Focus Shifts to Expenses

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Prosecution Shifts Focus to Expenses Black Charged to Hollinger International

Conrad Black's Use of Hollinger's Corporate Jet

April 16, 2007. On April 4, 2007, a witness for the prosecution, Fred Creasey, a former controller of Hollinger International, had testified that Conrad Black regularly flew Hollinger's corporate jet to his West Palm Beach home in Florida and other locations at an expense to Hollinger International of US$7 million a year. The trips included a trip to the Pacific Resort Island of Bora Bora with his wife Barbara Amiel.

Creasey said that while he was accepted the flights to Florida as a business expense, the Bora Bora trip made him uncomfortable.

"It did not fit into my allocation methodology," Creasey said. "I looked for guidance to Mr. Boultbee as to how these costs should be allocated." John Boultbee is a co-defendant with Conrad Black and was Hollinger International's former chief financial officer. Boultbee approved the charging of the expenses.

Creasey said he wrote Black a memo questioning the Bora Bora trip expense claim. Black replied with a handwritten offer to pay half of the $565,326 cost of the trip. As a result, Creasey allocated 50% of the cost to Hollinger International and 50% to Black's private company, Ravelston Corporation, thereby reducing the amount charged to Hollinger International by half.

Conrad Black's Canadian Lawyer - Edward GreenspanEdward Greenspan, Black's Canadian lawyer, took on Creasey's assertions. He showed that the cost of the flight was calculated by Creasey and not by Black and that Creasey calculated the cost of the flight at $24,169 an hour when it should have cost only $6,000 an hour. "The one thing you managed to do was charge Conrad Black the most expensive flight to Bora Bora in the history of mankind," retorted Greenspan.

Greenspan also questioned Creasey's calculation of the tax liability of the trip. He got Creasey to acknowledged that because the latter had rounded a percentage upward by one-tenth of a point when calculating the taxes, the overall cost of the flight went up by $7,000. "You rounded up?" queried Greenspan. "You made the tax bill bigger? H&R Block would never do that, would they?"

On Tuesday, April 10, 2007, Edward Greenspan returned to the subject by telling the court "The audit committee (of Hollinger International Inc.) insisted that all flights be covered, anywhere in the world - including Bora Bora - because of security and terrorism concerns ... because of the nature of the business this company was in." As such, Black used the corporate jet because the board asked him to do so.

Black's lawyers contend that Hollinger's policy did not differentiate between personal and business travel. They have also argued that Black was always working - while on vacation and even on social occasions.