that the defence seized upon in the first week of the trial. Using a simple diagram to illustrate his point, Genson had outlined the geographical boundaries that separated Conrad Black and David Radler as they ran the third-largest newspaper empire in the world. It only followed that as the American community newspapers were sold to a variety of purchasers in Radler’s backyard, it was therefore Radler who oversaw the negotiations.
The first witness to testify about the purchase of Hollinger International assets was Peter Laino. Laino worked for a media holding company Primedia, that was involved in a $75-million sale that included American Trucker magazine. The agreement, which was negotiated exclusively with David Radler, included non-competes with Hollinger International and Hollinger Inc. for $2 million. Laino conceded in cross-examination that in all likelihood the deal was contingent on Hollinger International and its affiliates not being permitted to compete after the sale. There was no apparent ruse, despite what the prosecution had promised in its opening. This was a case in which the buyer really did request a non-competition agreement. The defence was off to a good start.
Canadian Curtsy
I have always liked prosecutors. I like them best when they lose my cases. They will, however, at least in a Canadian courtroom, always remain my friends. That is the courtesy title that we attach to our robed adversary. Imagine a particularly contentious moment in a heated trial when the prosecutor has pulled an outlandish stunt in front of the jury. In America, a sidebar is called to avoid any unseemly accusations being hurled in the well of the court. In hushed tones at the far side of the courtroom, the lawyers thrash each other with verbal barbs as the judge attempts to mediate the problem.
Contrast that to a trial north of the border, where the defence counsel politely rises and addresses the judge about the offending conduct: “With respect, your Honour, perhaps my friend should consider his words more carefully,” she begins. “His most inappropriate statement in front of this jury bears little resemblance to the evidence this jury has heard.”
The prosecutor then has an opportunity to reply in kind to his friend and the judge instantly rules on the matter. The trial then moves forward with almost seamless efficiency.
In the Conrad Black trial, I observed the team of four young prosecutors during the pre-trial motions, and they appeared to be a happy lot. A scowl on a prosecutor’s face is a sign of either a prickly disposition or displeasure with the flow of the evidence. A relaxed smile, however, is a troubling sign for the defence. During one of those interminably protracted sidebars that began to infect the trial, the trial judge’s remarks drew hearty laughter from the lead prosecutor, Eric Sussman, and his cohort Jeffrey Cramer. It was noticeable that none of the defence lawyers even feigned a laugh. One of them abandoned the sidebar and left the courtroom with his coat and briefcase.
The prosecutors were already gaining the upper hand in the trial. Every advocate must possess the artful skill of feigned laughter for when judges tell jokes during a trial. DVDs of Seinfeld episodes are freely handed out at judges’ school but to little avail. The finest judges recognize their inherent limitations and mete justice absent of any jocularity.
March 22–27
Hollinger’s former manager of corporate finance, Craig Holick, testifies he “funnelled” proceeds from newspaper sales to Hollinger Inc., the Toronto holding company owned by Black and David Radler.
Thomas Henson, a lawyer who represented Community Newspaper Holdings Inc., testifies his company only requested non-competes with Hollinger International and that Kipnis added Hollinger Inc. to the deal. Under cross-examination, he agrees auditors would have reviewed the deal, which Genson contends was negotiated by Radler.
Pinocchio
I caught a glance today in court from Barbara Amiel. Our eyes locked momentarily and I immediately convinced myself that she had been drawn to take a peek by my supreme intellect. That idea was quickly rejected, and then I wondered if she had read that I was once chosen as one of Toronto’s sexiest men. And then the stark truth dawned on me: I reminded her of one of her gardeners back in London, England. Gardening shears would have been helpful in court today to pare down the incessant habit of prosecutor Edward Siskel of repeating the same question over and over again to emphasize an answer from the witness that he embraced.
The objections slowly began to roll in from the defence side of the courtroom. “Asked and answered,” the lawyers would exclaim in unison. The pile-driver method of trial advocacy is transparent to an intelligent jury. This is certainly such a jury. They are studious and undaunted by an assiduous judge who works longer shifts than most hospital residents or articling students.
In his opening statement, Edward Genson had argued that Hollinger was a healthy and successful company worth billions of dollars “until the company was taken away from Conrad Black.” In reality, the company that had amassed four hundred community newspapers by 1990 was staggering under the pressure of enormous debt. By 1998, Black and the chief operating officer, David Radler, had begun a mad rush to sell off the media conglomerate’s small American community newspapers.
Two such deals worth hundreds of millions of dollars took place with an American company, Community Newspaper Holdings, Inc. (CNHI). A top executive of CNHI, Michael Reed, and the company’s counsel, Thomas Henson, were called early in the prosecution’s case to bolster its claim that the non-competition agreements in the sales weren’t sought out or requested by the buyers.
Both Reed and Henson minimized the importance of purchase and sale agreements that stipulated in plain language that non-competition agreements with Hollinger Inc. were a condition of closing. What is a little lie in a contract if it doesn’t hurt anyone or affect the purchase price? Defence counsel pointed out in cross-examination that the agreements would be enforceable and the motion of injunctive relief was a possibility if the non-competition covenant was breached. Reed acknowledged that Conrad Black’s prowess in the media world was somewhat known to him and that he was also aware that Black and Radler were partners in a media company, Horizon, that owned community newspapers. But he adamantly denied that he cared about the non-competition agreements that were inserted.
As Jack Boultbee’s attorney, Gus Newman, pointed out in cross-examination, “Fiduciarily — if there is such a word,” Michael Reed had a credibility problem of his own to overcome. The almost half-a-billion-dollar purchase price paid by CNHI came from a retirees’ fund in Alabama. The fact that Reed had entered into a sham non-competition agreement was never disclosed to the lending fund. For a prosecution that rested on a theme of an abuse of shareholders’ trust, the duplicity of their own witness tarnished their position. Of course, Reed did profess to have a moral compass. He balked at the suggestion in the final moments before closing the deal that $9 million of the non-competition payments be diverted to Conrad Black and other senior executives of Hollinger International.
I fail to see how a jury could extend a morsel of credibility to Reed’s testimony. It was a shaky start for the prosecutors’ case. Conrad Black was the invisible man in the CNHI deals. He never attended a single meeting or was involved in any conversation or email related to the deal. The deals were David Radler productions. Mark Kipnis signed the agreements on behalf of the Hollinger senior executives with “his anti-fraud pen,” as Ron Safer described it in his opening. If Black was anywhere in the vicinity of the two blockbuster deals with CNHI, his presence would have been unmistakable; Conrad Black never enters a room quietly.
After court concluded, the Black defence called an urgent meeting for that evening. Eddie Greenspan was concerned that the defence was mounting an untenable position regarding the non-competes. The jury would never accept the proposition that the purchasers desired the non-competition agreements. More importantly, it was unnecessary for the defence to travel down that tortuous road. The real battle lay in convincing the jury that Conrad Black
