30 Pieces of Silver
Lord Black under investigation for looting Hollinger
By Finfacts Team
Mar 23, 2005
US Federal prosecutors at the United States Attorney's Office for the Northern District of Illinois, confirmed Tuesday that Lord Conrad Black (a Canadian who became a member of the UK House of Lords) and his associate David Radler in Hollinger International - owner of the Chicago Sun-Times and former owner of the UK's Daily Telegraph, are the subjects of criminal investigations into looting Hollinger.
Hollinger is suing Black and Radler for $542 million in a civil suit and the U.S. Securities and Exchange Commission (SEC) has sued them for fraud, alleging they stole $85 million.
Last August, a scathing report detailing allegations of 'self-righteous, and aggressive looting' by Lord Conrad Black and his associates who controlled Hollinger International, was presented to the SEC.
Lord Black and his associates were accused of looting the company's money on a grand scale when Black, was chairman of Hollinger International. The company was 'victimised' by its controlling shareholders, who took millions in payments that should have gone to the company, according to the report.
The report said the company was 'systematically manipulated . . . in a manner that violated every fiduciary duty.’ A summary of the report was given the title ‘A Corporate Kleptocracy.’
‘Not once or twice, but on dozens of occasions Hollinger was victimised by its controlling shareholders as they transferred to themselves and their affiliates more than $400 million in the last seven years,’’ according to the report commissioned by a special board committee of the newspaper publisher.
‘Hollinger went from being an expanding business to becoming a company whose sole preoccupation was generating current cash for the controlling shareholders, with no concern for building future enterprise value or wealth for all shareholders,’ the committee found. ‘Behind a constant stream of bombast regarding their accomplishments as self-described proprietors, Black and Radler ( former publisher of the Chicago Sun-Times) made it their business to line their pockets at the expense of Hollinger almost every day, in almost every way they could devise.’
Black and his wife, Barbara Amiel Black, a former columnist for The Daily Telegraph, as well as the Radler family used Hollinger as a ‘piggy bank’ for personal expenses, the panel said.
The company bought a Challenger aircraft for Radler for $11.6 million and leased a Gulfstream IV jet at $3 million to $4 million a year for the Blacks. Hollinger allowed the Blacks to ‘swap’ Park Avenue apartments with the company, which ‘rigged’ the transaction so the Blacks could obtain Hollinger’s apartment for $2.5 million below its market value, the report said.
Hollinger also paid for food, cell phones, perfumes and other living expenses for Black and his wife, the report said. These included $2,463 on handbags for Amiel Black, $2,785 in opera tickets, $2,083 on exercise equipment and a $42,870 ‘Happy Birthday Barbara dinner party’ at New York’s La Grenouille restaurant attended by designer Oscar de la Renta and television broadcasters Peter Jennings, Charlie Rose and Barbara Walters.
The meal, given for 80 guests, included beluga caviar, lobster ceviche and 69 bottles of wine.
Former board member Richard Perle, 62, gets his own chapter in the report. Perle is also a former member of the Pentagon's Defense Policy Board. The Hollinger board panel said Perle helped Black evade disclosure of his actions to the audit committee and the board. Perle should be required to disgorge all the pay he received from the company, which includes $3.1 million in bonuses from running a money-losing Internet investment arm, the report said.‘The Special Committee finds that Perle repeatedly placed his own interests ahead of those of Hollinger’s public shareholders, which violated his duty of loyalty,’ the report said.
© Copyright 2005 by Finfacts.com
Harper and CPC Caucus Losing Nerve on Marriage; Afraid of Debate on Abortion
Latest Move to Stifle Debate Could Cost Harper Crucial Pro-Life Votes on Leadership
MONTREAL, March 7, 2005 (LifeSiteNews.com) – Pro-life and pro-family leaders were outraged by the Conservative National Caucus resolution revealed today which would see resolutions on protecting marriage and a partial birth abortion ban nixed from consideration at the Conservative Policy Convention later this month. According to sources in the Conservative Party, Harper is trying to avoid votes on marriage and abortion because he’s afraid of how the party would be portrayed by the media.
Commenting on resolution P-90, which was accepted by the Conservative Caucus at the behest of Conservative Leader Stephen Harper, Campaign Life Coalition National Coordinator Mary-Ellen Douglas told LifeSiteNews.com, “I’ve always been skeptical about how committed Mr. Harper is to defending traditional marriage". Douglas, who is also a delegate to the Conservative Convention, added, "This later maneuver helps clarify how I’ll vote on his future leadership at the coming convention.”
Brian Rushfeldt, Vice President of the Canada Family Action Coalition expressed exasperation with the move and described the measure as stifling debate on issues vital to party membership. “We now have a caucus democratic deficit in the Conservative Party,” said Rushfeldt. “The caucus wants to run the convention and take it away from the membership.” Rushfeldt stressed “A deep democratic deficit" was being created "in what should be a membership driven party.”
Phil Horgan, President of the Catholic Civil Rights League was disappointed by the resolution and said he hoped for better from the Conservatives. “The Conservative Party is in a unique position to provide leadership on issues of concern to the great majority of Canadians in an unapologetic and explicit fashion,” he said.
Mark Fournier and Connie Wilkins, who run the popular conservative Canadian website Freedominion.ca, described the controversial resolution as “a pill designed to poison the grassroots” of the Conservative Party of Canada.
The Free Dominion site has rallied supporters with the cry, “Resolution P-90 must be voted down!”
Campaign Life Coalition has urged all supporters to contact Conservative MPs to express their concerns with resolution P-90, and ask that it be defeated at the Convention.
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Richard Perle's Nemesis
Commentary by Martin Kelly
Washington Dispatch - September 10, 2004
Downward and downward spiral the fortunes of Conrad Black, the deposed CEO of Hollinger International, the only tycoon in history brought low by his wife’s taste in shoes. Last week, the sometime Sun King of the Sun-Times received a mortal blow in the form of an internal report into his alleged malfeasance called ‘The Hollinger Chronicles’ authored by a personage no less prominent than Richard Breeden, former chairman of the SEC.
It is damning stuff. According to Dominic Rushe in the September 5 Sunday Times, Breeden has found that throughout the period of 1997-2003, the amount of money taken by Black and his cohort David Radler in a policy of ‘aggressive looting’ amounted to $400m, a staggering 95.2% of Hollinger’s net income for that period. Although there might not be much to substantiate the investigations by the SEC and the Illinois authorities, if he is found to have breached any SEC rules Black is automatically guilty of violating a consent decree requiring him to comply with securities laws, which was passed with his consent in 1982 and which remains in force, following litigation against sometime target Hanna Mining. Such violation is a criminal offence, and he goes straight to the hole.
However, it’s not only King Conrad who should be quaking in his boots with this report’s release. As a result of his failure to perform the duties incumbent upon him as a member of Hollinger’s executive committee, uber-neoconservative Richard Perle, ‘The Prince of Darkness’, sometime Chairman of the Pentagon Defence Policy Board, may soon find himself out of pocket to the tune of – wait for it, I’m savouring this – 5 MILLION DOLLARS!
Perle is not just a neoconservative – he is the personification of that philosophy. Along with David Frum, he is the co-author of An End to Evil, neoconservatism’s vision for the Middle East. Frum, like Black a Canadian by birth, was a columnist for Blacks’s National Post before being hired as a Bush speechwriter. Fired after his wife’s Internet boast that he coined the phrase ‘Axis of Evil’, Frum then penned the Bush hagiography The Right Man, before finding his true level as resident ideologue of the National Review Online. Frum is a hatchet man with a strong tendency towards self-promoting buy-the-book conservatism. In March 2003, he published a scandalous article in the National Review called ‘Unpatriotic Conservatives’ accusing Pat Buchanan, Robert Novak, Samuel Francis and others of, amongst other things, disloyalty, anti-Semitism and racism as payback for their refusal to support the Iraq War. Buchanan returned the compliment to Perle in a classic article, ‘Whose War?’ published in the March 24 2003 American Conservative.
Perle started his career in public life as an aide to Scoop Jackson. In 1983, the New York Times reported that he had been paid by Israeli weapons manufacturers. In 1996, he co-authored a report for Likud Prime Minister Benjamin Netanyahu called ‘A Clean Break: A New Strategy for Securing the Realm’ along with arch-neoconservative Douglas Feith. Buchanan quoted directly from the paper:
“Israel can shape its strategic environment, in co-operation with Turkey and Jordan, by weakening, containing and even rolling back Syria. This effort can focus on removing Saddam Hussein from power in Iraq – an important Israeli strategic objective in its own right – as a means of foiling Syria’s regional ambitions”
Four years after writing that, Perle was back at The Pentagon. It was in the office of Feith, now the number three civilian at The Pentagon, that the suspected Israeli agent Lawrence Franklin worked.
However, Breeden blasts Perle for the lack of care he exhibited towards the interests of the wider shareholder democracy forming Hollinger International. Perle was not just a main board director; he was a member of the corporation’s executive committee. He should have been scrutinising the web of interlocking companies, the non-compete fees, the management fees and the asset sales and purchases that seem to have enabled Black and Radler get their hands on so much for so long. Either Perle wasn’t doing his job properly or he was looking the other way. Breeden proposes that the ultimate penalty be imposed on Perle for his consistent failure to perform. Black’s biographer Richard Siklos, writing in Hollinger’s former title The Sunday Telegraph of September 5, quotes Breeden thus –
“As a faithless fiduciary, Perle should be required to disgorge all compensation he received from the company”.
Over the course of his involvement with the company, Perle was paid a total of 5 million dollars. If Perle is called upon to repay this sum, it will be very interesting to see who is backing him up.
‘A faithless fiduciary’. Man, that must really hurt. However, Conrad Black liked his company. Under Conrad Black, both the Daily and Sunday Telegraphs faithfully parroted the neoconservative line. According to Dominic Rushe, Hollinger International’s board meetings were civilised affairs, where, after a brief chat about the operations and tribulations of a global media empire, Black, Perle and Henry Kissinger would chew the fat about politics. It’s a pity that more time wasn’t spent on discussing corporate affairs; otherwise the Louisiana Teachers’ Pension Fund might not now be suing Hollinger. It just goes to show that, in business as in politics, don’t ever ask a neocon to mind the store.
A black future
Canada's top Bilderberger faces jail
September 05, 2004
After last week's damning report into Hollinger International accused Lord Black of Crossharbour of looting the company of $400m, the former Telegraph owner faces a welter of lawsuits and the prospect of a criminal inquiry that could lead to jail. Dominic Rushe reports from New York
AS a top bodyguard, James Hyslop saw some of the world’s most powerful people at their most vulnerable. Working in security for the Bilderberg Group, Hyslop came into close contact with the statesmen and leading businessmen that make up the right-wing think-tank’s membership.
Conrad Black, peer, former Telegraph boss and Bilderberg member, always impressed him, said Hyslop. “He didn’t need someone around the way other people on the world stage do — the bodyguard as a status symbol.”
Hyslop acted as Black’s bodyguard, accompanying him on his private jet and attending functions. He has nothing but fond memories of a man he describes as generous, warm, witty and intelligent.
Last week Lord Black’s former colleagues painted a very different picture of the disgraced peer — one that could land him in jail. In a phrase reminiscent of Black’s own famously florid oratory, he was accused of running “a corporate kleptocracy”. A 500-page internal report commissioned by his former company, Hollinger International, alleged that Black and others siphoned off $400m in an “aggressive looting” of the publishing company’s assets.
The cash taken by Black, his former deputy David Radler and their associates including Black’s wife Lady Barbara Amiel-Black, represents 95.2% of Hollinger’s entire adjusted net income during the period 1997-2003, claimed the report. Alongside the big numbers, the report is studded with a glittering trail of outrageous expense claims. Between 2001 and 2003, Black and co spent $23.7m on private jets. “Black’s corporate expense reports charge the company for items such as ‘handbags for Mrs BB’ ($2,463), ‘jogging attire for Mrs BB’ ($140), ‘exercise equipment’ ($2,083), ‘T Anthony Ltd leather briefcase’ ($2,057), ‘opera tickets for C&BB’ ($2,785), ‘stereo equipment for the New York apartment’ ($828), ‘silverware for Blacks’ corporate jet’ ($3,530) ‘summer drinks’ ($24,950), a ‘happy birthday, Barbara’ dinner party at New York’s La Grenouille restaurant ($42,870),” claimed the report.
Shareholders and Hollinger want the money back and are pursuing Black for more than $1 billion in the American courts. Also at risk are his former friends and directors, including Henry Kissinger, American defence adviser Richard Perle and Marie-Josée Kravis, wife of billionaire Henry Kravis. They stand accused of standing idly by as Black raided the piggy bank. Their bill for failing to stop Black’s excesses could run to hundreds of millions of dollars.
As the report makes clear, the claims against Black may well bankrupt the peer, but money could be the least of his worries. The Securities and Exchange Commission (SEC), America’s top financial watchdog, the state authorities and the FBI are investigating various aspects of the Hollinger case. A criminal lawsuit is a strong possibility and, in the current environment, conviction would almost certainly mean jail.
Black and Radler are strongly protesting their innocence. A statement from Ravelston, a company controlled by Black, dismissed the report as “exaggerated claims laced with outright lies”. Radler described it as: “a highly inaccurate and defamatory diatribe written more like a novel than a serious report.” He said KPMG, Hollinger’s auditors, repeatedly reviewed and approved the now controversial payments.
Hyslop said that Black should be treated as innocent until proven otherwise. But if the worst came to the worst and Black was sent to jail, “I think he would thrive. He can adapt to any situation. At least we’d have a far more intelligent prison class.”
WHATEVER the final outcome for Black, he and his former colleagues now look set for years of legal skirmishes. To date Black faces:
Black’s case, he said, reminds him of the trial of Dennis Kozlowski. The former boss of Tyco is awaiting a retrial on charges that he looted $600m from the conglomerate. Like Black he enjoyed a lavish, company-funded lifestyle, spending $1m on his wife’s birthday bash and $6,000 on a shower curtain for his Manhattan flat.
The Kozlowski case began with an investigation by the SEC. It then passed its findings to Manhattan’s district attorney Robert Morgenthau, who brought criminal proceedings against Kozlowski and other former Tyco executives.
Black is already being investigated by the SEC and by authorities in Chicago, the city Hollinger lists as its headquarters. The two will work in tandem and the SEC is “almost bound” to bring legal action against Black, said Coffee.
The Hollinger Chronicles, as the report is known, was compiled by Richard Breeden, a former chairman of the SEC, and contains such damning accusations that “the SEC, I am sure, will proceed against him”, said Coffee.
Should Black be found guilty, the SEC can fine him, demand he repay money and ban him for life from holding office in an American company. But the watchdog’s powers are civil, not criminal.
It will ultimately be up to Illinois’s attorney-general, Lisa Madigan, to decide whether criminal charges will be brought against the peer. Kozlowski’s trial will weigh heavily on the mind of any prosecutor. “In almost all respects this is a case that is similar to Tyco,” said Coffee. “And that one started unravelling all over the place the minute it got to court.”
Kozlowski’s trial was heralded by headline-grabbing examples of his excess and gross spending sprees. The trial proved far less spectacular, with the jury worn down by mindnumbing and complex arguments.
“I think this report could well result in indictments, but it’s not a slam dunk,” said Coffee. He expects prosecutors to begin working on former Hollinger directors to turn against Black and act as witnesses for the prosecution. “Flipping” witnesses, as its known, has been particularly successful in securing convictions against executives of Enron, the energy firm that imploded in one of America’s biggest scandals.
James Cox, law professor at Duke University, said Breeden’s report looks too damning for Black to escape criminal prosecution. “If Breeden is right, then it seems that this was not a question of poor judgment, but of scheming and design,” he said. He reckoned that prosecutors would identify one or two areas where they believe the evidence is strongest and attack Black on those charges rather than going to trial with a long list of accusations, as happened in the first Tyco case.
Last April, that case ended in mistrial after six months in court and two weeks of jury deliberation. Prosecutors are to bring the case back to court and are expected to trim down their charges after the successful prosecution of two other fallen business stars.
Complexity was a potential problem in the trial of Frank Quattrone, a former star banker at Credit Suisse First Boston. Quattrone was the biggest banker of the dotcom era and made millions for his clients from share sales in companies that subsequently collapsed, costing the investing public and pensioners billions in lost savings. Prosecutors side-stepped getting involved in a complex securities case and instead pursued Quattrone, successfully, for obstruction of justice. Martha Stewart, the media queen, was also convicted on obstruction charges after an investigation of insider-dealing charges — something that is very hard to prove.
Hollinger and Black’s affairs are about as tangled as they come. The peer controlled the Telegraph empire through a network of holding companies, had significant operations in Britain and Canada as well as the United States, and banked many of his most controversial payments in Bermuda.
With the successful prosecution of Stewart and Quattrone on simpler charges, Chicago’s prosecutors may be tempted to follow a similar solution, say legal experts. They say Black’s past behaviour has left him vulnerable to such an attack — one that could avoid the complexities involved in Breeden’s report, but could still land the peer in jail.
IN the early 1980s, Black was feeling socially and politically stifled in his native Canada. A lifelong Amerophile, he set his sights on making his debut in business across the border. An ideal candidate was found in Hanna Mining, a company whose largest shareholders were some of America’s most well-connected families, including the Humphrey family — George Humphrey was President Eisenhower’s secretary of the Treasury.
The foray ended in legal action between Black and Hanna. Court documents relate that the Humphreys were assured that Black’s intentions were friendly and in 1981 the Humphreys approved the sale of 4.9% of Hanna to Norcen, a company Black chaired.
In filings with the SEC this stake was described by Norcen as “an investment position” and “purchased for investment”. But minutes from a board meeting described a more aggressive scenario: the “ultimate purpose” of the investment was a takeover. Months later, Black launched a hostile bid. Hanna hit back hard, accusing Black and Norcen of fraud and racketeering.
Black spent 20 hours in the witness box over four days, but despite impressing both judge and prosecutor with his oratory, he lost the case. The judge called Black’s reading of events “strained and unpersuasive”.
After an SEC investigation of the case, Black signed a “consent decree” in 1982 in which he pledged not to break any of the rules and regulations surrounding publicly traded companies. A consent decree is a court order, and breaching it is a criminal offence.
Breeden’s report alleged that Black filed documents with the SEC that contained false statements, or “omitted to include material information” on numerous occasions.
Breeden claimed the SEC was not informed about tens of millions of dollars paid to Black, Radler and others “regarding fees and other forms of compensation or related party transactions ... For example, the compensation table in Hollinger’s proxy statements does not show Black and Radler as receiving any compensation from Hollinger as their share of $226m in management fees between 1996 and 2003. In an average year, Hollinger failed to disclose in its proxy statement as much as 96% of the compensation the committee believes was received by its top five officers,” reported Breeden.
Piling on the detail, Breeden reported that “Black and Radler caused Hollinger to make $15.6m in ‘non-competition’ styled payments in 2000 and 2001 to themselves and two associates without any review by or approval from the Audit Committee or the Board.” The Special Committee accuses Black and others of creating “sham transactions, the deliberate backdating of checks and concealment of the unauthorised payments” and says the payments were not fully disclosed to the SEC.
If the hotly disputed allegations were proven true, Black would be in clear breach of the consent decree.
FOR Black and his former colleagues the party is over, and the headaches have only just begun.
Under Black, board meetings operated more like “a social club or public-policy association than as the board of a major corporation”, according to Breeden’s report.
Black talked world affairs with Henry Kissinger and Richard Perle, the former Pentagon defence adviser. A good lunch followed the short meetings and never did the board query Black or his spending. Black and Radler bought newspaper titles from Hollinger, sometimes for as little as $1, and added them to their own private companies. The board appears to have failed to ask if this was as good a deal for Hollinger as it appeared to be for Black.
According to Breeden’s report, Black contributed to his board members’ charities and invested in businesses they were tied to. In the case of Perle, who at one point sat on Hollinger’s compensation committee, Hollinger awarded him millions in bonuses and even picked up his grocery bills — at least until Black started querying Perle’s expenses.
Those close ties and the board’s silence will come at a price, said Laura Jereski, analyst at Tweedy Browne, a Hollinger shareholder and the first to blow the whistle on Black. The company is threatening a lawsuit unless Hollinger pursues its present and former directors for allegedly allowing Black to allegedly loot the company.
Cardinal, another shareholder, is already demanding $300m in restitution from this rich and powerful board. Both Tweedy and Cardinal are likely to press for a settlement — if they don’t get one then Black’s former friends face embarrassing days in court.
Jereski said she was impressed with the Breeden report, before adding: “It’s one thing writing about what happened. But for me the finger wagging is less interesting than what gets done about it.”
Windsor Star and Montreal Gazette
Excerpt from Lord Black: The Biography by George Tombs
September 2, 2004
CHAPTER SEVEN: THE CROWN JEWEL
Conrad Black, by 1985, was a master at hobnobbing with the rich and famous and the politically powerful. He was an accomplished insider at the secretive Bilderberg conferences and the Trilateral Commission.
But he did not feel involved in world events. His business interests - with the exception of his newspaper interests - bored him. His involvement with grocery stores, mining, petroleum, farm machinery and the like served only one purpose. "I was in those solely for the reason of making some money out of them," he says. "Restructuring them, or managing them up and selling or trading them, or doing something financially 'preferably a bit innovative' with them."
Ever since Black had run the Eastern Townships Advertiser and the Sherbrooke Record in the 1960s, newspapers had appealed to him, and he had picked up a few in provincial Canadian backwaters. But his dream of becoming a press baron on a grand scale had been thwarted.
In 1979, he had been blocked by Kenneth Thomson in his quest to gain control of FP Publications, an important Canadian newspaper group.
Over the years, at Bilderberg conferences, Black occasionally discussed the prospect of investing in a British newspaper with Andrew Knight, editor of The Economist and a member of the Bilderberg steering committee. Black had always admired Canadian press barons who made it in London.
Lord Beaverbrook, from New Brunswick, had made a fortune through newspapers. He'd served as a minister in British cabinets in both world wars and vigorously promoted the Empire Crusade - an attempt to increase trade within the Commonwealth. He was even mentioned in the newsreel sequence of Citizen Kane as a newspaper power to be reckoned with.
Black had closely studied Kenneth Thomson's father Roy, admiring the way this astute but modest man from northern Ontario watched the balance sheet. But there was an obvious difference in style between Beaverbrook, the hands-on propagandist, and Thomson, the cool operator who had made a fortune in broadcasting and North Sea oil, then used it to subsidize The Times. Thomson considered the take-over to have been "the summit of a lifetime's work."
Even to this day, long after Thomson's death, Brian MacArthur, associate editor of The Times says: "I bless Roy Thomson's name. He hired excellent editors, spent money, didn't interfere, and let us journalists get on with it-something like the New York Times, the Washington Post or the Toronto Globe and Mail. All Thomson cared about was the number of classified ads, and giving journalists the resources to do their job."
Beaverbrook and Thomson Sr. had been Fleet Street giants, sending journalists around the world to report on events that mattered, setting a high standard for eye-witness news-gathering as much as for writing. They dominated the world's most competitive newspaper market and that commanding position gave them access to highest royalty and to politicians from mayors to prime ministers. They were sometimes asked to quietly smother stories, but also often had a hand in choosing the country's political leadership. Britain is a country with no written constitution, where the chain of command within the government - even in the planning of nuclear war - was subject to interpretation, based on historical precedents, and there was usually an informal, gentlemanly character to political decision-making. The press barons were a formidable, articulate alternative to the government.
Moreover, a strong majority in the British parliament could result in democratic tyranny. "Particularly in our constitution," said Lord Carrington, "press barons play an important role in Britain where if you have a very big majority in the House of Commons, there are no checks and balances. The House of Lords doesn't matter, and the House of Commons really doesn't matter, because if you have a big majority, the followers always go with the premiers - well, nearly always."
"Newspapers influence the outcomes of elections," said Lord Hattersley, a former minister in the Labour governments of Harold Wilson and James Callaghan, and a noted journalist. "In a free society, it just happens. Journalists have to be accepted as part of the democratic process. People in political office complaining about journalists are like sailors complaining about the sea."
The British government draws press lords into the circle of power by using the honours system, the often cynical award of noble titles-one of "the most potent pieces of patronage in a premier's hands," according to constitutional authority Peter Hennessy. A peerage transforms newspaper proprietors into legislators, with the power to debate and vote on bills sent up to the House of Lords from the House of Commons. This fudges their role, from the observation of events and the shaping of public opinion to participation in decision-making. They are proprietors, marketing facts and ideas on a grand scale. But they are statesmen too - with a political platform of their own in and outside of Parliament.
In May 1985 came an opportunity that would change Black's life.
At the Bilderberg meeting at Arrowwood, outside New York, Andrew Knight told Black that The Daily Telegraph was undergoing severe financial and managerial strain. The paper was the English-speaking world's largest-circulation conservative broadsheet. It dated from 1855, the time of the Crimean War. Black's great-grandfather Robert Thomas Riley was the son of one of the founding shareholders. Since the late 1920s, the Telegraph had been controlled by the Berry family, industrious Welsh entrepreneurs with a history of coming to the rescue of faltering companies and then building up durable value. Bill Berry, the first Lord Camrose and one of the pre-war giants of Fleet Street, had promoted high standards of reporting at The Telegraph. He had the good sense to oppose fascism throughout the 1930s (unlike his competitor Lord Rothermere at The Daily Mail) and had even employed Winston Churchill as a freelance contributor before the Second World War. The Telegraph broke the one million circulation barrier in April 1947 - a net daily sale of 108,000 more copies than The New York Times and The New York Herald Tribune combined. But Camrose's son Michael - Lord Hartwell - a deaf and extremely shy man prone to mumbling, did not have much entrepreneurial flair.
His mission was to preserve the value and style of his late father in the newspaper's executive offices on the fifth floor of 135 Fleet St. "Just as he kept his own offices unchanged, with their 1930s panelling and their ancient Telegraph contents bills for decoration, so he maintained his father's routines to the letter," wrote Duff Hart-Davis, the Telegraph historian. "A butler dressed in black still guarded the entrance to the fifth floor." Staff members of the old school snapped to attention when they spoke to Hartwell on the telephone.
Hart-Davis explained that Hartwell maintained an antiquated system of management, surrounding himself with venerable gentlemen like himself, and had done little to prepare the next generation - his sons Adrian and Nicholas Berry - for administrative roles. Adrian was more interested in science than administration. Nicholas had shown a keen business sense, but had not been prepared for succession.
Besides, in the midst of rapid technological change on Fleet Street, and an ongoing war of attrition between newspaper proprietors and print unions, Hartwell had made a catastrophic mistake - committing to costly new printing installations in the East London's Docklands on the basis of overly optimistic projections without properly evaluating the financial risks. The new presses would offer financial benefits to the paper, but the Telegraph did not have the financial depth needed to pull it off without new capital. After lengthy negotiations with several banks during 1984, "a consortium led by Security Pacific, and including the National Westminster County Bank, the Hong Kong and Shanghai Bank and Wardley London, agreed to put up Â£75 million on condition that the Telegraph raised Â£29 million from the sale of shares." Given the precarious financial position of the company, N.M. Rothschild & Sons was having trouble raising the Â£29 million.
"The Telegraph was bankrupt effectively," says Knight, "and it couldn't raise the money it needed to finance its new presses, let alone survive. Rothschild could not raise all the money needed, so I contacted Black with a view to having him invest in the paper. I had two candidates in mind, Conrad or Kay Graham. I went to Conrad because he was more ideologically attuned to the Telegraph and, unlike Kay, was not a friend of the Berry family, so future muddles would be avoided if and when he got control."
The Telegraph was the Crown Jewel of the British press. As Black later wrote, "the key to the Daily Telegraph's immense success was a formula devised by Lord Camrose and faithfully continued by his son, Lord Hartwell, consisting of an excellent, fair, concise, informative newspaper; good sports coverage; a page three in which the kinkiest, gamiest, most salacious and most scatalogical stories in Britain were set out in the most apparently sober manner, but with sadistically explicit quotations from court transcripts; and extreme veneration of the Royal Family."
Beyond the quality and prestige of the title, Black was also interested in the political platform that ownership, even partial ownership, would offer ?? a platform in a world capital, more than just a cut above Toronto. There was a charming, faded elegance to London, with its palaces and hotels, the bulky black Carbodies cabs and double-deckers lumbering by, the trotting procession of the Horse Guards and richly liveried staff in the clubs. London was a layered city, a visual feast for a history buff like Black.
There was also the impressive literary tradition of British journalism.
Bill Deedes (now Lord Deedes), a former editor of The Daily Telegraph, had been a war correspondent during the Italian invasion of Ethiopia in the 1930s (and a character in Evelyn Waugh's Scoop), a parliamentary secretary in Sir Winston Churchill's post-war government and a cabinet minister under Harold MacMillan. In the 1970s and 1980s, following in the footsteps of Waugh and George Orwell, came a series of adventurers and unusually gifted men - Reuters correspondent Anthony Grey, who was held hostage for two years during the Chinese Cultural Revolution as a symbol of the paper tigers of capitalism; war correspondent Max Hastings who sometimes scooped the opposition by taking a taxi to the front; John Pilger, a rugged Australian whose life mission was to denounce every abuse of power (he attacked the manufacturers of thalidomide as willingly as he blasted Henry Kissinger for the indiscriminate American bombing of civilian Cambodia during the 1970s); Robert Fisk who risked his life time and again reporting from Lebanon and throughout the Middle East; and Reuters man Andrew Tarnowski who became a temporary captive of the Amal militia in Beirut so he could interview hostages from the 1985 TWA hijacking and scoop the world's media.
Black relished the negotiating process; the opportunity of gaining The Telegraph at a bargain price and releasing the locked-up value."You have all the different elements there," said Black."You have possible economic gain, you have human drama, you sometimes haveâ?¦the abrupt and almost cruel end of long-standing incumbency, and the rise of new interests, which I suppose I myself represented. You have the unfolding drama, and you are conscious at all times of being in the midst of the drama, whose outcome is hoped-for, but there is a great deal of suspense as you get into these things. A lot of nervous energy is put into it." But Black recognized the risks as well.
Excerpted from Lord Black: The Biography by George Tombs.
Copyright 2004 by City Publishing Inc. www.optimumpublishing.com all rights reserved.
This book will be available across Canada Sept. 13.
Conrad Black now being sued for $1.25B US
Updated: Fri. May. 7 2004
In a radical escalation of its war against founder Conrad Black, Hollinger International Inc. has increased its court claim against him and other executives of the newspaper group to $1.25 billion US and accused them of corruption.
Black fired back that the company's latest action "is tabloid journalism masquerading as law."
The operating company of Black's newspaper empire said Friday evening that it has amended its complaint in a Chicago court and now is seeking $484.5 million US -- $380.6 million in damages and $103.9 million in prejudgment interest.
The company is also asserting that the defendants "engaged in a pattern of racketeering activities" and is demanding that the damages be tripled, as provided for in the U.S. Racketeer Influenced and Corrupt Organizations Act.
The RICO claim is based on "alleged fraudulent diversion of company funds through improperly obtained non-competition and other payments of fees, transfers of certain newspaper assets at less than fair value, and other acts."
The total claim including treble damages comes to $1.25 billion, plus legal fees.
A statement issued Friday night through Ravelston Corp., a Black private company through which he controls Hollinger International via Toronto holding company Hollinger Inc., commented that "overreaching use of the Racketeer Influenced and Corrupt Organizations Act has been frowned upon in virtually every circuit court in the United States. When this complaint is heard in a court of law, the poverty of this case will be plainly demonstrated."
Hollinger International alleged previously that Black and his associates took money improperly from the company -- whose holdings include the Telegraph of London, the Chicago Sun-Times and the Jerusalem Post -- through excessive management fees and unjustified non-competition payments.
The amended filing adds accusations of breaches of fiduciary duty "in connection with the sale of certain newspaper assets at less than fair value to companies controlled by certain of the defendants."
There have been persistent reports that Black and longtime associate David Radler arranged to buy small-town papers from Hollinger International at below market value.
The new filing also seeks to recover bonuses previously paid in connection with subsidiary Hollinger Digital.
The Ravelston response insisted that "the vast majority of the agreements and transactions to which Hollinger International is apparently objecting were reviewed and approved by its independent directors."
Black, who was forced to resign as Hollinger International's chief executive officer in November and as chairman in January, is engaged in a complex web of litigation with the operating company, whose previous claim in January was for $200 million US.
He in turn filed an Ontario action in February demanding $850 million in damages from Hollinger International directors, including $200 million for defamation, and last month sued Hollinger International for refusing to exercise his stock options.
The situation has snowballed since November, when a Hollinger International board committee uncovered $32.2 million US in alleged unauthorized or unreported payments to Black and three other executives.
In a development earlier Friday, the Toronto Stock Exchange said it is reviewing the status of the Hollinger Canadian Newspapers Limited Partnership -- the remnant of Hollinger's Canadian holdings which briefly made Black the country's dominant newspaper proprietor.
The partnership, whose unitholders receive income from 13 small-market dailies and assorted trade publications and community papers, has not complied with a TSX requirement that listed companies have at least two independent directors. The partnership has been given 30 days to meet that rule.
The big-city Canadian newspapers Hollinger had owned, including the former Southam dailies and the National Post, were sold to CanWest Global Communications for $3.2 billion in 2000. Hollinger's dailies in smaller markets in Ontario were sold to Osprey Media Media Group for $220 million in 2001.
Beset by financial and legal troubles, Black arranged to sell his controlling interest in Hollinger Inc. to British tycoons David and Frederick Barclay in a $605-million deal which fell apart in March.
Hollinger International is now entertaining bids for some or all of its assets.
Prufrock: Rulers of the world prepare to expel Black
14Feb04 - Prufrock in the Times
MORE bad news for Conrad Black, the ousted chairman of Hollinger, which owns the Telegraph newspapers. The disgraced Canadian press baron faces being pushed out of Bilderberg, the elite club that conspiracy theorists think really runs the world.
As befits somone fascinated by powerful historical figures, Black has long been a dedicated member of the secretive group of businessmen and diplomats. But his financial woes, including the small matter of a dispute over $300m of payments at Hollinger, have left the inner circle at Bilderberg increasingly uncomfortable.
The final straw came this month when Black said he would sue Henry Kissinger and Richard Perle, both directors of Hollinger and fellow Bilderbergers. Now he is going to be pressed to leave the group. Meetings of its steering committee have become awkward affairs since Black had his little spot of bother, said one insider. His exile from the rich and powerful will be particularly painful, but perhaps he will be comforted by the words of one of his heroes, Napoleon, who said it was “better to have a known enemy than a forced ally”.
The deadline for bids for the papers passed last week, but there is one outstanding bid still to come: from the Berrys, the aristocratic press barons from whom Black wrestled the Telegraph in 1985. Three weeks after Prufrock first revealed the Berrys’ determination to win back the papers, their bid is still alive. Watch this space.