UPDATE: Day 2 of Conrad Black Trial

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An attorney criminally charged with helping former media mogul Conrad Black swindle the Hollinger newspaper empire out of $60 million was a news business “outsider” who did the best job he could, his lawyer told a federal court jury Wednesday.

“He has had during the entire course of his employment at Hollinger at most five conversations with Conrad Black,” defense attorney Ronald Safer said in his opening statement on behalf of defendant Mark Kipnis.

Defense attorneys were wrapping up opening statements on the second day of the trial, which is expected to last 12 to 16 weeks. Prosecutors hoped to call their first witness Wednesday afternoon.

Kipnis ranked well below Black and other two co-defendants at Hollinger, but prosecutors say that he handled much of the paperwork in a series of deals that netted Black millions of dollars that rightfully belonged to shareholders.

Safer, however, said his client worked hard to make all aspects of the transactions public but lacked extensive knowledge of newspapers and corporate securities.

“He was an outsider,” Safer said.

Black, 62, born in Canada but now a full-fledged British baron, sat stoically through opening statements Tuesday as federal prosecutor Jeffrey H. Cramer called him the corporate counterpart to bank robbers and burglars.

“It was theft, it was fraud, it was crime,” Cramer said.

Black and his three co-defendants are accused of swindling Hollinger shareholders out of $60 million by selling off hundreds of community newspapers and taking payments from the buyers on the side.

The payments were made in exchange for promises not to compete in the same markets where the papers circulated. Such “non-compete” agreements are not unusual in the publishing industry. But prosecutors say the money should have gone to Hollinger’s shareholders, not the executives.

Black was ousted as CEO of Hollinger in late 2003 after a shareholders committee investigating the non-compete payments began asking questions. Black brushed aside such questions as “an epidemic of shareholder idiocy,” Cramer told the jury.

Defense attorney Edward M. Genson ripped into the shareholders committee, saying that Black had “spent his life building” a profitable company and that the committee unreasonably snatched it away.

Prosecutors plan to call as their star witness F. David Radler, the No. 2 man in Black’s climb from ownership of a small Canadian newspaper to the helm of a global media conglomerate.

Hollinger once owned the Chicago Sun-Times, the Toronto-based National Post, the Daily Telegraph of London, the Jerusalem Post and community papers in the United States and Canada. All the big papers except the Sun-Times have been sold and the company has been renamed Sun-Times Media Group.

Radler has pleaded guilty to his part in what prosecutors call a scheme to defraud the company and agreed to testify against Black in return for a relatively lenient 29-month sentence and $250,000 fine.

Cramer promised jurors that Radler would give them an inside view of the alleged scheme.

“Radler will show you how that worked,” he said.

Defense attorneys say it was Radler who negotiated most of the non-compete agreements and lied to company directors and auditors about it.

“Radler will come into this courtroom and lie to you about Conrad Black to help himself,” Genson told jurors.
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An AP report from later in the day follows.

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A businessman who steered the big Hollinger newspaper empire through a storm of lawsuits and investigations testified Wednesday that former media mogul Conrad Black “was very knowledgeable” about the finances of the company he?s accused of swindling out of $84 million.

“Based on my experience, Mr. Black was very knowledgeable” about Hollinger financial operations, Paris said. Prosecutors plainly hope his testimony will undercut a defense claim that Black left many financial details to top aide F. David Radler, now the government?s star witness.

The Sun-Times is the only remaining large paper. The rest have been sold and the name of the company changed to Sun-Times Media Group.

Federal prosecutors say the fees should have gone to Hollinger?s shareholders and not into the pockets of Black and two other Canadian executives, John Boultbee and Peter Atkinson. Chicago lawyer Mark Kipnis is charged with arranging the fees but not receiving them himself.

Prosecutors say the defendants lied to both the Hollinger International board of directors and outside auditors about the so-called non-compete payments. But Genson said Black negotiated only one of the deals, a massive 2000 sale of newspapers to Can West Global Communications, and that the board and auditors were kept fully informed.

Despite its minority share in the company, which was traded on the New York Stock Exchange , Hollinger Inc. was able to wield control over the big newspaper corporation because it owned a superior class of stock.

“Through Ravelston?s interest in Hollinger Inc. and Hollinger Inc.?s interest in International was Mr. Black able to control International?” lead prosecutor Eric H. Sussman asked Paris.

Paris told how he was brought into the company in 2003 as a member of the board of directors after serving as one of its bankers. He said Black called him and asked if he would be willing to conduct an investigation of fees received by members of the Hollinger management because shareholders were starting to demand information concerning the payments.

Paris ended up running the company. He relinquished the job of president and CEO last December.





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