Jailed Black to fight fraud conviction

NEW YORK - A US Supreme Court review of Conrad Black's fraud convictions could open the floodgates to scores of white-collar criminal appeals and make it harder to prosecute corporate fraud, prosecutors are warning.

The Conservative peer, for whom the Daily Telegraph was once the jewel in a global newspaper empire, takes his case to the highest court in the United States this week in the hope of winning release from the 6-year jail term he began last year.

Black's is one of a trio of cases being heard by the Supreme Court as it re-examines convictions based in part on a 1988 Congressional law that says shareholders and voters have the right to the "honest services" of the executives and politicians.

Jeffrey Skilling, the chief executive of Enron, convicted of fraud over the 2001 collapse of the energy giant, will have his appeal heard by the Supreme Court in the new year.

Black lost control of his media empire, Hollinger International, in 2004 after a probe by shareholder representatives found he and associates had used the company as if it were a personal piggy bank, putting his lavish lifestyle on expenses and looting it of US$400 million ($560 million).

A jury found that about US$32.2 million of that money was taken in outright fraud.

Black's lawyers argue that the law on honest services is exceptionally vague, and that prosecutors in his case should not have relied on it because, they say, Hollinger did not suffer any economic harm.

But prosecutors said that agreeing with Black's lawyers would emasculate fraud laws and free executives to act in ways that "courts have universally characterised as the 'core misconduct' covered by the statute - cases involving legislative votes or bureaucratic decisions paid for by bribes or based on a public official's undisclosed conflict of interest".

Black and his associates cooked up a scheme to pay themselves US$5.5 million by signing a "non-compete" agreement with Hollinger which promised they would not set up a new newspaper in the tiny mountain town of Mammoth in California.

They would hardly have been tempted to, since they already owned the one existing paper there.

A jury decided - and an appeals court panel agreed - that Black used the sham agreement to defraud Hollinger, by hiding what was effectively a big bonus.

- INDEPENDENT