Besieged former newspaper tycoon Conrad Black hasn't hesitated
in the past to file libel suits against his critics. Simply
Googling the phrases "Conrad Black" along with "libel chill"
brings up three pages of references, though they don't all refer
to his court actions.
Black, former chair and CEO of Hollinger Inc. and Hollinger
International, filed his first libel suit in 1983 against Peter
C. Newman, according to Richard Siklos's new book, Shades of
Black: Conrad Black's Rise and Fall (McClelland &
Stewart, $36.99). Newman had written a positive biography of
Black the previous year. According to Siklos, Black objected to
Newman's subsequent article about wealthy Canadians.
Siklos reported that over the next few years, Black sued the
Globe and Mail, the Toronto Star, the Canadian
Broadcasting Corporation, Canadian Press, and author Ron Graham
and his publisher.
In his 1993 autobiography Conrad Black: A Life in
Progress (Key Porter Books), Black gleefully recounted how he
extracted an apology from the Globe and Mail in 1989 under
its new editor, William Thorsell. Black launched court action
following a 1987 article in which "it was alleged that my
habitually unnamed critics considered that I had 'milked'
corporations and institutions, oppressed minority shareholders,
pocketed other people's pensions, 'destroyed' public companies,
and had been caught with my 'hand too close to the cookie
jar'."
Black recalled that he spent "many happy hours of bed-time
reading" with transcripts of the examinations for discovery of
Globe and Mail staff. "The retraction debunked the ancient
falsehoods that I had exploited the widows or acted improperly,"
Black wrote.
In 2002, Timothy Pritchard, former editor of the Globe and
Mail Report on Business, acknowledged that lawsuits or
threats of lawsuits from Black and others was "a fairly effective
tactic" for dealing with negative media coverage. "We could not
back off completely, but we had to be prudent," Pritchard wrote
in an article that appeared on the ROB's 40th
anniversary.
Black's litigious zeal bought him peace for most of the 1990s.
It didn't hurt that he and his business partner, David Radler,
controlled most of the daily papers in Canada from 1996 to 2000,
including the Vancouver Sun and Province.
Ironically, it was a former journalist--once on the receiving
end of a legendary U.S. libel suit--who played a big role in
Black's eventual downfall as a publishing magnate. In the early
1990s, Laura Jereski was a business reporter with the Wall
Street Journal. In 1993, a Houston investment company, MMAR
Group Inc., sued her and her employer, Dow Jones, after one of
her articles detailed questionable business practices by the
company. A jury awarded the plaintiff a record US$222.7 million
in damages, at the time the largest libel award in U.S.
history.
Dow Jones won a new trial and the action was eventually
dismissed, according to lawyer Dave Heller of the New Yorkbased
Media Law Resource Center. However, in the meantime, Jereski left
the Journal and went to work as an analyst at Tweedy
Browne, a New York money-management company.
In the new book Wrong Way: The Fall of Conrad Black
(Viking Canada, $38), two Globe and Mail reporters,
Jacquie McNish and Sinclair Stewart, described Jereski's
investigation of Hollinger International's sale of its chain of
Canadian newspapers to CanWest Global Communications Corp. for
$3.8 billion in 2000. Jereski focused particular attention on $80
million in payments to Black, Radler, their private holding
company, and two other executives in connection with the sale to
CanWest. These payments were not revealed in Hollinger
International's 2000 filings to the Securities and Exchange
Commission.
In the shareholders' question-and-answer session at Hollinger
International's 2002 annual general meeting, McNish and Stewart
reported, Jereski bluntly asked Black why he felt it was
appropriate for multimillion-dollar payments to go to him and not
to Hollinger International. Black replied that Hollinger
International's board of directors reviewed and approved the
payments, which, according to the book, Black said "were not
negotiated directly by us".
That was the beginning of the end for Black. Two institutional
shareholders sued. The Hollinger International board appointed a
special committee to investigate. Black and Radler later
resigned, even though they still controlled the company through
Toronto-based Hollinger Inc.
After they had departed, the special committee issued a
513-page report accusing Black and his partners of diverting $400
million in company profits to themselves and companies under
their control. Black and Radler each claimed that the report was
defamatory; in characteristic style, Black followed up with a
massive defamation suit against members of the special
committee.
The latest chapter in the saga came on November 15, when the
SEC filed a 76-page lawsuit against Black, Radler, and Hollinger
Inc., repeating some allegations in the special committee's
report. In a November 15 news release, the director of the SEC's
enforcement division, Stephen M. Cutler, stated: "Black and
Radler abused their control of a public company and treated it as
their personal piggy bank."
Black and Radler have not been found guilty of anything, and
no criminal charges have been laid. The SEC document devoted 12
pages to Hollinger International's sale of Canadian newspapers to
CanWest, which invited Black and Radler onto its board of
directors.
The lawsuit quoted minutes from the September 11, 2000, board
audit-committee meeting, in which company lawyer Mark Kipness
stated that CanWest originally insisted that Black and Radler
each receive $26 million in "noncompete payments". However, the
minutes stated that Black and Radler negotiated adjustments so
some of this money could go to fellow executives Peter Atkinson
and Jack Boultbee.
In addition, Kipness stated that Ravelston, a private company
controlled by Black and Radler, would be willing to reduce its
management fees in return for an "early termination fee" of 0.9
percent of the purchase price, which worked out to $30 million.
However, the SEC lawsuit alleges that the early termination fee
was "baseless" and that CanWest did not specify the value of the
noncompetition agreements.
Black and Radler, a former publisher of the Vancouver
Sun and Province, issued news releases on November 15
saying they will defend themselves and that they expect to be
vindicated. Despite Black's history, however, he hasn't
threatened any defamation suits against the SEC, which is an arm
of the U.S. federal government, despite the seriousness of its
allegations.