Report is 'elephant in room' at Conrad Black trial

25 Mar, 2007

It may not have big floppy ears, but a thick book in play at the criminal fraud trial of fallen media mogul Conrad Black is an elephant in the courtroom just the same.
As the trial resumes for a truncated session that will last only Monday and Tuesday of next week, jurors already know the report from an internal company committee exists, but cannot hear the conclusions reached in its 500-plus pages of damning accusations.
It details how Black and his associates supposedly sucked millions of dollars from Hollinger International - the media conglomerate Black built - through a slurry of excessive management fees, questionable newspaper sales agreements and executive jet-setting. Black has maintained his innocence, calling the charges a smear job.
Prosecutors have agreed not to elicit the findings or conclusions of the special committee's investigation, or to try to introduce the substance of its report, court papers show. However, prosecutors, and Judge Amy St. Eve, have found that the committee's existence, and the nature of its investigation, remain intertwined with the charges.
The internal report - which resulted in Black's ouster - was built on interviews with more than 60 current and former Hollinger employees and directors, as well as outsiders who participated in the sales of various newspapers, financial advisers and legal advisers. The special committee that prepared it also reviewed 750,000 pages of documents.
Many of the people interviewed, as well as those who conducted the investigation and prepared the report for the company now known as the Sun-Times Media Group Inc, are likely to be called as witnesses in the trial.
"It's very prejudicial," said Chicago attorney Hugh Totten, a partner with Perkins, Coie LLP who is watching the trial. "It has phrases like 'corporate kleptocracy' in it. Defendants tend to choke on words like that."
The mere mention of the book at one session last week was enough to spark objections from defence attorneys and the first of what will likely be many side conferences among prosecutors, defence attorneys and the judge to craft a neutral reference to a report the jury must not read.
The architect of the report, Gordon Paris, was the first witness called to outline the complex corporate and ownership structure that left Black in control of Hollinger International, despite holding only a minority stake.
At one point prosecutors even carried a copy of the book to the witness stand so Paris could refresh his memory - without, of course, saying what was in the tome. While a mystery to the jury, the book will likely make repeated appearances as the trial moves into what will be weeks of detailed testimony about the financial deals on which prosecutors hope to build their criminal fraud case.

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