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Home / Business

Fade to Black

By Stephen Foley
12 Jan, 2007 04:00 PM7 mins to read

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KEY POINTS:

The stage is being set in Chicago for the last, and perhaps judicially fatal, stand of Lord Black of Crossharbour, fallen newspaper tycoon, conspicuous consumer and alleged corporate fraudster.

The American prosecutors determined to pin 17 fraud charges on Black are salivating at the prospect that the rambunctious
peer will take the stand in his own defence when his trial opens in a few weeks.

Styling himself as a "freedom fighter", Black has repeatedly rubbished the allegations that he looted hundreds of millions of dollars from his media companies, and has told friends that he is resolved to testify.

But he could be setting himself up for a clash with his expensive lawyers and other advisers, since they may yet beg to differ. Already the Black camp is concerned that the peer's reputation for arrogance and his penchant for lavish clothes and cars could turn a jury against him.

His team is said to have sought the services of "jury consultants" in an attempt to help his case. These experts, charging up to US$500 ($730) an hour, will be able to coach him in his testimony, advise on how to act in court, even recommend what to wear to appear more like a man of the people.

The humility awareness programme could even include clothing him in an off-the-peg suit rather than his usual bespoke tailoring.

But the fear is that he just won't be able to take the advice.

Edward Greenspan, Black's Canadian attorney, said he expected to put up a rollicking defence, with or without his client in the witness box.

"It is true that Lord Black is ready for the fight, waiting for the fight, and it is certainly his inclination to tell his side to the story," he said. "But in my practice, decisions about testifying or not testifying are made at the appropriate time - and that is at the end of the prosecution's case."

Prosecution attorneys are sceptical they will get the chance to cross-examine, but are already dreaming of the damaging questions they could lob.

"So Lord Black, could you explain why your company, Hollinger International, picked up most of the tab for a $54,000 birthday party for your wife at an exclusive New York restaurant?"

Or: "Have you been trying to hide some of your wealth from the court, filing an incomplete affidavit on your finances while continuing to splash money on clothes, renovations and charitable gifts?"

The trial begins in Chicago on March 5. In the plethora of lawsuits between Black and the remnants of his old empire - and against critics he accuses of libel - this is the criminal case, his one shot at clearing his name before taking revenge on his enemies and clawing back a little of his wealth and influence. The newspaper empire, once third-largest in the world - stretching from the British Telegraph titles to the Chicago Sun-Times and The Jerusalem Post - is broken up. Instead, 62-year-old Black is fighting for his reputation, for his access pass to high society in North America and his right to return to the House of Lords, for which he gave up Canadian citizenship in 2001. And to stave off a prison term of up to 101 years.

Chicago prosecutors filed their final papers this week, detailing myriad ways they say Black used to finance a lavish lifestyle by dipping into the coffers of his companies. Such expenditure might have been fine if he had owned the companies outright, but he controlled them only through preferential voting shares and Hollinger was not his personal piggybank.

He is accused of in effect robbing the other shareholders and presiding over what accountants described as "a corporate kleptocracy". And, by dressing up millions of dollars of unauthorised payments to himself and his associates, he also is said to have deceived the taxman.

A short pre-trial meeting between the attorneys and the presiding judge this week confirmed Lord Black's not guilty plea.

The trial, expected to last three months, threatens to touch on the reputations and judgment of a dizzying array of public figures - from American political luminaries such as Henry Kissinger and Richard Perle, who served on Hollinger's board, to Baroness Thatcher, who was on Black's "advisory committee" which gathered regularly to discuss world affairs.

Black's journey from Westminster's red benches to a criminal dock in Chicago began with a few probing questions from a shareholder at his New York-listed media company, Hollinger International.

Investment firm Tweedy, Browne - which has a reputation for holding clubby boards of directors to account - wondered in 2003 why Black and his associates had personally trousered US$42 million when Hollinger sold its Canadian papers. That money, it said, should have gone to Hollinger itself.

When Tweedy, Browne's questions led Hollinger to investigate the complex financial deals between the company, Black, and his network of holding companies, the findings were shocking.

Black and his associates appeared to have looted Hollinger to the tune of US$400 million, most of it with the tacit approval of the board but - crucially, if the criminal charges are to be proved - some of it by stealth.

Hollinger International ousted Black as chairman and he also lost control of his Canadian holding company Hollinger Inc.

Meanwhile, the authorities were closing in. On the day in May 2005 when he was subpoenaed to provide evidence, he was caught on closed-circuit television removing a dozen boxes of documents from Hollinger Toronto headquarters. Then in September of that year, David Radler, his long-time business associate and number two at Hollinger, admitted a single count of mail fraud.

He had agreed a plea bargain, 29 months in prison in return for testifying against Black. Charges against the peer followed within weeks.

It has become commonplace to blame the press baron's fall on Barbara Amiel, the former Times columnist known for her pungent pro-Israeli views, whom he married in 1992.

Both enjoyed brushing shoulders with the rich and powerful, but it is insinuated that her craving for status drove Black to overreach himself financially. Some of his closest lieutenants from the Daily Telegraph have helped bulk-up this theory.

Charles Moore, former Daily Telegraph editor, said Amiel drew his proprietor deeper into a glamorous and costly world of celebrity and minor royalty.

Jeremy Deedes, the former Telegraph chief executive, said Lord Black "was willing to do whatever she wanted, it would appear".

Neither side is expected to call Amiel, given that "spousal privilege" would allow her to keep the couple's private conversations just that, private. But she is likely to be in Chicago - and she is unlikely to take kindly to sartorial advice from her husband's jury consultants.

Such consultants, often psychologists, offer hints on how appearances can garner sympathy with a jury, and coach defence attorneys and defendants to better portray their case.

Tom Diamante of DOAR Litigation Consulting, which is not involved in the case, said: "In the end, we are a performance consultancy.

"Whether you are an executive in a boardroom, a clown in a circus or a litigator at trial, performance matters."

Consultants can also weed out potentially unsympathetic jurors. Some criteria may be obvious - Black's lawyers would probably want to strike out any juror who has been a victim of fraud - but others can be more devious. In one recent complex fraud case, consultants asked potential jurors for their favourite famous person. Those who picked politicians or historical figures were struck out.

Black is likely to be well advised to tone down his notoriously imperious style. This is a man whose response to the criminal charges was to dismiss them as "one massive smear job from A to Z", and who has referred to his enemies as "pygmies". Observers of his first appearance in court said he wore a smirk.

Even Black's friends admit "he did not get a high mark" when last he appeared in the witness box on his own behalf.

His attempt to sell control of the Telegraph titles to the Barclay brothers in 2004, as prosecutors were closing in, was blocked by a Delaware court. Judge Leo Strine said he found Black an "evasive and unreliable" witness and that his explanations of his motives "did not have the ring of truth".

The consultants' verdict: must do better.

- INDEPENDENT

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