JUSTICE

THIS IS HUMILIATING

Having to defend yourself or your husband is unpleasant, but what’s at stake is too important to be left unsaid

BARBARA AMIEL August 4 2008
JUSTICE

THIS IS HUMILIATING

Having to defend yourself or your husband is unpleasant, but what’s at stake is too important to be left unsaid

BARBARA AMIEL August 4 2008

THIS IS HUMILIATING

JUSTICE

Having to defend yourself or your husband is unpleasant, but what’s at stake is too important to be left unsaid

BARBARA AMIEL

My life was wiped out in Chicago—at least all that mattered in it. No big deal for a city that has wiped out many lives, I suppose, but my demise didn’t come at the hand of some zoot-suited mobster. Mine was a judicial murder in the Seventh Circuit U.S. Court of Appeals. The blunt instrument striking me down on June 25 was in fact directed at my husband—I was only collateral damage.

During the past few years, newspapers and television producers by the truckload have asked me in vain to talk about “it.” “It” for them being the delicious story of the rise and fall of a big wheel in society and business. “It” for me meaning the brutal destruction of my husband’s accomplishments, reputation and freedom, as well as our life together, his company and with it virtually all shareholders’ equity by a combination of press and judiciary merrily dancing together to the music of the times.

So what you ask. What does it matter if one well-off elderly white woman with too many pairs of expensive shoes now finds her social life largely limited to visiting her dearly missed husband in a U.S. federal correctional institution. Should be interesting material for her as a writer. But I’d tackled the real issue in my writing when commenting on changing fashions in crime and criminal law long before I married Conrad: if the rich and well-connected cannot get justice, what chance for anyone else? What chance for the orange jump-suited, marginalized young men I saw shuffling in front of the judge in Chicago, silent while their court-appointed attorneys negotiated their freedom away in that tight little legal world where a client’s fate never disturbs the bonhomie between lawyers. If ostensibly privileged defendants like us can be baselessly smeared, wrongfully deprived, falsely accused, shamelessly persecuted, innocently convicted and grotesquely punished, it doesn’t take much to figure out what happens to the vulnerable, the powerless, the working-class people whose savings have been eaten up trying to defend themselves: they land, finally, in the 8:45 a.m. courtroom parade that takes place all over “America the Free,” the country that “wins” 90 per cent of cases and imprisons more people than any other in the world.

Every wife says her husband is innocent. Every convicted man has a tale of how the system is rigged. I have always suspected some tales were true. Now I know. Let me tell you a little about life in the fast lane down.

My husband, Conrad Black, took 30 years to build his company into the third-largest newspaper company in the Western world. He did it his way—and his way was a good way to run a railroad. As the 20th century

drew to a close, my husband’s strategy in a rapidly changing market was resulting in profitable divestments in Canada as well as in the United States, earning shareholders nearly US$2 billion in capital gains. Then, a large New York institutional investor saw even more profit in hijacking the gravy train. Along with a few smaller investors, the dissidents began a campaign to wrest control of the company from Conrad, break it up, and sell parts of it for a quick profit.

The corporate rebels started planting stories in competing newspapers with false accusations of management misdeeds at the Hollinger group, ranging from simple greed to fulminating extravagance to outright corruption and thievery. Our newspaper competitors lapped it up and amplified the defamatory fantasies. We were, it seems, a delicious target. After months of daily faxed pages from newspapers around the world, I stopped reading about my sex life, real or imagined, my conspicuousness in dress, true or false, and my plastic surgery, revealed by me or made up by reporters. I hadn’t a clue what relevance such tripe had to do with the accusations against my husband or why it interested ostensibly serious media commentators, but this was the process of demonization.

In any event, were I the clothes-crazy, sexual predator so disliked by the Globe’s Margaret Wente and Maclean’s Peter C. Newman, and were my husband the arrogant and pompous caricature of the books and films depicting him, what then? Would this justify the twisting of due process by the legal system? Would it make unnecessary the proper scrutiny by the press of public facts and filings? Is this a sufficient reason for silence even now when the essential emptiness of this bitter hunt has been established in a court of law? If Dreyfus had been a loud and vulgar Jew instead of an officer and a gentleman Jew, would his case have been any the less important or his persecution less unjust?

In his innocence, my husband believed that innocence was enough. On May 22,2003, in response to an activist investor, he created a special committee to investigate allegations of excessive or unjustified payments to him and his management team, confident this special committee—which hired former SEC honcho Richard Breeden as counsel—wouldn’t find any unjustified/unauthorized payments for the simple reason that there were none.

At the conglomerate Conrad controlled there were not only no corporate criminals but no corporate crimes: no accounting scandals, no job or pension losses, no bankruptcy, no stock value collapse. Even in the difficult economic times of the early 2000s, the Hollinger group kept its corporate head above water. None of this mattered. What my husband did not understand was that the marauders and zealots of corporate governance had their own agenda. Propelled by the force of the Zeitgeist, they didn’t need to find anything. Once he was accused, evidence against my husband was no longer required. After a five-month investigation, the special committee reported—wrongly, as we now know—that payments of US$32.15 million arising out of the sale of some newspaper assets and made to my husband and others were not authorized by Hollinger International’s board of directors.

Nov. 17, 2003. Catastrophe! I remember that day, every detail, including the ashen face of my husband: every TV channel had fictional tales about us flashing across the bottom of the screen. By then we knew the rats had left the ship, taking with them the last shreds of their integrity: directors like

Henry Kissinger, who had sworn eternal loyalty only weeks earlier, Marie-Josée Kravis, Richard Burt, former governor James Thompson of Illinois, all of them ready to sing any song to save themselves the inconvenience of standing up to the threats of regulators and prosecutors or alienating those lawyers and newly appointed directors dining so very well off what was then the fleshy carcass of the companies Conrad created. Reading the FBI interviews with such eminent people is to read a sad bad novel. Thus began the draining of Hollinger International and its parent company Hollinger Inc. of billions, and my husband of his lifetime of work and earning.

IN THE BAG WAS HIS HALF-USED TUBE OF LIP SALVE AND THE TABLETS HE USED FOR SLEEP AT NIGHT. ‘CAN’T HAVE THAT,’ SAID THE OFFICER.

Conrad fought with one hand behind his back. He could get neither information nor access to the special committee’s findings. It had presented no evidence for its charges but he felt duty bound to resign as CEO and pay back monies they questioned. (He’s owed most of that money now but the company hasn’t got it.) Deals that Conrad arranged to privatize Hollinger Inc. and sell Hollinger International to give the shareholders a decent profit were blocked with the help of the Chancery Court in Delaware and the Ontario Securities Commission in Toronto (whose duty it is to protect shareholders but whose supervising panel voted against the recommendations of their own staff as well as 87 per cent of Hollinger’s public shareholders). Now, shareholders would sit helplessly for the next four years and watch the value of their shares evaporate to nil or next-to-nil.

JUSTICE

Lawsuits for defamation followed swiftly from both sides. Conrad had no idea, and one could not convince him, that he was in Salem, in the middle of an American witch hunt, mimicked by fawning Canadian acolytes. There is no defence against false accusations in Salem. In June 2004, the best asset of the company, the British Telegraph Group, whose control was acquired by my husband in 1988 for $30 million, was sold for US$1.3 billion. It was a good price but a dumb deal. Selling the entire company, which was Conrad’s blocked arrangement with the same purchasers, would have given the shareholders a tremendous profit—but would have left no business to pay the hundreds of millions the corporate governance winners feasted on over the next four years. In August 2004, the special committee issued the so-called “Breeden Report,” a document of 513 pages, accusing Conrad and his team of having run a US$500-million “corporate kleptocracy.”

Big-game-hunting U.S. attorney Patrick Fitzgerald announced his intention to add my husband’s head to his trophies in November 2005. Two members of Conrad’s management team had already been indicted on charges of fraud in relation to non-compete payments the government contended should have gone to Hollinger International (later, a jury didn’t quite agree). My husband’s onetime partner, former Sun-Times publisher David Radier, a man with the backbone of a jellyfish, had by then made a plea agreement with the prosecutors. It wasn’t surprising that he did; of all the defendants, Radler was the only one who may have done something dishonest. As the prosecutors knew only too well, this made him the most likely to deal.

The trial began in Chicago in March 2007. Conrad couldn’t wait. This was America, the country he loved and admired all his life, had defended in his writings and newspapers, for which he was reviled by many in Canada and the U.K. This, he kept telling me, was where ordinary men and women would see the truth. Pessimistic little Jew that I am, I listened and worried.

He was facing 17 criminal charges, lead prosecutor Eric Sussman having thrown everything at him, including the kitchen sink—literally, because the charges included the false accusation that he fraudulently stuck Hollinger International with some of the costs of our New York co-op. The jury would eventually throw out this charge, along with many others, but meanwhile it enabled the prosecution to confiscate the proceeds from the sale of our former Park Avenue residence, some US $10.5 million, as a result of which we were defended in Chicago not by the lawyers we would have liked, but by the lawyers we could afford. Major difference. Coupled with the judge and prosecution insistence on a bail bond of US$21 million, secured by $38 million, one of the highest in U.S. history, this little end run around the Fifth, Sixth and Eighth Amendments was all in a day’s work for the Patrick Fitzgerald-Eric Sussman safari.

T COULD BARELY STOP MYSELF FROM LAUGHING WHEN BARBARA REFERRED TO HER CONCERN FOR CONRAD’S REPUTATION’

The jurors retired after four months of listening to evidence and arguments and took two weeks to reach a verdict. They had 13 charges to consider, after the judge and prosecution threw some overboard. By now I knew a lot about so-called American justice where, among many evils, the FBI can with impunity knowingly swear incomplete affidavits, where the prosecution can threaten defence witnesses and call up our mortgage holders to let them know their companies will be fully investigated should they renew our loans, where an American prosecutor can engage in unlawful behaviour with the Canadian tax authorities who will themselves try to please him.

Given this, it was almost surprising that the 12 ordinary citizens of Chicago threw out nine of the 13 charges against Conrad, and $53.9 of the $60 million. In monetary terms, they acquitted my husband of 90 per cent of the prosecution’s case. Still, the witch hunters managed to confuse the jurors enough for them to convict him on four counts: three counts of wire fraud involving US$6.1 million, and one of obstruction of justice. Meanwhile, the ever-popular and perky trial judge, Amy St. Eve, sentenced Conrad to a draconian 6.5 years, which may not be much for having stolen US$6.1 million, but rather a lot for not having stolen it.

On March 3,2008, we drove to a prison in northern Florida.

He stood mute in front of the grey uniformed correctional officers. “My husband, Conrad Black, is self-surrendering,” I said for him. I had explained to Conrad earlier that he could take nothing, absolutely nothing, into prison but his spectacles and a small sum of money that would be put into a commissary account. I hadn’t noticed the tiny carrier bag he held, which the guard opened on the counter. His glasses were in it but so was his half-used little tube of lip salve and the tablets he used for sleep at night. “Can’t have that,” said the correctional officer and handed the lip salve to me, confiscating the tablets. I watched Conrad walk toward a door and disappear. A few weeks later his clothes arrived from the prison in a brown paper parcel. He was 58 when these horrors began, 63 when he entered prison; we knew that unless the famed Seventh Circuit U.S. Court of Appeals intervened, he’d be 70 when he emerged and I would be 73In view of this, we rather looked forward to June 6 when the appeals court indicated it would hear oral arguments.

Even after the debacle of the trial, Conrad placed his hope in the appeal. “Now,” he said to me, having read all about Chief Justice Frank Easterbrook and former chief justice Richard Posner, “we get to a serious American court.”

Kangaroo court more like it. On June 6,1 arrived at Court No. 27 in the Everett Dirksen U.S. Courthouse in Chicago. I’ve attended appeals in Canada and the U.K. but never have I seen so shabby a performance. This “serious court” allowed the four defence briefs together 20,000 words. Oral arguments were limited to 20 minutes in total between the four defendants (later extended to half an hour). Shades of the Star Chamber, I thought— but still my husband saw hope. “They are relying on the written briefs,” he said, “and

from a legal and factual point of view, we win hands down.”

The three judges were led by Judge Richard Posner. Posner, a man reputed to be a serious intellect, is certainly a self-important one, listing virtually every publication, including book reviews back to 1964, on his biography page. This is no crime but it does indicate a degree of self-absorption more often seen in film stars than judges. He slouched deep in his chair and scowled. My husband’s lawyer Andrew Frey, former U.S. deputy solicitor general for 13 years, a sober and excessively conservative advocate, led off: “I want to say a few words at the beginning about obstruction of justice. This is the weakest case I have seen in 45 years.” Little did he know how accurate his choice of the phrase “a few words” would be. During Frey’s 10minute opening remarks, Justice Posner made 32 interventions, 24 of which were outright interruptions and 21 of which took place after less than two sentences by Frey. Posner’s leitmotif was an irritating whine, “I don’t understand,” which I realized actually was the case

since it quickly became apparent that Posner, who did 99 per cent of the questioning, knew at best one side of the case. He appeared to have glanced at the prosecution brief and the judge’s summaries but evinced absolutely no knowledge of the facts or the defence pleadings. After 10 minutes I knew it was over. What I didn’t know was why.

MY PERCEIVED PENCHANT FOR PEACOCK DISPLAY WAS A BURR UNDER THE SADDLE OF A LARGE NUMBER OF PROFESSIONAL WOMEN

Three weeks later the appeals court released its written reasons, signed by Judge Posner, for denying every aspect of the appeal for all four defendants. The judgment shows that it was unnecessary to limit the defence briefs to 20,000 words because the judge seems to have read not one. Major factual errors abound. The count was over 20 when I last checked. For example:

Posner: “Although Hollinger is a large sophisticated public corporation, no document was found to indicate that the $5.5 million in payments was ever approved by the corporation or credited to the management-fees account on its books.”

Fact: How could the US$5.5 million be on the books as management fees if it was recharacterized as non-competes, which it was, according to the prosecution’s chief witness Radler? How does the absence of documentary evidence to contradict the government’s exculpatory evidence end up inculpating the defendants?

Posner: “It is true that Radler, who pleaded guilty and testified for the government, said that he thought the audit committee had approved the so-called management fees. But the members of the committee testified otherwise and the jury was entitled to believe them.”

Fact: Members of the committee did not testify otherwise.

Posner: “He [Black] was acting in his capacity as the CEO of Hollinger when he ordered [Hollinger International lawyer Mark] Kipnis to draft the covenants not to compete and when he duped the audit committee and submitted a false 10-K.”

Fact: Black never ordered Kipnis to do anything on this subject. Even the prosecution did not allege this.

The judge based his opinion on key points that were simply not factually correct. Acquitted acts were muddled up with convictions. Justice? A joke. Why believe the wife? You don’t have to. Do what the appeal court could and should have done: go to the trial transcript and defence submissions; they’re public documents.

Now, once more, we’re going through an appeal process. Now I know from the marrow of my bones that it will be useless. We have asked the entire Seventh Circuit to sit en banc to review the case. Normally Posner is the most supportive of such applications— unlikely he will galvanize the court to do it this time. Perhaps the Seventh Circuit will send a polite letter correcting all Posner’s errors and telling us that, regrettable as they are, it makes no difference to their decision. This is the usual way of American justice.

Why did this happen to us? There’s a line in the 198O film American Gigolo when Richard Gere is trying to find out why he has been set up for a murder. The sneer on the face of actor Bill Duke (playing the suave black mobster Leon) as he says “You were expendable. No one liked you” is wonderful to behold. Well, a lot of people didn’t like us. My husband’s self-confidence and exuberant displays of intellectual prowess, plus his confidence that he was somehow exempt from the normal rules of petty mankind—to wit, he could call many journalists lazy without being buried by them when the first real opportunity came—irritated enemies and even some admirers. My own political incorrectness and perceived penchant for peacock display was a burr under the saddle of a large number of women in the professions. Add worldly achievement and the evident happiness of our marriage and you have a perfect petri dish for animus.

In the early days of this awful saga, when hostile investors were orchestrating a financial squeeze play on Hollinger, we had an emergency telephone conference call with the Hollinger Inc. directors who included myself, former high commissioner Fredrik Eaton, Douglas Bassett, lawyer Maureen Sabia, and a man who was the recipient of many favours from Conrad, former ambassador Allan Gotlieb. The call was a disaster. The directors refused Conrad’s request for more time to raise money. When the meeting ended, Conrad quickly hung up his phone. I did not. Nor did the other directors who, believing both of us off the line, abandoned their serious tone and began laughing and joking about the stew they had put Conrad in. “I should get an Oscar for my acting,” said Gotlieb in reference to his performance as a concerned director. “I could barely stop myself from laughing when Barbara referred to her concern for Conrad’s reputation,” said Fred Eaton. The woman I had recommended for the board, my old schoolmate from St. Catharines, Ont., Maureen Sabia, sarcastically replied, “All she’s worried about is her own reputation,” and joined happily in the dissing of us both. Here, writ plainly, was the future. These people were among Conrad’s oldest friends.

Perhaps all this happened for another reason as well: Conrad is a man out of joint with his times. His notion of loyalty is superglue strong and prevented him from taking the steps he should have with, among others, David Radler, when his capacity for business deceit first surfaced a few years earlier. (Radler was an equal partner with Conrad in a private company, but had a secret written agreement with one of the company’s executives to vote shares Radler had given him according to Radler’s wishes.) The 21st century is not a good fit for men like Conrad. As a bold, innovative entrepreneur, or at least as the CEO of a public company, my husband may simply have been in the wrong place at the wrong time.

Because his is the story of the attempted destruction of a rich Anglo businessman, there’s little sympathy for him or interest in the very large issues behind the man himself. But these are major wrongs well worth fighting. Our society hunts down, rightly, the guilty individuals who ruin companies and fleece shareholders, but no one sheds a tear for the unique and very much more dangerous story of a flourishing company with real assets whose shareholders are ruined and fleeced by the government, regulators and self-described corporate reformers hidden inside the Trojan Horse of corporate governance. Americans sit smugly confident in their justice system built around the plea bargain— a system that invites intimidation by prosecutors and perjury by witnesses. Every sophisticated American businessman we knew told us early on that innocent or not, Conrad hadn’t a chance. “Make a deal and plea bargain” they said wearily when Conrad professed his faith in the justice system. What we did not know was how willingly Canada would submit its justice system and regulators to American bullying—with eagerness and an apple-polishing attempt to outperform any request made.

CONRAD’S SUPERGLUE NOTION OF LOYALTY PREVENTED HIM FROM TAKING THE STEPS HE SHOULD HAVE WITH, AMONG OTHERS, RADLER

These issues are larger than Conrad’s penchant for showing off his knowledge about American politics or my buying yet another half-dozen Chanel jackets. Where is the outrage and fury, the understanding that as the rich man is denied justice so much worse will be the fate of the poorer? Where is the Zola this needs? We have had some defenders, like the brilliant Mark Steyn. Still, to be effective he needs to be joined publicly by thinkers from all sides of the political spectrum in America as well as in Canada. No point in the wife writing J’Accuse, who will listen to me? No matter how many disclaimers I make, when you have to defend yourself or your husband, it can only leave a bad taste in everyone’s mouth. Though I have utterly no doubt Conrad will come back with

renewed vigour to recreate his success in a different business, writing this account is humiliating, unpleasant, unbecoming. But it needs to be said.

When Conrad was ousted, his company’s shares were fast heading towards US$18; now, five year later, they won’t fetch 50 cents. He offered to buy his Canadian company’s shares for $7.60; the regulators stopped him. Today those shares are worth zero. The supposedly exorbitant management fees that sparked the coup against him—that caused Breeden to characterize Conrad’s regime as a US$500-million “kleptocracy”—amounted to about $25 million a year ($201 million over eight years). The brass band of Breeden and the Protectors unleashed a legal firestorm that, together with their bonuses and salaries, cost shareholders over $45 million a year ($136 million in not quite three years by 2007). Dissident investors who balked at paying $25 million a year to those who created Hollinger International’s wealth ended up paying $45 million a year to the “reformers” and their lawyers, investigators and auditors who dissipated it. “Chicago, Chicago, that toddlin’ town...” The corporate governance racketeers could teach Al Capone a lesson or two.