KEY POINTS:
Conrad Black's business partner of 30 years testified yesterday that he knew the scheme he and the former media mogul devised to pay themselves bonuses was wrong.
David Radler, star witness at Black's trial who has already pleaded guilty to fraud and faces jail time, described how Black and he divided up US$600,000 ($824,175) from the proceeds of two deals made as Black was selling off the media empire they had built.
Prosecutors contend Black and three co-defendants stole US$60 million from his main company - Hollinger International - by using non-compete payments that should have gone to the company to give themselves tax-free bonuses.
Such payments were set aside from the proceeds after newspaper sale prices were determined, and were designed to give the buyer a guarantee the seller would not re-enter the same market.
"Did you advise the Hollinger board or audit committee?" of the $US600,000 that was kept, lead prosecutor Eric Sussman asked Radler.
"No I didn't," Radler replied.
"Why not?" Sussman asked.
"I knew the process of creating these non-competes was wrong," Radler said.
Radler, who faces 29 months in prison under a plea agreement reached two years ago in the same case, is the US Government's chief witness against Black and the others.
Prosecutors have tried to convince the jury that the two operated in tandem in everything they did and, since Radler had already admitted guilt, that Black too was culpable.
Defence lawyers again asked for a mistrial verdict on Wednesday but were denied. This time they objected to prosecutors delving, with Radler's help, into memos from 2000 to 2002 from some of 13 boxes that Black was caught removing from his Toronto offices in 2005.
In those documents, some of which were presented in court, Black railed against Hollinger International shareholders who had challenged the non-competes and various other spending.
He said executives should make "conciliatory gestures" but insisted such moves were not "a confession of excess" and that would cut into the "comfortable enjoyment" of the money the company was making.
In response to a question from Sussman about one of the memos, Radler said: "In my opinion, he [Black] was saying he intended to run the company [Hollinger International] like a private company, not a public company."
In one memo, Black wrote that the officers should be "unapologetic".
"We created this company. And we brought these assets back to health and great profitability."
In another, Black said that "the goose keeps laying a golden egg every year and the best is yet to come".
The 62-year-old Black, a Canadian-born member of Britain's House of Lords, faces up to 101 years in prison, millions in fines and US$92 million in forfeitures. His co-defendants face lesser charges.
- REUTERS
