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United States vs Conrad Black: End of Week 1

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United States vs Conrad Black: End of Week 1
Tina Simpson

Jury selection was completed, opening arguments were heard and witnesses have started to testify in the trial of Conrad Black on charges of, among other things, fraud. At issue are non-compete agreements, a financial agreement between a seller and a buyer that the seller will not compete in the buyer's market. The prosecution contends that these agreements were not necessary and that the new owners of newspapers purchased from Hollinger group of companies did not require them to close a sale. The Hollinger shareholders feel that the proceeds of the non-compete agreements should have been distributed to them and that Mr. Black, as CEO, was illegally pocketing all of these proceeds. In all, 17 charges have been laid against Conrad Black, if convicted on all of them he would face a maximum of 104 years in jail.

Mr. Black, who is Canadian by birth but has British citizenship, is represented by Canadian lawyer Edward Greenspan and American lawyer Edward Genson. Mr. Greenspan is a high profile, respected lawyer in Canada since 1970 and a personal friend to the Black family. This is his first court appearance in the U.S., and he was observed to be having a bit of difficulty with his delivery in unfamiliar territory. Their message to the jury has been to not judge Mr. Black based on his "sparkle of wealth" and that all of the transactions at issue were conducted lawfully and according to generally accepted business practices. This "sparkle" has been valued at $400 million which is estimated, by Richard Siklos, author of Shades of Black: Conrad Black and the World's Fastest Growing Press Empire, to be the high point of Mr. Black's financial worth. According to Siklos, Mr. Black is now, after being ousted from Hollinger, down to his last few millions.

The newspaper CEO business is fairly lucrative; Gordon Paris, who testified for the prosecution on Hollinger business matters, had reportedly offered to demote himself from a salary of a few million for a few years to just $900,000 one year as the failing Hollinger's CEO. In his testimony, it was disallowed for him to discuss the committee he formed to investigate Mr. Black's financial management of Hollinger subsequent to Black's resignation. Mr. Paris' testimony was deflated, but through his disappointment, he still managed to give it a mention.

Peter Laino testified for the prosecution that in 1998, he worked for Primedia, a media holding company that was involved in the $75 million purchase of Hollinger International assets (including American Trucker Magazine). As part of the transaction, he testified, the agreement stipulated that Primedia expected Hollinger and its affiliates not to compete. The value of this agreement was $2 million.

Week 2 will be more of the same. The jury will learn more about the value of the "sparkle" of wealth and how non-compete agreements work; Mr. Greenspan will undoubtedly polish his act and Mr. Black (and family) will be smiling bravely while trying to remove the tarnish of what Conrad Black refers to as a giant smear campaign against his reputation.

Comments

#1 | lisagee123 on March 26 2007 12:57:28

Thanks for your info.

#2 | seaman93555 on May 06 2007 19:10:22

I wonder if Conrad Black is "old money", but suspect he is "new money", given the tenacity of the prosecution in this case.

#3 | MplsVala on May 07 2007 10:46:04

I'm biting my tongue to avoid launching into another tirade on how ridiculously overcompensated CEO's are today. It is not a trend that is good for us. The company is bankrupt, so he'll settle for only 900,000 for his role in that. How noble.