Testimony in the trial I wrote about a few days ago wound up today with Conrad Black claiming to be an innocent and honorable business man who had been "horribly defamed". Given all the legal proceedings that are pending regarding Hollinger International, it's possible that Black became confused and thought this was his defamation suit against the Hollinger board. I can certainly understand him being nervous since the presence of a judge would put him off his normal game.
On Thursday, company adviser Richard Breeden told the court that Lord Black regularly threatened to sue independent members of the board of directors of Hollinger International.But Black's bullying manner wasn't the most interesting thing that was brought to light in the proceedings.Mr. Breeden, a former chairman of the U.S. Securities and Exchange Commission, testified that Lord Black often began meetings with the company's board members by threatening them.
"I've heard him start several meetings by saying he'd sue every member of the board If they didn't go along with what he wanted," Mr. Breeden said under questioning from a Hollinger International lawyer.
The antagonism between Black and the rest of the board began over so-called unauthorized payments that he and other executives, most notably his "right-hand man" David Radler, received. Following the initial internal investigation, Black was asked to step down as CEO and to repay the money and, after a bit of a tussle, he agreed. But subsequently he claimed that his own lawyers had discovered previously undisclosed documents which authorized the payments. At that point he refused to repay the money, announced that he was selling his holdings in the company and launched a defamation suit against the board members.
His lawyers submitted the "authorizing" documents as evidence yesterday. They turned out to be "unanimous consents" signed by Black, Radler and Richard Perle. (Yes, that Richard Perle.) One is left to wonder why Black needed his lawyers to locate documents which he had signed himself to authorize paying himself and why, if this is all the authorization that was required, he originally stepped down and agreed to repay the money without more of a fight.
And one might wonder how Perle ends up in the middle of this. He is, in fact, a member of the board, but perhaps he's more than just an average director.
RICHARD PERLE, the former US Assistant Defence Secretary and Hollinger International board member, is under investigation for allegedly failing to disclose bonuses worth about $3 million (£1.6 million) which he received for running an investment scheme, The Times has learnt.The story goes on to say that Perle helped to set up this scheme and that the money was funnelled through a company of which he was co-chair. It also mentions the unfortunate fact that Perle's failure to disclose his bonus is a contravention of SEC rules. So now we have money flowing every which way between directors and executives of the company while the COO, Peter White, described the company itself as "broke" in his testimony today. And we have Richard Perle in the thick of it. (One might say it appears that Black and Perle were thick as thieves. But it's just an expression. Honest.)Mr Perle, a vocal supporter of President Bush, was awarded the money as a reward for investing Hollinger shareholder funds in a series of separate businesses. Mr Perle also held a stake in some of those businesses. While the scheme put Hollinger International shareholders’ money at risk, it was never disclosed to them.
Richard Breedon (sic), who heads a Hollinger committee that is already investigating other undisclosed payments to group executives, is said to be now looking at circumstances surrounding Mr Perle’s apparent undisclosed bonus.
Mr Perle was one of five Hollinger International directors who participated in the bonus scheme.
However, while Lord Black of Crossharbour, the publisher’s founder; David Radler, deputy chairman and chief executive of Hollinger International; Dan Colson, chief operating officer of Hollinger International; and Peter Atkinson, Hollinger vice-president, all divulged their awards to shareholders, it appears that Mr Perle has so far failed to do so.
And what about those payments to Black and Radler? I'm glad you asked.
The money paid to Black had been described as "non-compete" payments, which are normally paid to a seller of newspaper by the buyer to assure that the seller doesn't immediately re-enter the same market.(Aside: is "bizarre" the newest euphemism for "fraud"? Just asking.)But [interim CEO and board member Gordon] Paris said that in Black's case, the payments were made to him personally instead of to the company, and without the approval of independent directors. He called them "fictitious," and said "they were inappropriate, and they were unauthorized."
Raymond Seitz, a U.S. former ambassador to the United Kingdom and one of the board members probing the payments, testified later that it was unclear why some of the money described as non-compete payments was going to Hollinger International's Toronto-based holding company, which didn't seem to ever be a likely competitive threat in the U.S. community newspaper market.
In one case, a non-compete payment went to a wholly owned subsidiary of Hollinger International. Seitz said he found it "odd to have an agreement not to compete with yourself."
Seitz said the situation "moved from the peculiar to the bizarre" when it became apparent that there had not even been an actual non-compete agreement signed in that case.
The point of this proceeding is to determine whether Black can go ahead with the sale of his holdings in Hollinger International to the Barclay brothers. The Hollinger board objects because they're afraid it will prevent them from recovering the money they feel Black owes them and because Black had signed an agreement in November that should prevent the sale. It became evident during the proceedings that Black wasn't exactly honoring the spirit of that agreement and had taken pains to keep the board members in the dark about the interest on the part of the Barclays.
Conrad Black "put off" the millionaire Barclay brothers' attempts to inform the board of Hollinger International Inc. of their intention to purchase control -- against their insistence and the advice of his own lawyer, according to court papers filed this week by Hollinger International.It may be a mug's game trying to anticipate how a judge will rule in this case, especially when it may well come down to the legalese in the company's bylaws and various contracts and agreements, but I'd have to say that if there's to be any real justice in the outcome it doesn't look good for Black.He also insisted they pursue the purchase of London's Daily Telegraph through his control stake in parent company Hollinger Inc., the court papers say.
Lord Black dismissed his own lawyer's warning to the Barclays that he was bound by a November agreement not to sell -- Lord Black called the lawyer's concerns "exaggerated," according to the statement of facts.
Separately, Hollinger International director Richard Burt said an employee of the company has admitted to covering up improper payments to executives for years.Several of the stories I read stated that this court has "a reputation for quick and clear judgments in business disputes". Here's hoping this one doesn't ruin it's reputation. If it does, and they want to sue Black, they'll have to get in line.A document submitted to a Delaware court indicated that Mr. Burt said Hollinger Inc. executive Peter Atkinson admitted last November that "he had been asked to lie, cover up."
The filing, prepared by Hollinger International, quotes from Mr. Burt's deposition made ahead of the trial.
According to the filing, Mr. Burt said Mr. Atkinson was "very sad" and "very contrite" when he met with some board members to discuss alleged improper payments made to Conrad Black and some other executives, including Mr. Atkinson.
Mr. Burt said Mr. Atkinson admitted "that there were documents that were postdated. And ... essentially he described a conspiracy."
In addition, Mr. Burt said, "[Mr. Atkinson] and others had been engaging in this process, this cover up for years."
And with the new and prominent role that the Prince of Darkness has in all of this, I may have to start a new blog just for this.
