AP PHOTO - Conrad Black, former head of the Hollinger International Inc. newspaper empire, arrives at the federal building in Chicago, Friday, July 13, 2007.


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Having already lost his media empire, most of his fortune, and his reputation for business acumen, Conrad Black, 62, now stands to lose his freedom for 20 years.
A Chicago jury today found him guilty of fraud and obstruction of justice in a landmark 15-week trial in which Canada’s best-known business figure was accused of plundering his own flagship company, Hollinger International Inc., of $60 million (U.S.).
The working-class federal court jury of nine women and three men found the fallen Toronto tycoon guilty on three counts of mail fraud and one count of obstruction of justice, while finding him not guilty on nine additional charges. While the charges carry a maximum sentence of 35 years, Black faces 20 years in a U.S. prison on the most serious guilty counts against him, pending appeal.
The jurors found against Black despite a relatively weak prosecution case. “The government overcame a very shaky start to win this case,” Jacob Frenkel, a former federal prosecutor and former U.S. Securities and Exchange Commission (SEC) enforcement officer, told Bloomberg News today. “They were able to pull a rabbit out of the hat.”
The jury also didn’t hear testimony from Richard Breeden, the former SEC commissioner hired by Hollinger International after it ousted Black as CEO in 2003 to examine the company’s compensation practices.
Breeden ultimately reported that Black, former partner David Radler (who pleaded guilty to one count of fraud and testified against Black) and other Black associates had been operating what Breeden called a “corporate kleptocracy” at Hollinger – a term never uttered in the courtroom, as Breeden’s report was deemed inadmissible.
Breeden’s report accused Black and his Hollinger International fellow executives of diverting $400 million (U.S.), or 95 per cent of the firms adjusted net income between 1997 and 2003, to themselves and holding companies Black controlled.
Even without hearing the Breeden report’s condemnatory assertions – which did prove useful to the U.S. Government as a “roadmap” in devising its prosecution strategy – the jurors were convinced that criminal activity had occurred by prosecution witness Radler, who stated at trial that Black had suggested that himself and Radler be “inserted” in non-compete agreements negotiated by Hollinger in the sale of about $3 billion (U.S.) worth of Hollinger newspapers in the late 1990s and 2000.
The prosecution told jurors that those payments by newspaper purchasers not to compete with the buyers in the future belonged to Hollinger, the owner of the papers, and not to Black and the firm’s other executives. Black “systematically stole” from his own company, prosecutors told the jury, at the expense of other shareholders.
The obstruction of justice conviction arises from Black’s having removed more than a dozen boxes of material from the 10 Toronto St. headquarters of his former holding company Hollinger Inc., despite an Ontario court order forbidding him to do so.
Black’s removal of the boxes, which he loaded into a waiting limousine, was captured on Hollinger Inc.’s security cameras, and were shown at trial. While they were deliberating on their verdicts, jurors asked Judge Amy St. Eve for technical assistance with video equipment, suggesting they were studying that incident with special interest.
Jurors were also told Black had cheated Hollinger International by charging it for out-sized perks, including the $500,000 expense of using a company jet to fly to Bora Bora on a vacation with his wife, Barbara Amiel Black. He was also accused of billing Hollinger International for two-thirds of the $62,000 (U.S.) cost of an elaborate birthday party for Amiel, which defense counsel argued was a business event. Other evidence touched on extensive renovations of Black’s Park Avenue apartment at company expense, and his ability to acquire that property from Hollinger International in an alleged sweetheart deal.
Prior to and even during the trial, Black criticized the U.S. criminal justice system, the prosecution and his former closest business associate Radler, using terms of derision and mockery to describe the case against him. At one point, Judge St. Eve told Black’s co-counsel Eddie Greenspan of Toronto and Eddie Genson of Chicago to make Black stop making off-the-cuff criticisms of the proceedings outside the courtroom after each day’s proceedings, or that she would.
Canadians who have observed Black’s long business career might not be surprised at the devastating setback dealt to Black today, after watching the dismantling of his first empire – the Argus collection of Massey-Ferguson, Dominion Stores, radio station CFRB and other assets – and then Black’s abrupt sale of the National Post, which Black dumped only two years after launching it in 1998, and his hundreds of major and small-town North American papers.
And since the 1980s, Black has had many run-ins with securities regulators, aggrieved minority shareholders and champions of higher standards in business conduct – the latter group dubbed by Black as “corporate governance terrorists.”
For the American press, however, the criminal conviction of a member of the British House of Lords came as something of a shock.
“Black’s conviction marks the stunning downfall of one of Canada’s most prominent businessmen,” wrote the Chicago Tribune, a rival to the once-Black-owned Chicago Sun-Times, “who used the power of the press to become an international celebrity, known as much for his right-wing views as for his jet-setting lifestyle,”
Owner of prestigious and near-monopoly major papers in Canada, Britain and Jerusalem, and for a time in Australia and the Caribbean, Black’s mostly small-town U.S. papers did not make him a familiar name in America, a country for which he has ceaselessly expressed admiration, particularly in comparison with Canada.
Even in Chicago, the one city in which he owned a sizeable paper, the Sun-Times, Black “is not a household name,” the rival Trib said today.
But Black now does have a reputation in the United States, and not a flattering one.
As Bloomberg News said in a report that will be picked up by countless U.S. media outlets, Black is the last victim in a clean sweep by U.S. federal prosecutors who have scored victory after victory in bringing convictions against executives at Enron Corp., Tyco International Inc., WorldCom Inc., HealthSouth Corp., Adelphia Communications Corp. and Qwest Communications Inc., firms the represented an unprecedented white-collar crime wave dating from egregious behaviour in the late 1990s.
The CEOs of all those high-profile corporate miscreants have been sentenced to jail, except for Enron’s Ken Lay, whose conviction was voided after he died before completing his appeals. Qwest’s Joe Nacchio awaits sentencing in a case where prosecutors are asking for a seven-year jail term.
Until recent days, Black showed no public doubt about the vindication he was certain was in store. “I’m on an inexorable march to victory,” he said outside the Chicago courtroom during the trial. “I see the trend. My strategy is working.”
Only in recent days did his mood turn dark. “This is not the trial I was expecting,” the former controlling shareholder of the world’s third-largest publisher of English-language newspapers told his former paper, the National Post, a few days ago as the jury was deliberating.