A former Hollinger International director advised Conrad Black to be more humble with shareholders after investors started asking questions about so-called non-compete fees, jurors at the former media mogul’s fraud trial heard Friday.
Marie-Josee Kravis, a prominent economist who served on Hollinger’s board and audit committee until 2003, said she asked Black for information about the fees after learning of shareholder and media accusations that executives may have funneled money away from investors.
“I’m not suggesting that directors engage in discussions with the press or with analysts, but I would feel better if we were all on the same song sheet,” she wrote in a 2003 e-mail to Black.
Black and two of his co-defendants are accused of plundering $60 million from Hollinger International by pocketing payments from buyers of hundreds of community newspapers in North America in exchange for promises not to compete with the papers in areas where they circulated.
While such payments are common in the business world, prosecutors say the money belonged to shareholders.
Kravis said she advised Black to “be a little bit more humble,” when dealing with shareholders, after Black wrote an e-mail to her and other directors promising to “hose down shareholders in need of it.”
“I suggested he take a more quiet tone,” she testified. “I thought it was in the best interest of the company.”
Black, she said, listened to her and thanked her for her call.
He later sent her a memo detailing shareholder concerns and acknowledging that the issue of non-compete payments to executives had been “a lightning rod” for Hollinger.
“This is a symbolic issue and must be defused, but not with unjustified defensiveness,” he wrote.
Kravis’ testimony wrapped up the trial’s sixth week.
Star government witness David Radler, the former No. 2 executive at Hollinger, is expected to take the stand in about a week, after testimony for former Illinois Gov. James Thompson, who chaired Hollinger’s audit committee.
Radler also was accused of pocketing non-compete payments, but pleaded guilty and agreed to testify against Black in return for a lenient jail sentence of 29 months.