and a pessimist, he was diligent, honest, and would not lie under oath. Mark Steyn and others thought that he exuded an air of natural believability when under direct examination and felt he was a strong prosecution witness. I assured them that he would be just as believable answering our questions and would be completely useless to the government and that this would be clear after an hour’s defence questioning, because the charge was unfounded, and Fred would tell the truth.


  Creasey had recorded that our trip to Bora Bora in 2001 had cost the company $565,000 because he divided the entire cost of the aircraft operation, including salaries, the charter, and hangar rental by the proportion of the year that was taken up by the trip. Of course this was nonsense, since the fixed costs were inevitable and would have been incurred if the airplane had not moved one inch in its hangar.

  Greenspan took the cross-examination, and I thought he performed well. Creasey retreated at speed from all the overexposed positions to which the government had led him. Yes, I could have chartered a comparable plane for a quarter as much. Yes, I paid half the cost, as he had calculated it, which was more than twice the variable costs, which were what were normally charged. Yes, I had been assessed a taxable benefit for much more than industry practice would have indicated. Yes, the company made $125,000 transporting me. I thought Greenspan did particularly well with the exchange that ended: “I’m sorry. I thought that when you said that you were an expert in corporate finance, you meant that you were an expert in corporate finance.” Creasey: “Not necessarily.” Greenspan concluded with one of the more memorable lines of the trial: “You provided Mr. Black with the most expensive airplane trip in the history of manned flight.”

  In their redirect examination, Julie Ruder introduced a new tactic, which was to become tiresomely familiar. “Where in this document do you find any reference to …?” Anything could be inserted here, from supposedly unauthorized non-competition payments to the remotest and feeblest parts of the prosecution’s case. Since she was asking non sequiturs, the answer always had to be “nowhere.” A long sequence of these questions, which I told some members of the press would eventually include references to my participation in the assassination of Abraham Lincoln, as well as my habitual severance and boiling of little boys’ heads, would give way to a further series of: “If you had known of …” and all the earlier horrors were repeated, more or less in order, “would that have altered your judgment of” whatever. It was the shabbiest, most sophomoric device I had heard in decades, and visibly made little impact on the jury, whose members were not electrified by Creasey at any point.

  Mark Steyn changed his tune and agreed with Theresa Tedesco’s overly harsh view that far from being a threat to the defence, Creasey was an Elmer Fudd figure. Mark added that Hollinger should have gone more quickly out of the newspaper business and into aircraft chartering, an immensely remunerative form of commerce on this occasion. Fred Creasey left as he had come, a beetle-browed, beleaguered but good man who had achieved negative yardage for the prosecution because he did not lie under oath and was never snide or malicious.

  The first week in April produced good press responses to the Creasey appearance, and a pleasant diversion when the eighty-one-year-old Dominick Dunne, an acquaintance of Barbara’s from the 1970s, came to town and Barbara, Alana, and I had dinner with him. Alana continued to be the great star of the trial. Her lovely appearance, beguiling manner, attentiveness, charm, and complete lack of interest in the press conquered almost everyone.

  AFTER THE UNSUCCESSFUL Easter luncheon between Greenspan and Gus Newman, I spoke to Genson and Martin about Greenspan’s problem with American procedure, I thought that he did well with Creasey. Genson clearly wanted the cross-examination of Radler, but Greenspan had earned that. It was agreed that Genson’s partner, Terry Gillespie, would give Greenspan a crash course on procedure.

  I had a cathartic meeting with Greenspan in our little lunch room in late afternoon. I asked him very calmly to “raise my comfort level about your ability to master U.S. procedure.” He flared up and threw all the toys out of the baby carriage and announced he would return to Toronto at once. Barbara, when I told her, thought this was a golden opportunity not to be missed, felt there were better American lawyers at our table that were not being used, and had to be restrained from paying for a private flight to take him home that day. I ignored both her and Greenspan’s suggestions and urged him to compose himself and just give me more confidence that we were turning the corner on his adaptation to this court.

  Because Greenspan had been the most famous lawyer in Canada for many years, it was both touching and worrisome to see the sudden erosion of his prestige. I was now quite accustomed to the sudden collapse of a prominent individual; seldom had a prominent person’s status and reputation been destroyed more quickly than mine. But I had at least carried myself with outward dignity toward everyone, even the diminished number of confidants and did not impute animosity, much less conspiracy, almost indiscriminately.

  Eddie Greenspan’s methods were far too ponderous for the rapid cadence of American trials. Generally, objections are just ignored by defence lawyers, who proceed whether the judge sustains or overrules. Greenspan had been accustomed to the Canadian method of arguing over each objection, which completely broke his rhythm.

  Sussman, overconfident as always, referred to Greenspan as “an old water buffalo” and said to Jane Kelly that I would be convicted in the minds of the jury before Radler even took the stand. That was not how it worked out.

  The next phase of the trial consisted of very lengthy videotapes of Torys lawyer Darren Sukonick and a former partner of that firm, Beth DeMerchant. Videotape depositions consist of a fixed camera on the face of the deposee, who appears in limbo being questioned by a disenthralled voice from an invisible source. When you are watching a large screen with the close-up of a sombre Canadian accountant or lawyer such as Beth DeMerchant talking for five or six hours straight, it becomes almost humorous in its monotony. A silent hum of boredom descends over the courtroom. After about three hours of videotape, the deposee could have said she was a terrorist from Sri Lanka and no one would have noticed. The judge seemed to use much of the time to get papers on her desk cleaned up and fiddle with the two computers on her desk. At least, unlike various jurors and counsel, she didn’t doze off. The tapes had been taken in Toronto in February, and edited by joint agreement. It was never clear to me what the government thought it would achieve with this. Both lawyers expressed confidence in the integrity of Atkinson, their contact person in our company. (Sukonick and DeMerchant were later investigated by the Law Society. I was never overly impressed with their imagination, and some of their advice was incorrect, but I don’t think they were unethical or negligent. The singling out of them, as well as the Law Society’s rather banal allegations, seems to me to be shabby and tokenistic placation of opinion by the Toronto legal establishment, at the expense of two relatively defenseless scapegoats.)

  The issue was whether we had tried to withhold disclosure of the CanWest non-competition payments. Torys had advised us that we need not disclose them, so we didn’t. The U.S. firm Cravath, Swaine & Moore, through Bud Rogers and Paul Saunders, the next two witnesses, advised us that we must, so we did, four days after receiving their definitive advice. This was not much of a case for a cover up. Rogers and Saunders both greeted me cordially. They confirmed both the advice they had given and our quick follow-through on it. Saunders had acted for me in the Hanna Mining affair in 1982, and we had remained in occasional contact since. He was an ascetic, austere, painfully fit, and thin man with an inflexible formality, like a retired Marine colonel. His cordiality to me now was carefully calibrated, in the subtle manner of the chief professional servants of the New York financial establishment, and was conditional, curt, and even tentative. He was a cold-blooded follower of the tide of events, a sand shark serving larger and fiercer fish. If I had had any need of a barometer of my status, he could have provided it.

  It emerged clearly from all the lawyers that we had faithfully tried to follow exactly the disclosure regulations, irrespective of our own perceived convenience. A month into the trial, most of the press had backed off a long way and acknowledged that it was a much less clear-cut case than had been represented in government and Breeden-sponsored leaks and allegations. My former editor at the Globe and Mail’s Report on Business magazine, Margaret Wente, who was strangely nasty in h
er written references to Barbara and me, though cheerful when we actually met, wrote that while she hoped that I would go to prison, she now doubted that I would. Given her animus, her premonitions made her a hopeful weather vane. The prosecutors had not laid a hand on us. None of the community newspaper buyers had ever had any exchange with me, and I was not mentioned by the Torys and Cravath lawyers. And we had clearly won the arguments about the legitimacy of the non-competition payments and the response to legal advice.

  While the lawyers appeared by video, I launched a side offensive in Toronto, and Peter White published a letter I had received from loyalists in the former Hollinger International exposing Voorheis’s desperate effort to sell Hollinger Inc.’s super-voting rights to STMG (again, the former Hollinger International). Stan Freedman represented us at the annual meeting of Hollinger Inc. and posed a series of questions to Voorheis, which he completely failed to answer, particularly why he had fiercely opposed the Hollinger Inc. privatization two years before and there was now a 95 per cent deterioration of share value.

  Voorheis had also made erroneous representations about imminent realizations on litigation to Richter (the Ravelston receiver), which re-elected him despite his failure and his self-overpayment, as Richter too was overpaying itself to strip the carcass of what it was sworn to protect, and Richter too was a puppet of the prosecutor. The vandals had to protect one another: it was a brotherhood. Sussman wanted Voorheis in place because of his ability to aggravate me and destroy what little was left of the value of Hollinger Inc. assets. We at least attracted press attention to the stunning collapse of Hollinger Inc. since we had been betrayed by the Ontario Securities Commission on the instructions of Breeden in March 2005. The only hope for salvaging anything for the shareholders or bondholders of any of the former group was in our complete acquittal, and swift reassertion of control and sweeping out of the parasites.