Temper flares at Black trial

A lawyer for Conrad Black repeatedly shouted down a former board member of the toppled media magnate’s newspaper company Monday, demanding to know how she could have ignored documented references to executives’ disputed payments in the sale of newspaper properties.

Lawyer Edward Greenspan’s occasionally heated cross-examination of former Hollinger International Inc. board member Marie-Josee Kravis centered on why she did not ask any questions of Black at the time of the accused fraud.

“If you had any question about this paragraph [containing references to payments to executives], you could have asked, couldn’t you? You could have called, you could have e-mailed?” Greenspan asked Kravis, an economist who is married to billionaire financier Henry Kravis.

Admonished to stop arguing with Kravis by U.S. District Judge Amy St. Eve, Greenspan quipped to Kravis: “I won’t do it if you won’t.”

But the friction did not end there over how Hollinger’s board had approved so-called noncompete payments to Black and other senior executives from the proceeds of asset sales.

Federal prosecutors have described the noncompete payments, which ensured that executives would not resume business in the same markets where they were selling off newspapers, as outright thefts from Hollinger International and shareholders that totaled $60 million.

Black, a member of Britain’s House of Lords, faces years in prison and $92 million in forfeitures if convicted. The trial, expected to last three months, is in its seventh week.

Black is on trial with three former associates.

Kravis was among those who had voted to oust Black in late 2003 as chief executive of the company that he helped build.

Kravis and another board member, former U.S. Ambassador to Germany Richard Burt, have testified for the prosecution about how they were duped into approving asset sales that included payments to Black and two other former executives on trial. A fourth executive is accused of helping arrange the payments.

The former board members said the payments to executives were sometimes left out of oral presentations to Hollinger’s board or were glossed over. In every case, Kravis said, she was told by Black and other executives that the buyers had demanded the noncompete agreements from executives.

Greenspan cited 11 company documents through 2003 that he said Kravis would have read as a board member in which the noncompete agreements were at least partially spelled out. Yet she had gone along and approved the deals, he said.

“I’m saying they were only partly disclosed in some of these,” Kravis protested.

At a few points in the testimony, when asked to review documents in which the payments were revealed, Kravis responded: “I missed it.”

“From the chairman of the board to the ordinary shareholder, they relied on you, correct?” Greenspan asked, referring to her fiduciary duty as an independent company director.

“Well, they relied on everyone on the board,” Kravis replied.

The defense has argued that Black depended on what turned out to be bad advice from his outside Canadian law firm and accountants about whether it was necessary to disclose the payments.