- The Washington Times - Thursday, March 22, 2007

CHICAGO (AP) — An investment banker testifying yesterday in the racketeering trial of former media mogul Conrad M. Black explained how he took command of the Hollinger International newspaper empire following an investigation of payments to top managers.

Gordon Paris said he learned that he would take over from Mr. Black, who is accused of swindling Hollinger out of $84 million, in a conversation with former Illinois Gov. James R. Thompson and other board members.

It was in November 2003 and the board members were on their way to talk with Mr. Black about problems besetting Hollinger.

“I inquired about what we were going to do about the CEO spot and I was told, ‘Congratulations,’ ” Mr. Paris testified.

“Thompson said, congratulations, that they expected me to assume the role under the circumstances and given the loss of a substantial number of executives” from the company, said Mr. Paris, the government’s first witness.

Mr. Black, 62, and three former executives are charged with plundering millions of dollars from the big newspaper holding company through the sale of hundreds of community newspapers in North America.

Mr. Black and two of the co-defendants pocketed payments from the buyers in exchange for promises not to compete with the papers in areas where they circulated. Prosecutors said the money belonged to the shareholders.

Mr. Black’s attorneys said he did nothing wrong and that if any of the deals were improper, it was the fault of his longtime No. 2 man, F. David Radler, who has pleaded guilty and promised to testify for the government in exchange for a lenient 29-month sentence and $250,000 fine.

Prosecutors called Mr. Paris to the stand to set the stage for what is expected to be a complex 12- to 16-week trial, and to testify to Mr. Black’s strong control of the company and its far-flung financial operations.

At one time, Hollinger International owned the Chicago Sun-Times, the Toronto-based National Post, the Daily Telegraph of London and hundreds of community newspapers across the United States and Canada.

All of the big papers except the Sun-Times have been sold and the name of the company has been changed to Sun-Times Media Group.

Mr. Black’s attorneys, who claim he left much of the nuts-and-bolts running of Hollinger to Radler, tried to paint Mr. Paris as ambitious for power within the company and almost drenched in corporate affluence.

Edward Greenspan, Mr. Black’s Toronto-based defense attorney, questioned Mr. Paris about how Mr. Black invited him onto the board of directors in 2003 with the understanding that he would investigate shareholder concerns about payments to a small, Black-controlled holding company called Ravelston.

Rather than work as employees of Hollinger International, Mr. Black and top executives worked for Ravelston, which in turn received annual management fees from the big international newspaper conglomerate.

Mr. Black also purportedly used his control over Ravelston to wield control over Hollinger International in which he owned a 35 percent share.

On cross-examination Mr. Greenspan asked Mr. Paris about his association with fellow board of directors members while a committee he headed was investigating the management fees. The attorney suggested it might represent a conflict of interest. But Mr. Paris said it was standard practice.

Mr. Greenspan also questioned Mr. Paris intensely about his pay.

“I’m going to suggest to you that you earned $15,805 a day in ‘05,” Mr. Greenspan told Mr. Paris. That brought lead prosecutor Eric Sussman to his feet with an objection and Mr. Greenspan couldn’t get an answer.

But the Canadian attorney got Mr. Paris to acknowledge that he had been paid $511,375 by Hollinger in 2003, when he was a board member most of the year and didn’t become an employee until November.

Dwelling on the hefty salary, fees and stock deal that Mr. Paris received from Hollinger might have been intended by defense attorneys to offset any suggestion that Mr. Black was greedy for pocketing the noncompete money and to suggest to jurors that large compensation is normal in big business.

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