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CHICAGO - Jurors at the fraud trial of toppled newspaper tycoon Conrad Black heard today that Hollinger executives relied on the advice of outside lawyers and accountants for how to account for the payments they made to themselves.
Defence lawyers pounded away at prosecution witness Darren Sukonick, a lawyer at the law firm Torys LLC who advised Black's Toronto-based holding company Hollinger Inc, showing him memos and transcripts of voicemails where he appeared to suggest the executives need not disclose specific payments to themselves.
Sukonick's testimony was videotaped in January in Toronto and played for the jury in federal district court in Chicago.
So far in the four-week-old trial, prosecutors have sought to portray US$60 million in payments to Black and other executives as illegal bonuses they paid themselves and then attempted to hide from shareholders and government regulators.
Defence lawyers for the Canadian-born Black, who faces years in prison and US$92 million in forfeitures if convicted, and three co-defendants, have sought to undermine the testimony of Sukonick and former Hollinger Inc. accountant Fred Creasey by trying to show payments were properly disclosed in corporate filings.
And if the payments were not always spelled out, the defence lawyers said, it was because Torys and the outside accounting firm KPMG either failed to encourage the company to disclose them or explicitly advised the executives against it.
Regarding $C80 million set aside from a $C3.2 billion sale in 2000 of Canadian papers owned by Hollinger International Inc. to CanWest Global Communications, Sukonick was asked about his advice to executives.
Of the C$80 million allocated from the CanWest sale for so-called non-compete agreements -- promises not to reopen a rival newspaper where one has been sold -- $C30 million went to Black's privately held holding company Ravelston Corp Ltd, $C26 million was divided among Hollinger Inc executives, and the rest went to Chicago-based Hollinger International.
Once one of the world's largest newspaper publishers, Hollinger International has been renamed Sun-Times Media Group Inc and now owns only the Chicago Sun-Times and a few dozen regional papers in the surrounding region.
Sukonick was shown the transcript of a voicemail he left for former Hollinger International attorney Mark Kipnis, who is charged with helping arrange the suspect payments.
In the transcript, Sukonick told Kipnis that he and his US colleagues at Torys agreed that non-compete payments to individual executives from the CanWest deal did not need to be disclosed in a proxy statement sent to Hollinger International shareholders.
In emails and memos presented as evidence, the lawyer also discouraged Hollinger International from telling CanWest that some of the $C80 million money was being diverted to Ravelston -- advice that Kipnis' attorney Ron Safer pounced on.
"Your suggestion is to have this structure so that CanWest wouldn't know how much went to each executive, correct?" Safer said to Sukonick, who agreed.
"There's nothing unlawful or improper from keeping those payments from CanWest, correct?"
"No," Sukonick said.
Sukonick testified earlier that former Hollinger Inc vice president Peter Atkinson told him to insert the names of Atkinson and Jack Boultbee, Hollinger's former chief financial officer, into the non-compete agreements in the CanWest transaction.
Black, 62, Atkinson, 60, Boultbee, 63, and Kipnis, 59, have all pleaded not guilty in the case, which is expected to last for four months. Black's former partner, David Radler, has pleaded guilty and agreed to testify against the others.
- REUTERS
