Cash Concerns Labelled 'Hysteria', Black Trial Told

30 April 2007

CHICAGO: The fraud trial of Lord Conrad Black and three former Hollinger International executives last week heard of a series of florid emails from the fallen media baron. These dismissed concerns expressed by shareholders' over millions of dollars in 'management fees' transferred from the publicly traded H-Intl to Black's private firm, Ravelston.

However, these objections, first raised by by New York investment management firm Tweedy Browne [WARC News: 22-May-2003, were unconnected to the disputed $60 million (€44m; £30.1m) in non-compete fees paid to the the defendants following the sell-off of a raft of H-Intl newspapers.

The prosecution alleges this money was illegally diverted into the defendants' pockets when it should have gone to the company and its shareholders.

But the emails served to illustrate Black's self-confidence. He wrote in May 2003 that Tweedy Browne's concerns were "sanctimony or hysteria that has been confected and orchestrated".

The trial also heard evidence from Richard Burt, a former US ambassador to Germany, who had been a member of H-Intl's audit committee.

He told the court that neither Black nor any other senior staffer informed the committee about money paid to executives via the sale of the newspapers.

Burt claimed that in three deals where money was thus diverted, the audit committee did not sign-off the deals in their entirety but instead agreed that the company's executive committee should do so.

That committee consisted of Black, David Radler (expected to be a star prosecution witness) and former Bush administration adviser Richard Perle.

Defense counsel contended that the accused quartet approved newspaper deals that often explicitly mentioned non-compete payments to top company executives, or to the smaller companies [such as Ravelston] that they more closely controlled.

Black and co-defendants Jack Boultbee, Peter Atkinson and Mark Kipnis all deny wrongdoing.

Lawyers representing Boultbee and Atkinson repeatedly cited terminology in H-Intl's financial filings and board minutes from 1999 to 2001 in which non-compete payments to executives were at least partly spelled out.

The trial continues.

Data sourced from Chicago Tribune; additional content by WARC staff