Black's bombast evaporates in US court

The former 'Telegraph' owner, charged with taking money from his firm, puts his case to a small-town judge. David Usborne reports
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The Independent US

He may be Lord Black of Crossharbour in London, but no one in the chancery court in Wilmington, Delaware, was paying much heed to fancy titles last week. There were serious financial fraud allegations and the fates of famous newspaper titles to consider here. And Mr Conrad Black was the man standing accused.

It was Mr Black, according to lawyers for Hollinger International, the media company that he created, who pilfered $7.2m (£3.9m) from its coffers, and Mr Black who agreed last November to pay it back, but had failed to do so. And it was Mr Black who had negotiated a secret deal to pass control of its most valuable asset, the Telegraph Group, to Sir David and Sir Frederick Barclay. Correct? Correct? Correct?

Not correct, insisted Lord Black, when he took the stand on Friday at the end of three days of testimony, given mostly by witnesses ranged against him. He had done nothing wrong. He had been falsely accused by the Hollinger board and if only the court would listen, it would understand. The money transactions had been disclosed. His deal with the Barclays was done in good faith. He wanted his good reputation back.

For almost six hours, Lord Black tried to put his case. He was deferential to Judge Leo Strine. There was no bombast from the Canadian-born biographer of Franklin D Roosevelt, although Latin did occasionally creep into his answers. He was conspicuously uncertain when grilled about documents that he had or had not signed pertaining to the missing money.

Just twice, the fury inside him simmered at the surface. His disdain for the chief lawyer for the plaintiffs, Martin Flumenbaum, was painted all over his face. Didn't Mr Flumenbaum understand that whatever else had happened, he had built Hollinger into a great company that made shareholders rich? That the Barclay deal would make them rich?

"Does that give you the right to steal other people's money?" the lawyer shot back.

Lord Black glared and his lawyers barked, "Objection!" It was close to the end of the day, and perhaps Judge Strine was weary of Lord Black, or of the case entirely. But he looked up from the bench and, without taking a breath, replied, "Over-ruled!" It seemed he was giving little leeway to the defendant.

Indeed, the judge twice intervened to press the peer on his answers. Why, exactly, had he chosen to tell nobody at Hollinger about his impending deal with the Barclays? Why had he waited to present it as a fait accompli - Lord Black's own words - when it was already done and signed?

Judge Strine had been less harsh on the other witnesses. He listened in silence as Richard Breeden, the former chairman of the Securities and Exchange Commission, repeatedly asserted that Lord Black's money had been ill-gotten and that the deal with the Barclays was his attempt to "get out of Dodge". He said nothing when Ray Seitz, a former US ambassador to London, accused Lord Black of "classic self-dealing".

For three days, in this tiny courtroom in Wilmington - a town of zero glamour, where half of America's largest companies are incorporated because of the state's favourable laws - the whole, astonishing mess of the Hollinger International affair was laid out, skinned and dissected. Now it is over, and Lord Black must await the ruling of the judge.

That will come quickly. Indeed, Judge Strine has only until Friday to decide whether to uphold the suit brought against Lord Black. If he does, the board of Hollinger will be free to adopt a "poison pill" plan to deflect the deal with the Barclays, due to close in the first week of March. In that case, the future of the Telegraph titles will again be in the air. And there may be no rescuing the reputation of Conrad Black.

Conversations outside the court on Friday evening revealed a consensus among observers that the day had not seemed to go well for the embattled peer. There had been occasional sniggering in the overflow courtroom next door, which was connected to the proceedings by closed-circuit TV, when he had given some of his answers. Lord Black was, of course, unaware of that second audience, which was surely a good thing.