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As his former realm sways, fallen tycoon calls court case a smear job from A to Z

Ten years ago, Conrad Black was a swaggering newspaper tycoon, the owner of a media empire that was the third-largest in the English-speaking world.

As Black, 61, left a courtroom in Chicago this week, the US$20 million bail for his release came from a lien on his mansion in Palm Beach, Florida, and from US$8.9 million seized by the United States government from the sale of a luxurious apartment in New York.

For Black, there was no bail money to be had from his once glittering newspaper empire. The  shrunken Hollinger International is beyond the reach of  its creator.

Canadian-born Black was in the Chicago court to plead not guilty to charges of helping to steal US$51.8 million from Hollinger  through wire and mail fraud.

Black  dismissed the charges against him as 'absolute nonsense ... one massive smear job from A to Z'.

In its heyday, Black and his partners owned 650 daily and weekly English-language newspapers with a combined circulation of more than 10 million.

In the US, Hollinger owned more than 400 newspapers; in Canada, it controlled 60 per cent of all newspapers.

Extravagant spending has diminished the empire. The jewels - the Daily Telegraph and its Sunday edition and the Spectator in Britain, the Jerusalem Post and the Jerusalem Report, the National Post and the Southam newspapers in Canada - have all gone.

The Hollinger empire is now the Chicago Sun-Times, 100 daily and weekly newspapers in Chicago, and a scattering of small newspaper and trade publications in Canada.

Hollinger's troubles began in 2002 when unhappy shareholders complained of mysterious mounting losses and excessive payments to Black and other officers.

The Hollinger board responded by appointing a special committee under the leadership of Richard Breeden, a former chairman of the Securities and Exchange Commission.

The result was a stinging 500-page indictment by Mr Breeden that accused Black and others of 'corporate kleptocracy' and of 'aggressive looting' of US$425 million from Hollinger.

The first move came from the SEC, which accused Hollinger's officers of taking US$85 million from the company, then  came the regulatory authorities in Canada and the US prosecutor in Chicago.

However, the empire is a tangled web.  More than 60 per cent  of Hollinger is owned by Hollinger Inc, and Hollinger Inc is owned by Ravelston, a private holding company almost fully owned by Black and his long-time sidekick, David Radler, who is out on US$250,000 bail after pleading guilty in a Chicago court to fraud.

Everything is frozen. Black and his colleagues have been excluded from any role in Hollinger while  investigations are under way.

The now-independent Hollinger board sold the Telegraph and Jerusalem Post holdings despite Black's best efforts to block the sale.

Hollinger's Chicago and Canadian newspapers are continuing to publish but the days of massive takeovers are long since past.  The test now is survival.

Corporate vultures may eventually have at the carcass of Hollinger, but they will have to wait for the long line of creditors first.

Of the US$1 billion in claims against Ravelston, probably 90 per cent are from Hollinger and Hollinger Inc.

Although  the Telegraph and Jerusalem Post sales brought in handsome rewards, the value of claims against Hollinger is far higher than the value of the estate.

As  one insider said: 'The financial interest of Black and the others is effectively zero. We are all in the same canoe. We're tied at the hip. No one can do anything without the other.'

johngray@sympatico.ca



Black's swagger: from paper hero to empire zero