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CHICAGO - An executive who paid more than US$500 million ($700 million) to buy dozens of small US newspapers from former media magnate Conrad Black's company testified at Black's fraud trial that he baulked when asked to wire US$9.5 million directly to Black and his associates.
A handwritten asterisk on the closing documents in a 2000 sale of eight to 10 newspapers from Black's Hollinger International to Community Newspaper Holdings directed that US$4.5 million in non-compete payments be transferred to Black.
Another US$4.5 million was to be transferred to partner David Radler and US$250,000 each to two of Black's co-defendants, the jury heard yesterday.
"The deal was with Hollinger International. We thought that was where the proceeds were supposed to go," said Michael Reed, the former chief executive of the Alabama-based newspaper group, which bought more than 100 Hollinger-owned papers over the years.
"It just didn't seem like the right thing to do," Reed said.
He refused to honour the request from Black's co-defendant, Hollinger lawyer Mark Kipnis, to wire the US$9.5 million from the US$92 million sale directly to Black and co-defendants John Boultbee and Mark Atkinson.
It was not clear from testimony if Black and the others ever got the money from that particular deal, though he and his three co-defendants are accused of absconding with US$60 million through similar transactions.
Prosecutors contend the non-compete agreement money should have gone to Hollinger International - the media giant Black built and later disassembled - and to its shareholders.
US-based Hollinger International was later renamed the Sun-Times Media Group.
Canadian-born Black, 62, is also accused of abusing company perks, obstruction of justice and tax fraud.
If convicted, he could spend the rest of his life in prison, ordered to pay millions in fines and forfeit US$92 million in assets.
Radler has pleaded guilty to a lesser charge and is expected to testify against Black and his three co-defendants during the trial in the US District Court.
Non-compete payments, which are central to the case, preclude the seller of newspapers from going back into the same newspaper market where it has sold a property.
- REUTERS
