Black Entitled to ‘Golden Eggs’ from Newspaper, Memo Shows
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Conrad Black described his newspaper company as a “goose” that “keeps laying a golden egg every year,” his fraud trial heard yesterday.
In a memo to colleagues written in 2002, and which was shown to the court, Lord Black suggested to fellow directors of Hollinger International: “We have pretty much won the great battle over the noncompete agreements and a decent interval has passed.”
Recognizing that many shareholders had been angry over the payments, he said that the company should adopt a conciliatory tone towards investors but insisted there was little need to change the fundamental way it operated.
“We have a certain style that shareholders were aware of when they came in,” he wrote in one document shown to the court.
“We should fine tune that style,” he said, “not revolutionize it with a Damascene conversion to vows of poverty.” He added that while it was important not to “degenerate into decadence,” it would also be wrong to “appease the lust for authority of the more aggressive institutional investors.”
He pledged not to wear “the corporate equivalent of sackcloth and ashes.” In particular, he said, Hollinger should continue to pay for his chauffeur and for half the costs of the cook employed at his London home.
The release of the documents prompted calls for a mis-trial from Lord Black’s lawyers. Earlier the court heard how some of the noncompete payments worked, with his former business partner David Radler testifying that four executives, including himself and Lord Black, shared a pay out of $5.5 million in 2001 for agreeing not to compete with an American newspaper which Hollinger already owned through a subsidiary.
“Did you have any intention to compete with it?” Mr. Radler was asked of the Mammoth Times by prosecutors. “No,” Mr. Radler replied.
He testified how Lord Black had personally authorized the payments “as a bonus for the executives.” However, they were dressed up as non-compete payments because it meant that, unlike bonuses, they would be tax free in Canada where all four men lived, Mr. Radler said.
He also testified that in two other deals in 2000 when Hollinger sold newspapers, Lord Black authorized payment of $600,000 in non-compete payments, which resulted in raiding Hollinger’s reserve bank account when the men realized the money had not been paid.
