Black's Legal Jousts Continue

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 Yorkí‚ ­based 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.