Black Called Hollinger Investors 'Idiots', Witness Testifies

24 May 2007

CHICAGO: Angry shareholders questioning millions of dollars in payments pocketed in 2000 by Lord Conrad Black and other Hollinger International [H-Intl] executives were dismissed by the media baron as "idiots", a US court heard earlier this week.

Testifying for the prosecution Paul Healy, former head of investor relations at H-Intl, told the jury that the company's ex-general counsel, Peter Atkinson (indicted alongside Black and co-defendants Jack Boultbee and Mark Kipnis), told him that non-competition payments from one major deal had been "inaccurately" described to H-Intl shareholders.

The payments in question were made by CanWest Global Communications on on its C$3.2 billion ($2.95bn; €2.19bn; £1.49bn) acquisition of Hollinger's Canadian newspapers.

The prosecution claims that these sums rightfully belonged to the company and its stockholders but were pocketed by Black and his colleagues via the peer's privately owned company, Ravelston Corporation.

Healy recounted how he forwarded Black an email from New York investment house Tweedy Browne protesting at the diversion of the non-compete payments.

"Nonsense," riposted His Lordship in his reply to Healy, "a lot of shareholders are holding hands on this ... the facts are with us ... much as I'd like to blow their asses off ... we're still trying to sell stock."

The jury was further entertained by an audio tape of the 2002 shareholders' meeting, at which Tweedy Browne managing director Christopher Browne persistently questioned Black over the payments.

The latter dismissed them as "comparatively modest", and told investors they had his "moral assurance ... not to be exploitive."

Another irate shareholder told Black: "You're not investment bankers. The corporation [Hollinger] owns you lock, stock and barrel. You shouldn't be getting these fees!"

"I don't want to get unctuous here or self-righteous," Black responded, getting unctuous and self-righteous. He told attendees that shareholders who thought something "unethical" was going on "shouldn't be here".

Prosecutor Ed Siskel asked Healy about the general tenor of the meeting: "Is it fair to say this was a contentious shareholders' meeting?" he asked.

Healy: "Yes it was."

The witness told the court that that after the meeting he and Black lunched with potential investors who asked about Black's corporate perks, such as his company plane. "I could have a 747 if I want," Black is said to have replied flippantly.

Data sourced from Sydney Morning Herald/Reuters; additional content by WARC staff