Conrad Black Trial: Make or Break Time for the Prosecution.
Former Friend and Partner Takes the Stand Against Black
Mysterious Boxes Introduced as New Evidence
May 8, 2007. On Monday, May 7, 2007, David Radler took the witness stand to testify as a prosecution witness against his former friend and partner for 40 years, Lord Black. Radler is the former deputy chairman and chief operating officer of Hollinger International Inc., the holding company for the media empire that Lord Black built in partnership with Radler. Lord Black was Chairman and CEO - the senior partner in their business relationship.
Radler's association with Black goes beyond a business relationship. Radler told the jury that he had a long and close personal connection with Black. Both men and their wives vacationed together.
Radler's testimony before the jury has been a much anticipated event and the culmination of the prosecution's case against Lord Black. The equation made by the prosecution is that if Radler is guilty so is Black.
The past week has not gone well for the prosecution and if Radler's testimony does not convince the jury of Black's guilt, the prosecution risks losing their case.
Radler has already pleaded guilty. In a plea agreement with the prosecution, Radler accepted a reduced 29 month jail sentence and a nominal $250,000 fine. Included in the plea agreement was Radler's agreeing to testify against Lord Black and the other co-accused former Hollinger International Inc. executives. If he lies or conceals evidence before the jury, the plea agreement is null and void.
In addition, Radler has agreed to pay a US$28.7 million dollar fine as part of a settlement with the US Securities and Exchange Commission (SEC); he agreed to pay Sun-Times Media Group Inc., formerly Hollinger International Inc., $63.4 million to settle a civil lawsuit brought against him regarding the backdating of stock options.
The prosecution contends that Radler and Black were buddies and worked so closely, that Black was not just aware of Radler's actions, he approved if not directed Radler's actions. "We discussed every aspect of every newspaper we had," Radler told the jury. "I discussed with Mr. Black on any major decision (that) could be considered an executive decision."
The defence says that Radler was the mastermind of the schemes of which Black is accused. Black was mainly involved with eastern operations (Eastern Canada and Britain). Radler looked after western operations (Western Canada and the United States) - the arena in which the alleged schemes to steal money from shareholders took place.
Radler, according to the defence is a liar and will do anything, including selling out a close friend and confidant, in order to save this own skin. The defence is striving to show that Radler's testimony is tainted and the lacks credibility needed to prove guilt beyond a reasonable doubt - the standard for a criminal trial.
As part of his testimony before the jury on May 7, Radler said he had pleaded guilty to fraud and admitted "to taking money from Hollinger International in circumstances that were not allowed."
While their business empire grew and prospered before the turn of the millennium, both were paid millions of dollars a year in management fees and bonuses. However, when the business started to show losses, the fees started to dry up, and Hollinger International Inc. began selling its assets - newspaper companies around the world.
Radler said he recalled his discussing their reduced income from management fees with Black. "Generally," he said, "I was concerned with the decrease in management fees, and so was he (Black)." He also discussed "the consequences of that decrease."
The implication is that Black, Radler and other HII executives, decided to augment their loss of management fees with non-compete fees made during the sale of HII assets.
On May 8, the prosecution introduced boxes of evidence and court proceedings were adjourned in order to give the defence team time to review the contents. These boxes contained papers that Black attempted to remove from his corporate offices, allegedly to hide evidence. Black says he removed them for safe-keeping.
Former Illinois Gov. and HI Inc. Audit Chair James Thompson Denies Approving Payments
During the previous week, Former Illinois Governor James Thompson and former Hollinger International Inc. director and chairman of its audit committee, took the stand for three days during which time he strenuously denied approving non-compete payments to Black and other executives. Unlike the others involved in the trial, Thompson is well-known to residents of Chicago and his testimony might carry credibility.
The audit committee of the board of directors is the principle in-house watch-dog of a corporations financial transactions and policy. As its chairman, Black's defence says that Thompson knew about, and approved, the non-compete payments made to Black and others.
Black's lawyer, Edward Greenspan said Thompson and the committee's two other members knew all about the payments, then "conveniently forgot" about them when they became the focus of a criminal trial.
On Wednesday, May 2, Thompson had testified that he had only "skimmed" key financial and regulatory documents that outlined the payments 11 times, and that is why he failed to notice $15.6 US million in payments to Black and other HII executives.
Thompson repeatedly said he didn't remember details from audit committee meetings and board meetings, saying "It was seven years ago." Despite his lack of recollection, he emphatically told lead prosecutor Eric Sussman he "never" approved the payments. This he seems to recollect clearly. "He (Edward Greenspan) was saying to me that I had lied to this jury about not approving those payments," said an indignant Thompson in response to a question from Sussman.