Business

Friday 9 December 2016

back into black::: Newsmaker Conrad Black, former newspaper magnate

Freed on bail, the determined ex-media mogul faces a tough battle to return to business

Published 24/07/2010 | 05:00

This week's release from jail represents a remarkable reversal in the fortunes of Conrad Black, the Canadian-born former newspaper baron. Free from prison after just over two years, the ex-media mogul is now vowing revenge on his many enemies.

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Black's 34-year business career, with its dramatic ups and downs, wouldn't be out of place in a trashy paperback novel. A sort of a real-life cross between Citizen Kane and Jeffrey Archer, Black has repeatedly overcome obstacles and reversals that would have ended the careers of lesser men.

When in July 2007 he was found guilty of fraud and obstruction of justice by a Chicago court and sentenced to six-and-a-half years in prison, it seemed as if Conrad Black's colourful career was finally at an end. Not alone had he been found guilty of looting $6.1m from his company, Hollinger, he was also found guilty of obstruction of justice, with jurors being shown devastating CCTV footage of Black wheeling 13 boxes of papers from the company's Toronto offices in May 2005, despite a court ban on removing potential evidence.

Dramatic

However, the July 2007 verdict was not a complete success for the prosecution. Black had been initially accused of skimming $84m from Hollinger but the jury could only agree that he had taken $6.1m from the company. Even so, for a man who had once counted former UK prime minister and former US secretary of state Henry Kissinger among his friends -- they had both served as paid "international advisers" to Hollinger -- it was a dramatic fall from grace.

The gist of the prosecution case was that during the early 2000s when Hollinger was selling off hundreds of local newspapers across North America, it demanded non-compete payments from the buyers.

However, instead of passing these non-compete payments on to Hollinger, Black pocketed them and used the money to fund a lavish lifestyle, which at one stage included homes in London, New York, Toronto and Florida and a corporate jet.

It is a testament to Black's ego and tenacity that he was able to see a partial victory in the prosecution's inability to convince the jury of the truth of its entire case. For the past three years, he has waged a legal battle to have the July 2007 verdict set aside.

His first big break came last month when the US Supreme Court ruled that the scope of the "honest services" law, which states that a company is entitled to the honest services of its executives, was too broad and should be narrowed to cover only bribes and kickbacks. The Supreme Court ruling removed one of the main planks of the prosecution's case and paved the way for Black's release on bail of $2m (€1.54m) this week.

The Supreme Court ruling will make it almost impossible for the prosecution to uphold an appeal by Black against his two fraud convictions. He may find it more difficult to overturn the obstruction of justice conviction. The most likely outcome is that the fraud convictions will be thrown out and that Black will be sentenced to time served on the obstruction of justice conviction.

Moguldom

However, while few would have predicted in July 2007 that Black would turn the tables on the prosecution in such a spectacular manner, reports of his imminent return to media moguldom are almost certainly greatly exaggerated.

The newspaper titles, including the 'Daily Telegraph', the 'Jerusalem Post' and the 'Chicago Sun-Times' -- which at one stage made Hollinger the third-largest print media group in the world -- are long gone. So too are most of the other baubles of business success, including the house in London, the New York apartment and the corporate jet, while the Palm Beach mansion, to which he retreated after his release this week, is on the market.

In fact, Black was so strapped for cash that he had to rely on a friend, New York financier Roger Hertog, to come up with his bail money.

And his financial problems could be about to get a whole lot worse. Even as he was being released, the US Internal Revenue Service was hitting Black with a demand for $71m in unpaid taxes and penalties. Black has responded that he was not a US resident and is thus not liable for US taxes. The IRS is unlikely to agree.

Also lurking in the long grass are the former Hollinger shareholders, whose investment was wiped out when the company went bust in 2009.

Black's spectacular fall has inevitably distracted attention from his earlier record as a press baron. He started out by buying dozens of local newspapers in Canada and the US. However, it wasn't until he seized control of the ailing 'Daily Telegraph' and its Sunday stablemate from the Berry family in 1986, that he made the breakthrough into the big time.

The new proprietor hired Max Hastings as editor of the 'Daily Telegraph'. It was a brilliant appointment. Building on the paper's already strong news coverage, Hastings transformed the fortunes of the 'Telegraph' by updating its dowdy layout and vastly improving its comment, sport and features sections. It helped that, although he often strongly disagreed with Hastings's one-nation Tory politics, Black gave his editor a free hand.

At its best in the early 1990s the Black/Hastings 'Telegraph' was an outstanding newspaper, whose success allowed Black to expand his empire, with Hollinger purchasing the 'Jerusalem Post' in 1989 and the 'Chicago Sun-Times' in 1994.

Black's personal life was also undergoing a transformation. In 1992, he divorced Joanna Hishon, his wife of 14 years, and married newspaper columnist Barbara Amiel. It was from around this time, whether coincidentally or not, that Black began to assume a much higher public profile. Always politically conservative, he enthusiastically embraced his new wife's neoconservative views. Amiel was also seriously high maintenance, once famously boasting that: "My extravagance knows no bounds".

Despite his being a multi millionaire, the couple's lavish lifestyle quickly outran even Black's deep pockets, with one observer commenting that they were living a billionaire lifestyle on a millionaire's income.

Unfortunately for Black, he was embracing the billionaire lifestyle just as his cash cow was about to run dry. In 1993 Rupert Murdoch slashed the price of the London 'Times', unleashing a price war among the UK broadsheets. The price war decimated the profits of the Telegraph.

Then in 1996, wearying of his boss's insistence that he toe the neoconservative line, Hastings quit. Instead of heeding these warnings Black and Amiel kept on partying. In 1999, in a photograph that had hubris written all over it, the couple were pictured at a fancy dress party with Black dressed as Cardinal Richelieu and Amiel as Marie Antoinette. In 2001, Black renounced his Canadian citizenship so that he could accept a British peerage, becoming Lord Black of Crossharbour.

Nemesis quickly followed. Outside shareholders in Hollinger, puzzled by the fact that an apparently profitable company seemed to be generating very little cash, demanded an investigation into its affairs.

The investigation by former Securities and Exchange Commission chairman Richard Breeden was devastating, concluding that Black had run a "corporate kleptocracy" at Hollinger, with he and nine other executives looting more than $500m from the company. Black was fired from Hollinger shortly afterwards.

So what will Black do for an encore? A return to newspaper publishing seems unlikely. Black used his time in prison to write a personal account of his legal battles. If it's half as good as his well-received biographies of US presidents FDR and Richard Nixon, it should make for fascinating reading.

Irish Independent

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