‘Conrad Black’s Whitewash’ from Private Eye Magazine (June 2019)

“This completes the destruction of the spurious prosecution of me. It’s a complete final decision of a not guilty. That is finally a fully just verdict.”

No surprise that this was the verdict of convicted fraudster Conrad Black on his presidential pardon earlier this month from his old pal, fellow former Palm Beach resident and one-time business partner Donald Trump. Black said Trump told him his 2007 conviction — upheld in part despite appeals all the way to the US Supreme Court — had been a “bad rap”.

The reaction in the US and Lord Black’s homeland of Canada focused more on Black’s recent paeans of praise to the president, especially his 2018 book Donald J. Trump: A President Like No Other: Black at least got that right.

Black — unlike his hero and pardoner — has been consistent. Ever since he was forced out of his Hollinger International newspaper empire in 2004, accused of participating in a “corporate kleptocracy”, Black has been pleading innocence, denying all allegations and rubbishing adverse court or regulatory findings. They were, to borrow a Trumpism, fake news.

But the court record was full of unflattering contrary comments from senior US judges on the former newspaper baron who gave up Canadian nationality to become a Tory peer. The pardon means the House of Lords may again soon have the privilege of his presence.

Even before he was was arrested, Black was called a liar in 2004 by the senior judge in the influential Delaware company court over his bid to sell control of Hollinger, owner at the time of the Daily and Sunday Telegraph, to the Barclay brothers. “Defendant Conrad M. Black… has repeatedly behaved in a manner inconsistent with the duty of loyalty he owed the company,” declared Vice-Chancellor Leo Strine, blocking the sale. “Black’s statements were, of course, largely false and can only be reasonably construed as being intended to mislead his fellow directors… Black breached his fiduciary and contractual duties persistently and seriously.”

Strine concluded: “It became impossible for me to credit his words after considering his trial testimony in light of the overwhelming evidence of his less than candid conduct towards his fellow directors… I found Black evasive and unreliable. His explanations of key events and of his own motivations do not have the ring of truth. I find it regrettable to say so but it is the inescapable, and highly relevant, conclusion I reach.”

In 2007 Black was convicted in Chicago on three counts of fraud (along with three Hollinger executives) and one of obstruction of justice and was jailed for 78 months on charges related to $6.1 million in bogus “non-compete” payments paid to him and other Hollinger executives following the sale of US and Canadian newspapers. He was acquitted on nine counts of fraud and racketeering.

Black appealed but received no change from the federal appeal court in 2008. “The evidence established a conventional fraud, that is, a theft of money or other property from Hollinger by misrepresentations and misleading omissions amounting to fraud,” declared lead judge Richard Posner in its ruling.

There was evidence that Black knew that the alleged frauds were being investigated… In the midst of these proceedings [in 2005] Black with the help of his secretary and his chauffeur removed 13 boxes of documents from his office, put them in his car, was driven home, and helped carry them from the car into his house. He later returned them, but no on knows whether the boxes he returned contained all the documents that had been in them when he removed them from his office. For that would mean that he had received them, in which event his denials of knowledge of their contents would be undermined.

Black would have remained convicted on all three fraud counts but for a 2010 US Supreme Court decision in favour of former Enron chief executive Jeff Skilling. It ruled that the test of depriving shareholders of their ‘honest services’ by corporate executives — used by prosecutors in both the Enron and Black cases — was too vague unless there was also corruption.

The Supreme Court held that the appeal court should review again the three fraud convictions, on the basis of the instructions given to Black’s jury. The obstruction of justice conviction remained.

Supreme Court Justice Ruth Bader Ginsburg wrote: “Our decision in Skilling makes it plain that the honest-service instructions in this case were indeed incorrect. As in Skilling, we express no opinion on the question whether the error was ultimately harmless… Black contends that spillover prejudice from evidence introduced on the mail-fraud counts requires reversal of his obstruction-of-justice conviction. That question, too, is one on which we express no opinion.”

Later in 2010, the appeal court duly overturned two fraud convictions but upheld one fraud count, involving a $600,00 payment to Black and others, and the obstruction of justice conviction.

Judge Posner remained unimpressed by Black’s insistence of innocence of any obstruction of justice — just like Trump over the investigation into Russian interference in the 2016 election.

“The evidence that the boxes were removed in order to conceal documents from the government investigators was compelling,” declared Posner. “No reasonable jury could have acquitted Black of obstruction.”

As to the remaining fraud charge, Posner described it as “a plain vanilla pecuniary fraud”. The Black defence that the payments were legitimate was “decisively unbelievable.” There are no covenants, the defendants concede that none was prepared… The concession fatally undermines their challenge to the convictions on this count.

“The absence of a written record of a $600,000 transaction, the disinterested testimony by the newpapers’ buyers that they did not request covenants not to compete.. and the absence of an economic reason for them… the evidence of pecuniary fraud is so compelling that no reasonable jury would have refused to convict.”

The Supreme Court refused to intervene again. Still Black prefers to point to the 11 counts on which he was acquitted as somehow cancelling out the convictions for fraud and obstruction of justice, claiming that he fought the law and won. He served 37 months of a reduced 42-month sentence and was released in May 2012.

Black sued the Hollinger directors for $1 billion. A settlement was reportedly agreed with Hollinger’s insurers in 2011. They paid Black and his wife Barbara Amiel and four other former directors $12.2 million. “Mr. Black will be dismissing and releasing all of his claims of defamation actions, and neither the company nor the people he sued for defamation are are paying him a penny,” the National Post reported.

Thoses criminal convictions were not the only contradiction to Black’s claims of innocence. The US Securities and Exchange Commission (SEC) banned him from being a director of a US public company and fined him $6 million in 2012. It accused him of diverting money to himself and others from Hollinger by way of the “non-compete” agreements, making mis-statements and omissions about the payments and misleading shareholders about selling Hollinger assets for their benefit.

Black naturally appealed, but after arbitration he settled the case in 2013, agreeing to the boardroom ban and paying $4.1 million to the Hollinger successor company. The SEC announced: “Black consented to the final judgement without denying the allegations of the Commission’s complaint.”

A man who loudly protests his innocence, Black took the Fifth Amendment against self-incrimination and did not answer questions from the SEC. He did not testify at his Chicago trial.

The final forum for Black’s claims of innocence was the Ontario Securities Commission (OSC). It waited until the US courts and the SEC had ruled before moving forward with its own case. In February 2015 the OSC banned Black from acting as a director or officer of any listed company.

“We have concluded the the misconduct for which Bland and [Hollinger co-director John] Boultbee were convicted in the US legal proceedings was sufficiently abusive as to warrant apprehension of future conduct detrimental to the integrity of Ontario’s capital markets,” the OSC declared.

The Canadian regulator’s staff wanted to ban Black from even trading shares locally. The OSC refused to go that far, but “for the purposes of investor protection” it imposed a boardroom ban. “Such prohibitions should be permanent as there is no basis in these specific circumstances in our view for considering that the risk of future misconduct is somehow circumscribed by the passage of time.”

The US Department of Justice website explains that a presidential pardon “does not signify innocence.” Among those previously pardoned are former mob-linked Teamsters union boss Jimmy Hoffa and senior New Jersey Mafia figure Angelo “Gyp” DeCarlo (both by Richard Nixon) and fugitive commodities trader Marc Rich (by Bill Clinton) .

Eric Sussman, who prosecuted Black in Chicago, had his own verdict. “Justice in Donald Trump’s America is unapologetically linked to who you know and how much money you have,” he told Canada’s Financial Post. “The pardon of Conrad Black doesn’t simply represent the victory of greed, power and wealth over bedrock principles of justice, it is an open and unapologetic celebration of this victory.” It was, he said, a “mockery that President Trump has made of our justice system.”

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One thought on “‘Conrad Black’s Whitewash’ from Private Eye Magazine (June 2019)

  1. Your article re supertwitt is of course brilliant. But, such alot of work. Congratulations on your esteemed fortitude.

    If you’re in Stratford this year please call.

    Richard

    Like

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