April 2 2007


April 2 2007


The Chicago courtroom seems determined to shrink Conrad Black




When it comes to famous not-guilty verdicts in the Windy City, I think of Frank Sinatra in the film Robin and the Seven Hoods, on the courthouse steps, surrounded by flappers and celebrating the successful conclusion of his trial with a performance of My Kind Of Town (Chicago Is):

“Now this could only happen to a guy like me And only happen in a town like this...”

A triumphant courtroom vindication after the last three years could only happen to a guy like Conrad Black. Whether it can happen in a town like this is another matter. And, if it does, there will be no steps on which to emerge blinking and free into the Chicago sunlight. The Everett McKinley Dirksen federal courthouse is an anonymous office block. You go inside, you ride up to the 12th floor, you pad down the corridor, and you come to Judge Amy St. Eve’s court. There’s a centre aisle with four rows of benches. There’s no well of the court for attorBLACK leaves neys to prowl while scornfully eviscerating witnesses. Instead, the small room is clogged with swivel office chairs and long tables cluttered with computers, like a badly laid out executive training seminar. Presumably, this arises from the four individual defendants with separate legal representation, though that can’t be so uncommon in Illinois. Any attorney who wants to prowl scornfully has to wedge his way between the backs of two rows of the office chairs, at the front of which is a two-foot space to “approach the bench.” The carpet is criss-crossed with duct tape covering the extension cords sneaking down the table legs and back to the baseboards. Flouncing out of the furniture-clogged court isn’t any easier. Each bench has a chair at the end for a sketch artist, which narrows the centre aisle somewhat. The Black team’s lead attorney, Edward Genson, enters in a motorized wheelchair which requires some considerable movement of bags, coats and chairs to get him to his place. The principal defendant glides more smoothly to his seat at the central table. “Mr. Black” (as the prosecutors insist on calling him) has been relishing the opportunity to rise to the occasion. In this anonymous room on the 12th floor, the occasion seems determined to shrink him to it.

We in the press box exemplify the fatal error at the heart of the Hollinger strategy. There are Canadians, Britons, a couple of Australians here to cover the trial, but not a lot of Americans. At its height, Hollinger ran the United Kingdom’s biggest-selling broadsheet, almost all Canada’s major metropolitan dailies, and Australia’s leading newspaper group. Oh, and also the Chicago Sun-Times. Nevertheless, the management decided to bring what was essentially an Anglo-Canadian newspaper group under the umbrella of an American public company, and thus under the jurisdiction of the SEC, the U.S. Department of Justice, and Judge Amy St. Eve. In consequence, Hollinger Inc., the now crumbling Toronto parent of Hollinger International, was reduced to a holding company. Inc. is currently suing International for restitution for the bargain-basement transfer of valuable Inc. assets such as Britain’s Telegraph Group south of the border to International.

Paul Healey, International’s former vicepresident of investor relations and a key witness at this trial, once boasted to me over breakfast at the Plaza in New York that he was the one who centralized the company’s diversified British Commonwealth portfolio under the streamlined Hollinger International brand. That doesn’t look like such a smart move now. True, everyone wants to be big in America. Imagine a company that owned the Royal Bank of Canada and HSBC in Britain but that also happened to have picked up the First National Bank of Dead Skunk, Maine. It wouldn’t necessarily be the sawiest deal to make Dead Skunk the global corporate HQ. In Conradian Napoleonic terms, Hollinger is meeting its Waterloo in a city its chairman barely set foot in. And a Chicago jury finds itself with a case that centres on the propriety of a form of Canadian tax benefit to a British peer.

In court we subjects of the Crown are with Conrad to the end. There are celebrity chastisers like Peter C. Newman, from Toronto,

and Tom Bower, from London. Canadian journalism has sent its eminences, including the great Christie Blatchford. Fleet Street has dispatched the usual schadenfreude set. But the local boys don’t seem to have any appetite for the story. The Sun-Times began the trial with a majorly lame apologia by its publisher John Cruickshank— .. these events stir strong feelings in those of us who lived through the trying years of Black’s control... talented staff made valiant efforts... far too little was done by our parent firm... feelings of resentment that are still quite inflamed... etc., etc.”—concluding with “We will cover this trial as we do any other.” If this is how the Sun-Times covers other trials, it helps to explain the problems of the U.S. newspaper industry: they seem to have adopted a policy of just enough coverage to

avoid accusations of a news blackout. (Full disclosure: I’m still a columnist for the SunTimes, or I was at the time of writing, and Cruickshank’s my boss; but honestly, if he’s going to disavow the old management he could at least do it with the brio and sadistic glee of Conrad’s fairweather friends in London.) As for the lads in Colonel McCormick’s Gothic mausoleum for the Chicago Tribune, they seem oddly subdued about their rival’s downfall. Saddled with the dead weight of the fast-sinking Los Angeles Times, the Tribune company is believed to be up for sale or a radical dismemberment, if anyone’s interested. Hollinger’s—i.e., Conrad’s— decision in 2000 to sell Canada’s Southam papers for a boffo price looks smarter every minute. These are glum times for the North American newspaper business.

The prosecution thinks the very complexity of the case works to its advantage: if you want to prove Black and Co. innocent, it all gets highly technical very quickly; if you want to convict, the very labyrinthine nature of the allegations means that much of the jury will be grateful to cut to the chase. “Bank robbers wear masks and have guns,” prosecuting counsel Jeffrey Cramer told the jury in his opening statement, “but these fourthree lawyers and an accountant—wore ties and suits.” Describing an entrepreneurial newspaper man as a “lawyer” was only the first of Mr. Cramer’s less than subtle tweaking. Fresh from scalping Scooter Libby in Washington, Patrick Fitzgerald is playing not so much hardball but flood-the-zone. On the eve of the trial, the SEC announced a curiously timed settlement between the Sun-Times Media Group—the new name for the rump Hollinger—and companies controlled by its former president and the prosecution’s star witness, David Radler. Gordon Paris, Black’s usurper at Hollinger and another key prosecution witness, was issuing statements bragging about all the dough he’d won back from the old kleptocrat management, claiming a grand total of $185 million. Which may compensate (partially) for ongoing losses and a share price that fell by four-fifths on his watch and a husk of a company with nothing left to sell. As Mr. Genson said in his opening remarks to the jury, “This is not a story about a theft by Conrad Black. It is a story about a theft

from Conrad Black”—i.e. the theft of successful newspapers that he’d built up over the years and made hugely profitable. Nevertheless, the settlement with Radler is intended to reinforce the impression that what’s at issue in this trial has already been decided: the jury merely have to put the last piece of the puzzle in.

I wonder. If you want a Ken Lay figure in this case, Radler fits the role better—the man who ran the American end of the business while its nominal boss was far away in London. Mr. Genson made the point that the American end of the business was run entirely by Mr. Radler, and that all the damaging imputations made by Mr. Cramer can be attached only to Radler’s deals. Black’s principal contribution—the Can West deal—was above board, memoed up to the hilt, paperwork in triplicate—and also netted the company a billion dollars in profits. The central accusation in the prosecution case is the “non-compete” fees that the prosecution say should have benefited Hollinger International rather than Conrad Black personally. But, as William Rees-Mogg wrote in the Times of London this week, “In practical terms, Conrad was the competitive entrepreneur, and Hollinger without him was a mere holding company.” Indeed, the new management provides the most obvious self-refutation of its own case: post-Conrad, there is no Hollinger.

There are different views of how the great man’s bearing up. I don’t think the swivel chair from Staples helps. It makes him look too corporate and comfortable. His wife Barbara and daughter Alana, sitting across the aisle from me, provide a coolly stylish support, alert if rather inscrutable during hours of technical motions. Conrad himself strolled over for a word during a break on the opening day. I asked him whether he’d enjoyed his weekend in Palm Beach. Alas, that turned out to be a wicked rumour spread by the media. With a century of jail time riding on the verdict, weekends are for strategy sessions, though I hoped he’d get some kind of a break from it all. “I didn’t visit Colonel McCormick’s museum, if that’s what you mean,” he replied dryly. One day not too far away, all Chicago newspapering will be in a museum, but the Conrad Black exhibit will be more interesting than most. M