THE DEFENCE

Charlie Gillis,Anne Kingston March 12 2007

THE DEFENCE

Charlie Gillis,Anne Kingston March 12 2007

THE DEFENCE

While many corporate fraud cases in recent years have devolved into mind-numbing excavations of legal minutiae, Black’s lawyer Edward Greenspan says he plans to keep it simple. “This is a jury of 12 people who are not heads of corporations, they’re not involved in corporate process, they’re not involved in Sarbanes-Oxley, and they’re definitely not

involved in the intricacies of special committees and restructuring agreements. No matter how complicated the case is, the case has got to be reduced to its simplest form, and it has to be fought on that basis: is it fraud or is it not fraud?”

Of course, beneath that seemingly elementary question lies a tangle of complex transactions and relationships. Much of what the government will portray as bald lies and theft may not be nearly so clear-cut once Black’s defenders have a chance to address the jury. As prosecutors try to narrow their focus on the money trail, defence lawyers will dwell on the often blurry line between legitimate corporate expenses and personal ones. Therein lies the path to acquittal. “If the jury doesn’t understand the case, they will refuse to convict. They will rely on the concept of reasonable doubt,” says Albert.

For example, the defence has made it clear they will argue everything about the noncompete agreements, so far as the defendants knew, was proper, says Flenning. In the Can West deal, for instance, the head of CanWest himself, Izzy Asper, asked that Black and the other defendants be named in the non-compete contract. Before his death, he even wrote to Black confirming this.

More to the point, the defence will focus on the role the board played, as well as lawyers and accountants who ultimately approved the deals and payments. The Hollinger audit committee was an illustrious group, including members like former Illinois governor James Thompson and economist Marie-Josée Kravis—not types easily duped or confused by even the most complex business trans-

actions. The defence will say, “everything we got was reviewed and approved by the board of directors and that’s how it’s supposed to work in a corporation,” says Buell. Playing up the committee’s financial acumen is key, says Daniel Horowitz, a criminal defence lawyer based in Oakland, Calif. “One of the great arguments you can make is to talk about how sophisticated these people are and how high their IQs are. You say, ‘They knew far more about this than you ever will in two months. They didn’t see anything wrong.’ ”

The defence will seek to show that everything of substance was disclosed, and if lesser details were not, it was an administrative oversight for which a CEO can’t be held criminally responsible. Questions about what exactly was disclosed and how it was done is expected to lead to some contentious days of testimony and cross-examination of board members. Regarding the Can West deal, even

the government’s documents highlight significant confusion and disagreement among outside lawyers over what needed to be made public, underscoring that issues of disclosure and approval are not always black and white, even to seasoned legal minds.

On the charges of obstruction of justice, defence lawyers will argue that the boxes Black removed from his Toronto office contained only personal items unrelated to any court orders. Who, after all, doesn’t remove personal belongings when leaving a job? Last year, the judge in the case, Amy St. Eve, ordered the boxes be turned over to prosecutors, to the objection of Black’s lawyers.

The boxes are currently with the Canadian court, says Jane Kelly, a lawyer with the defence team. Because the boxes are in Canada, the U. S. prosecutor must proceed by the Mutual Legal Assistance Treaty (MLAT) to get them, she explains. The matter is currently before the Canadian court. “We’re making submissions about the validity,” Kelly says. “We’re trying to work through before March 14, but there’s no guarantee.” The exact contents of the boxes have not yet been disclosed.

As for the attention-grabbing details of corporate excess, the defence will argue that Black’s social expenditures were all part of building a media empire that relies on toplevel contacts and social exposure. Perks are part of the corporate game, and criminal lawyers say juries generally understand that executives make a lot of money and won’t convict people simply for living high off the hog. For example, the defence will argue that the birthday party for Black’s wife in New York was a legitimate corporate expense because it coincided with a directors’ dinner that had long been in the works. Black, it will be argued, generously agreed to pay for part

of the dinner with his own money precisely to avoid any hint of impropriety. But if these sorts of details become too much of a focus, the defence will seek to turn it around on the government, says Buell. “Every time the government emphasizes that evidence, come back and say, ‘this is irrelevant and the only reason they’re emphasizing it is because they know the substance of their case is weak.’ ” The defence will make it hard for prosecutors to strike a balance between evoking moral outrage and leaving jurors feeling manipulated.

Just as with the government’s strategy, how the defence handles Radler is crucial. Radler’s cross-examination will be gruelling—it could

go on for a week or more, say lawyers familiar with the case. The aim will be to make Radler look like a liar, or at least an unreliable witness. “If you make him look dirty, if he comes across as shifty, the jury may just hit the ‘off’ button,” explains Henning. Greenspan has acknowledged that is a weakness he will surely exploit: “Now he’s got to admit that everything he said before was a lie. And it’s, ‘Well, which is the lie? Now? Then?’ ”

Furthermore, by asking Radler what sort of jail time he was facing before he struck a deal with the government, the defence can use him as leverage to give the jury a sense of the massive jail time Black now faces, something they are never otherwise told, says Horowitz. “The jury will go, ‘wait a minute, killers get 25 years.’ ’’Jurors may sympathize with Black’s plight if they understand that by convicting him, he won’t simply receive a slap on the wrist, but could go to jail for the rest of his life.

British peer denies allegations of looting’and claims 513-page report Is laced with outright lies’ RICK WESTHEAD BUSINESS REPORTER Conrad Black and his cronies plundered hundreds of millions of dollars from Hollinger International Inc. while its high-profile board did nothing to stop him, according to a scathing report commissioned by tire publishing company. In a 513-page report that caps a

Black’s lawyers will seek to isolate Radler and attempt to show that, working from his office in Chicago, he was behind the non-

competes, and he was the one assuring everyone that the agreements were on the level and approved by the board, when in fact they may not have been. According to the Breeden investigation, for example, Boultbee reported that “Radler assured Atkinson that the [noncompete] payments had been approved.” Black also hinted at this strategy when he spoke to reporters after appearing in a Chicago court in December 2005. “The obligation of all of us is to tell the truth. And if the truth is that he committed a felony, he’s right to admit it. Better late than never. If he goes further and tries to incriminate innocent people, that is something else,” he said.

But guilt alone may not undermine Radler’s credibility. “Prosecutors will argue we didn’t pick Mr. Radler. Mr. Black did—as his business partner,” says Kent, the former government attorney on the Black case. “If you’re going to get an inside view of criminality, you’re going to have to get it from a criminal.” Indeed, the testimony of high-ranking indi-

viduals has been pivotal in both the Enron and WorldCom trials, says Buell. The Bernard Ebbers trial had former WorldCom CFO Scott Sullivan as its critical witness. The Jeffrey Skilling and Kenneth Lay trial had former Enron CFO Andrew Fastow.

Lawyers liken the Black case to that of Dennis Kozlowski, the former Tyco executive. Kozlowski used a similar defence to the one Black is expected to use. At its crud-

est: “I was a pig, but I was allowed to be, or nobody stopped me,” explains Henning. Even though Kozlowski’s first trial ended in a hung jury, he was not so lucky the second time around. He’s now serving up to 25 years in prison—a bad omen for Black. But there is one final strategy the defence may employ at any time if things start to look dire: stop the trial and strike a deal with prosecutors in exchange for a lighter sentence.

It may be a prudent choice, but to those who know anything about Black, it’s highly unlikely. This has been a scorched-earth confrontation from the start, fanned by highpitched rhetoric on both sides. The time for deals, it would seem, has long since passed. Prosecutors are interested only in abject surrender, and Black is willing to contemplate only total vindication. As the prime defendant said himself last year, when he entered a not-guilty plea to all charges, “It’s going to be a great trial.” M

With Charlie Gillis and Anne Kingston