The ‘celebs’ arrive and the defence treats them like star reservations

MARK STEYN May 14 2007


The ‘celebs’ arrive and the defence treats them like star reservations

MARK STEYN May 14 2007


The ‘celebs’ arrive and the defence treats them like star reservations



At the end of a long day in court last week, Conrad Black made some observation or other, and I replied: “One would hope so.”

He sighed. “If I’ve learned anything in these last four years,” he said, “it’s that

when someone tells you T would hope so,’ it means ‘no, you’re wrong.’ ”

Up to a point, Lord Copper.

So I came clean. I thought the defence had won Round One on points—that’s to say, the government had put up a procession of auditors, accountants, corporate lawyers and the other side had deftly knocked them down, or exposed the contradictions, or at the very least made them look like boobs and bunglers. But the prosecution had now moved into Round Two—the big guns, the celebrity directors of Hollinger International—and I didn’t think that was going so well. The celebrity directors aren’t really celebrities, even by the standards of us desperate trial-watchers: Richard Burt never soared higher, for example, than ambassador to Germany, and so long ago it was only West Germany. But he was bespoke in pinstripes, and he was very much at ease in the spotlight, unlike most of last month’s witnesses who did passable impressions of startled wildlife when you switch the basement light on. Personally, I thought Burt was a puffed-up creep, but then I’ve never been keen on State Department types. Alas, the tough old buzzards on the defence legal team were more impressionable. Grizzled bruisers who’ve spent years representing Chicago mobsters were suddenly transformed into oleaginous maître d’s ushering the star reservation to his table.


Gus Newman, the whiskery octogenarian Noo Yawker whose style proved so effective against earlier witnesses, was reduced to doing his Catskills shtick without any redeeming forensic probing while Burt eyed him with the faintly bored air of the village squire enduring a variety show put on by his undergardeners. One dreaded to think how the defence boys would have abased themselves had some genuine big shot shown up. The deputy trade minister of Tajikistan, say.

Slick Rick Burt is a central figure in the Hollinger story. He’s the guy who, at a critical board meeting, slipped to a fellow director across the table a piece of paper bearing the scribbled words “Call Richard Breeden”— the former head of the SEC. Those three words set in motion the unravelling of the company and of Conrad Black’s life. On the other hand, round about the same time, he had brain surgery and suffered memory loss. The defence managed to wedge in a garbled reference to the brain surgery but not to the memory loss, never mind Burt’s active role in the dismantling of Hollinger. So for two days he was allowed to preen as a man of substance, of disinterested patrician authority, and the defendants’ lawyers never laid a glove on him. On Monday, Pat Tuite, the feisty old bird who represents Hollinger accountant Jack Boultbee, did the same with another celebrity director, Marie-Josée Kravis. Mrs. Kravis had also sat on the board of Hasbro. “I’m not going to toy with that,” said Tuite, as eyes rolled all the way out the courtroom, down the stairwell and into the Chicago River. Au contraire, Mrs K. toyed with him. He hoped she’d enjoyed the fine weather last weekend. She didn’t even bother forcing a smile at that. The celeb directors’ attitude to the defence team seems to be modelled on Barbara Amiel’s attitude to the help (at least as alleged in Tom Bower’s biography). If cross-examination is defined as passing the time until lunch, the Tuite pitch was very effective.

So my line to Lord Black was that, while the defence had done a good enough job making the auditors and corporate lawyers look shifty and evasive, they had to raise their game with the Hollinger A-listers like Ambassador Burt and Mrs. Kravis. You don’t need to tell that to Conrad, of course. Inside the court, the defence often seem to be fighting the trees rather than the forest, labouring to win points you don’t always see the point of: the lOQ corrected the lOK, the Ravelston management-fee reduction to $6 million added $110 million to the CanWest deal because it was computed on lOx EBITDA, etc. Outside the court, Conrad prefers the grand sweep—on one occasion, famously dismissing the prosecutors as “Nazis.”

And, to be honest, I think he’s right. Well, okay, not Nazis, but certainly fascists. I mean, for example, take the sentence he’s facing: 101 years in jail. What kind of countries throw people in jail for a century? In any other developed nation, Black would be facing a

sentence a tenth of this one—except that, in any other developed nation, this wouldn’t be a criminal case at all, just a civil one between competing business factions: in Canada or Britain, the state would have no interest in the matter.

Now I’m all in favour of long sentences. This column is full of them, as that snippy lady pointed out on our letters page the other week. I support the death penalty for murder, and for rape and violent crime I’m happy to throw away the key. But in a civilized society a tough sentence can only follow a scrupulously fair trial. What’s fair about a trial in which just about every witness is here as a condition of his own deal with the government? The celebrity directors were served ominous “Wells notices” by the SEC—and then invited to assist the prosecution in mitigation. The corporate lawyers in Toronto got off with a financial settlement to Hollinger International—on condition they too assisted the prosecution. And of course David Radler is getting 29 months in a B.C. country clubon condition he turns up next week and nails Conrad. The government’s ability to buy a cast of accusers is grotesque.

Even so, it’s a bunch of shifty witnesses to an ever-shifting crime.

Is it the “non-compete” agreements?

No, they’re routine.

Is it that they’re tax-free?

No, that’s legal in Canada.

Is it that they weren’t disclosed?

No, they’re on innumerable 8Ks and lOKs and lOQs on the SEC website for all to see.

Is it that they weren’t approved by the audit committee?

Well, that’s what Mrs. Kravis and Co. are trying to argue despite their names all over documents to the contrary. But the government seems to think that if you accumulate enough witnesses it doesn’t matter whether there’s an actual crime. And, for all the crowds in the witness box, you’re struck after a month and a half by the complete absence of victims. We were told in the opening statement that the Black gang “stole” from the shareholders, whom the prosecution’s excitable Jeffrey Cramer painted as sweet li’l ol’ gran’mas investing their retirement savings and hard-working single moms putting their waitressing tips into Hollinger for Junior’s college fund. In the Enron case, there were thousands of folks who’d lost their pensions. But, in this case, not a single gran’ma or single-mom waitress will be called, nor even the grey Wall Street types from Tweedy Browne and other institutional investors who, underneath Mr. Cramer’s colourful

Dickensian fantasies, make up the drab reality of Hollinger shareholder muscle.

The fact is, if you put Christopher Browne and other investors up on the witness stand, they’d tell the jury, as they told Macleans a few weeks ago, that the whole sorry Black defenestration and attendant corporate meltdown has been a fiasco for shareholders. Delivering Hollinger into the hands of Richard Breeden and thence to a 12th-floor courtroom has done nothing for

a hard-working waitress like Mr. Browne.

So we’re in a curious position in which a cast of dozens has been assembled in order to serve as witnesses in a criminal case deriving from a series of events which, if they are a crime, appear to be a victimless one. In one of the livelier moments of his testimony, Richard Burt remarked, apropos a characteristically Conradian email about the “corporate governance fad,” that it was a “fad” in the sense that the computer is a fad.

Oh, I don’t know. In the wake of Enron, Congress passed the characteristically slapdash corporate governance bill known as “SarbanesOxley.” The costs to the average American public company of complying with SarbanesOxley are said to be around $16 million per annum. For a small company with revenues of $50 million, Sox compliance costs about $2 million—or four per cent. On revenues in excess of four billion dollars, Conrad Black and Co. are accused of stealing $60 million. In other words, the government regulatory regime introduced to stop the likes of Conrad bilking shareholders has cost shareholders far more money than his “thefts” ever did.

Is that a “fad”? Judging from the collapse in IPOs in the United States over the last five years and the simultaneous rise of companies choosing to list in London, Hong Kong and elsewhere, American capitalism better hope it is. I’m aware that the Black team’s lawyers are high-priced experts and know their business and have presumably con-

eluded that a constrained tactical defence is the best shot at acquittal. But Conrad’s offstage outbursts are nearer to the truth: there is something much bigger at stake here than a technical question about the approval of the disclosure of the non-competes. M