KEY POINTS:
Fallen media baron Conrad Black came face to face with the man who was his closest business associate for 30 years in a courtroom showdown that could determine whether he spends the rest of his life in prison.
His partner-turned-accuser, David Radler, took the stand at Black's trial in Chicago yesterday, as part of plea bargain that will spare him more than 29 months in prison, in return for testimony that could put Black away for the rest of his life.
"I pleaded guilty to taking money from Hollinger International in circumstances that were not allowed," Radler told jurors. Now, he said, "my obligation is to tell the truth".
The Government says Radler was the fifth member of a conspiracy to rob shareholders in Hollinger International, the publicly-quoted company that Black controlled, and which used to own Britain's Daily Telegraph in the UK and numerous American and Canadian titles.
Black, Radler and three other Hollinger executives robbed shareholders of more than US$60 million ($81 million), by inserting secret clauses in the company's business deals, it is alleged.
Those "non-compete" clauses are normal when newspapers are sold to a new owner, as they prevent the seller from setting up a rival.
But prosecutors say the money should have gone to Hollinger, not personally to Black and his associates and their network of companies.
Radler and Black worked hand in hand since 1969 to build what became the third largest newspaper group in the English speaking world.
The two men avoided eye contact when Radler entered the witness box, two months into a trial that both sides accept hinges on how plausibly he testifies and how well he holds up under a cross-examination designed to destroy his credibility.
Reflecting the importance of this phase of the trial, members of Black's family turned out in force. His wife, conservative columnist Barbara Amiel, was back in court, alongside Alana Black, her husband's daughter from his earlier marriage, who has attended since the start of the case. One of Black's two sons, Jonathan, also came to lend support for the first time.
Black continues to protest his innocence and promises an orgy of libel suits against his accusers after a not guilty verdict. He is accused on 14 counts of mail, wire and tax fraud, racketeering, money laundering and obstruction of justice.
Three former lieutenants, Hollinger's ex-chief financial officer John Boultbee, former executive vice-president Peter Atkinson and former general counsel Mark Kipnis face a smaller number of charges.
Radler, 64, received a lenient 29-month sentence on one single fraud charge and, as a Canadian citizen, could spend that time north of the border, where parole is more generous. He has also agreed to give up US$8.5 million in ill-gotten gains.
At first yesterday he appeared nervous, stammering and correcting himself and having to be told repeatedly to speak up. But later in the day he appeared more relaxed as he was taken through his business career to the point just before the frauds are alleged to have begun.
He showed little of the cynical, harsh personality that made Radler a feared executive among the editors and journalists who worked for him.
In his first testimony yesterday, he took jurors back to the restaurant in Montreal where he was first introduced to Black in 1969, when they discussed a deal to buy their first newspaper, a sleepy local paper in Quebec.
"I was impressed by Mr Black's knowledge and his ability and I thought he would be a great partner to have."
Black's defence team has been trying to argue that he entrusted control of Hollinger's businesses in the US and in western Canada to Radler, and any fraud he has admitted was carried out by him alone.
But previous witnesses have helped the prosecution's case that the two worked closely together and Radler yesterday took the jury through almost a dozen faxes and memos in which he solicited Black's opinions on financial and strategic issues matters.
And in a potentially important admission, Radler also admitted that Ravelston, the private Canadian company through which he and Black were paid, was facing a "debt problem" and declining revenue in 2000, when the biggest transfers of cash from Hollinger International are alleged to have been made.
Although Black owned barely a third of Hollinger International, he is alleged to have used it as a "personal piggy bank", dipping into its coffers to pay for lavish holidays and other personal expenses.
Before Radler's arrival yesterday, the court was told of the surprise 60th birthday party Black threw for his wife at at an upmarket New York restaurant in December 2000.
The US$62,870 bill, it was revealed, included an US$14,847 drinks tab as guests drank a selection of wines and US$320-a-bottle champagne.
Black's former assistant, Janice Akerhielm, said he told her to bill two-thirds of the US$62,870 bill to Hollinger, and he paid one-third.
- INDEPENDENT
