Conrad Black's business partner of 30 years testified yesterday that he knew the scheme he and the former media mogul devised to pay themselves bonuses was wrong.
David Radler, the star witness at Mr Black's trial who has already pleaded guilty to fraud and faces jail time, described how Mr Black and he divided up $600,000 from the proceeds of two deals made as Mr Black was selling off the media empire they had built.
Prosecutors contend Mr Black and three co-defendants stole $60 million from his main company, Hollinger International, to give themselves tax-free bonuses by using non-compete payments the company should have received.
Such payments were set aside from the proceeds after newspaper sale prices were determined, and were designed to guarantee the buyer the seller would not re-enter the same market.
"Did you advise the Hollinger board or audit committee?" of the $600,000 that was kept, lead prosecutor Eric Sussman asked Radler.
"No, I didn't," Radler replied.
"Why not?" Mr Sussman asked.
"I knew the process of creating these non-competes was wrong," Radler said.
Radler, who faces 29 months in prison under a plea agreement reached two years ago in the same case, is the US government's chief witness against Mr Black and others. Prosecutors have tried to convince the jury that the two operated in tandem in everything they did and since Radler had already admitted guilt, that Black too is culpable.
Defence lawyers again asked for a mistrial yesterday, but were denied. This time, they objected to prosecutors delving, with Radler's help, into memos from 2000 to 2002 from some of 13 boxes Mr Black was caught removing from his Toronto offices in 2005. In those documents, some of which were presented in court, Mr Black railed against Hollinger International shareholders who challenged the non-competes and other spending.
He said executives should make "conciliatory gestures", but insisted such moves were not "a confession of excess" and that would cut into the "comfortable enjoyment" of the money the company was making.
In response to a question from Mr Sussman about one of the memos, Radler said: "In my opinion, he [Mr Black] was saying he intended to run the company [Hollinger International] like a private company, not a public company."
In one memo, Mr Black wrote that the officers should be "unapologetic . . . we created this company . . . and we brought these assets back to health and great profitability." In another, he said that "the goose keeps laying a golden egg every year and the best is yet to come."
Mr Black, a Canadian-born member of Britain's House of Lords, faces up to 101 years in prison, millions in fines and $92 million (€68 million)in forfeitures if convicted.
