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A Matter of Principle
Conrad Black
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A Matter of Principle
Conrad Black
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"I never ask for mercy and seek no one's sympathy. I would never, as was once needlessly feared in this court, be a fugitive from justice in this country, only a seeker of it."
—Conrad Black, in his statement to the court, June 24, 2011In 1993, Conrad Black was the proprietor of London's Daily Telegraph and the head of one of the world's largest newspaper groups. He completed a memoir in 1992, A Life in Progress, and "great prospects beckoned." In 2004, he was fired as chairman of Hollinger International after he and his associates were accused of fraud. Here, for the first time, Black describes his indictment, four-month trial in Chicago, partial conviction, imprisonment, and largely successful appeal.In this unflinchingly revealing and superbly written memoir, Black writes without reserve about the prosecutors who mounted a campaign to destroy him and the journalists who presumed he was guilty. Fascinating people fill these pages, from prime ministers and presidents to the social, legal, and media elite, among them: Margaret Thatcher, Tony Blair, George W. Bush, Jean Chrétien, Rupert Murdoch, Izzy Asper, Richard Perle, Norman Podhoretz, Eddie Greenspan, Alan Dershowitz, and Henry Kissinger.Woven throughout are Black's views on big themes: politics, corporate governance, and the U.S. justice system. He is candid about highly personal subjects, including his friendships - with those who have supported and those who have betrayed him - his Roman Catholic faith, and his marriage to Barbara Amiel. And he writes about his complex relations with Canada, Great Britain, and the United States, and in particular the blow he has suffered at the hands of that nation.In this extraordinary book, Black maintains his innocence and recounts what he describes as "the fight of and for my life." A Matter of Principle is a riveting memoir and a scathing account of a flawed justice system.
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[ CHAPTER ONE ]
MARCH 2010: COLEMAN FEDERAL CORRECTIONAL COMPLEX, FLORIDA
I sleep in a cubicle that shares a ceiling with sixty other identical spaces, rather like partitions in an office, except that these are painted cinder block and there are no potted plants. At 10:30 p.m., the ceiling lights placed every twenty feet or so go out. The residents turn out their cubicle lights, leaving only an overhead row of red, dimly lit panels, pierced here and there by the beam of portable reading lamps, which enable the readers among us to escape into books, letters, newspapers, snapshots, and tokens and reminders of the world beyond the gates. In the morning, daylight creeps past the condensation generated by the confrontation between the Florida heat and the fierce air conditioning of the Federal Bureau of Prisons into the outside cubicles through narrow rectangular windows grudgingly set in the concrete walls.
Here, we concern ourselves with how many postage stamps (the local currency) are needed to buy an extra notepad. We see and hear the talking heads on television in the activities room or, in my case, read in the newspapers of the steady failures or crises of great institutions: AIG, General Motors, Citigroup, the State of California, the New York Times, the Harvard University Endowment. How could this country have become so incompetent, so stupid, and why was this debacle so unforeseen? The pundits have the usual uninformed answers, not greatly more well thought out, and less entertaining, than those of some of my fellow residents. Lying in my bunk after the lights have gone out, I reflect on the ludicrous demise of my great love affair with America.
Bemused by the economic and political shambles, created largely by people I have known, I fight on from this absurdly shrunken perimeter for recovery of my liberty, reputation, and fortune. I still expect to win.
My prison number, 18330-424, is stamped on my clothes and mandatory on all correspondence. I am sixty-five years old. I entered these walls a baron of the United Kingdom, Knight of the Holy See, Privy Councillor, and Officer of the Order of Canada, former publisher of some of the world’s greatest newspapers, and author of some well-received non-fiction books. In December 2007, a courteous federal district judge in Chicago sentenced me to seventy-eight months in a federal prison and imposed a financial penalty of $6.2 million. This is all winding its way through final appeals and is completely unjust, but so are many things. I was convicted of three counts of fraud and one of obstruction of justice, of all of which I am innocent. Three charges were dropped and nine led to acquittals. I have gone through but survived straitened financial circumstances, have sold two of my homes, and am responding to and initiating endless civil litigation. For the last six and a half years I have been fighting for my financial life, physical freedom, and what remains of my reputation against the most powerful organization in the world, the U.S. government.
My shrunken newspaper company, once owner of distinguished titles in Britain, Canada, Australia, and America, as well as the Jerusalem Post, was now bankrupt under the dead weight of the incompetence and corruption of my enemies, who have hugely enriched themselves under the patronage of American and Canadian courts of law and equity. I am estranged from some of my formerly professed friends, including a number of famous people, though in greater solidarity than ever with some others. Much of the press of the Western world was long agog with jubilant stories about the collapse of my standing and influence. For years I was widely reviled, defamed, and routinely referred to as “disgraced” or “shamed” and
dp n="25" folio="3" ?“convicted fraudster.” (This was the preferred formulation of the London Daily Telegraph, of which I was chairman for fifteen years.) In light of my lately improving fortunes most of my less rabid critics are now hedging their bets. Whatever happens, this will not be the end of my modest story. But it seems an appropriate moment to update it.
OCTOBER 2003: MY HOME, KENSINGTON, WEST LONDON
London’s yellow afternoon light filtered in from windows overlooking gardens on three sides of my room. All about me was the reassuring evidence of an active career and an eclectic range of interests. Shelves of leather-bound first editions giving every side of the French Revolution and Napoleonic Wars. Depictions of the great English cardinals Henry Manning and John Henry Newman. Jules Mazarin and the esteemed diplomat Ercole Cardinal Consalvi, strikingly rendered, looked down impassively upon, among other things, a small bust of Palmerston, a fine crystal model of the Titanic given to me by my tragically deceased driver, Tommy Buckley, and an iron copy of the death mask and hands of Stalin that I had bought from the estate of the great British maverick politician Enoch Powell. Gifts: a shield from Chief Buthelezi of the Zulus, a naval painting from our directors in Australia, the extravagantly inscribed latest memoirs of Henry Kissinger and Margaret Thatcher, each evoking interesting times and powerful friends, historic figures who had helped me and whom I had helped.
My lengthy biography of Franklin D. Roosevelt lay in galleys on my desk. This was a room that had weathered all efforts of interior decorators and remained comfortable and practical for my work. Good chairs and reading lamps, a large and deep sofa on which I sometimes napped, its antique decorative pillows turned backward to hide the scorching received when one of my younger son’s friends fell asleep on it and knocked over a lamp. Though large, the room exuded a sense of safety, a barricade at the far end of the house away from prying eyes and noise. All the same, increasingly I felt an indefinable foreboding. Mazarin, the protegé and successor of Cardinal Richelieu, could have warned me. He knew the signs of insurrection well. All was silent; I was uneasy, but my vision was impaired.
I knew well enough where the trouble lay. Some of our large institutional shareholders were attempting to break up the newspaper company I had created, Hollinger International, in order to sell it off for a good short-term price while newspaper stocks were sluggish but newspaper enterprise values – the sale of newspapers as going concerns – were still buoyant. Now, firmly riding the hobby horse of shareholder activism, a backdoor attempt to overthrow me and achieve the sale was in progress – though I didn’t entirely grasp it at the time. All I knew was that allegations of overly generous payments to myself and other executives were keeping business writers, especially those of competing newspapers, phoning around for colourful anecdotes to illustrate our supposed extravagance with company funds. In response, I had agreed to establish a special committee to examine these matters, confident of our complete vindication. Now these committee members were beavering noisily away, with the concentration and attitudes of antagonists. I did not know then how easily a special committee could decapitate even a controlling shareholder. But I knew enough to be uneasy. If I could be rattled severely enough, the company could be sold and all the shareholders instantly gratified. I thought more could be achieved by gradualism, selling assets when they were ripe, and separately to targeted buyers, as few companies would be attracted at top prices to such geographically disparate newspaper properties. I also considered, and the directors and shareholders professed agreement, that these were decisions for the managing and controlling shareholders who had built the business. This was the core of what became a huge controversy.
FROM MY EARLY YEARS, I thought that publishing large and high-quality newspapers was the most desirable occupation of all: this was a business that could offer commercial success, political influence, cultural and literary potential, and access to everything and everyone newsworthy in every field. As a young person I read about famous newspaper owners such as W.R. Hearst, Lord Beaverbrook, Lord Northcliffe, Lord Rothermere, Colonel Robert McCormick, and Canadians that my father knew: J.W. McConnell, Joseph Atkinson, George McCullough, John Bassett, the Siftons.
During a break in my university years, I took over an uneconomic weekly newspaper in Knowlton, Quebec, about fifty miles east of Montreal, from my friend Peter White, who had become a special assistant to the premier of Quebec, Daniel Johnson. I paid Peter $500 for half of the Eastern Townships Advertiser, approximately $499 more than it was worth. I wrote, edited, and laid out the eight-page half-tabloid and sold whatever advertising could be had in the elderly English-language minority of that area, who lived chiefly from the avails of maintaining and milking the country houses of wealthy Montrealers. I even dealt with some of the circulation distribution. In winter, the wind whistled across frozen Brome Lake, and I often needed snowshoes to get to and from my car. I read a great deal and found the life of a coureur de bois exhilarating, especially when the first signs of spring began to appear.
When I was in my third year at the Laval University law school, Peter White and I, together with David Radler, a new acquaintance Peter introduced me to, bought the insolvent Sherbrooke Daily Record, another twenty miles east of Knowlton. This newspaper had a circulation of seven thousand. Its press had been repossessed by the manufacturer and it was in dire straits. We paid only Can$18,000 for it. I became the first university student, at least in Canadian history, to be a publisher of a general-interest daily newspaper. David Radler, who was almost a caricature of a penny-pinching businessman, focused entirely on costs and revenues. He was alert, suspicious, and often entertaining.
I had moved from Toronto to Quebec in 1966, suffused with enthusiasm for Canada as a country that had the advantage of having the two greatest cultures of the West within itself. I became fluent in French, studied the civil law, and wrote a book about Quebec’s longest serving and most controversial premier, Maurice L. Duplessis, which has stood as a serious work on the subject.
I moved back to Toronto in 1974, just before my thirtieth birthday, exasperated with Quebec’s endless threats to secede from Canada – while retaining all the economic benefits of Confederation, including huge transfers of money from English Canada in institutionalized annual Danegeld. I became a fairly vocal and widely publicized advocate of a strong line against Quebec separatists, suspecting, correctly, that they could never get near half the votes without an umbilical association with Canada that in effect combined official independence in the world with continued provincial dependence, both eating and retaining the cake. The whole concept was a fraud. I was also an advocate of transforming Canada into a greater enterprise state than the United States, one that could, by its low crime rate and tax reductions, attract industry and people that would otherwise go to the United States or had already moved there. My views were widely mistaken as annexationist – that is, advocating federal union with the United States. I made the point that Canada would be better off making a deal with the U.S., including instant parity for our 65-cent dollar, than continuing endless fruitless tractations with Quebec separatists who wanted concessions but would never make a durable agreement.
However I was seen, I couldn’t regard myself as a pillar of the Canadian establishment, which at that time, it seemed to me, operated a back-scratching, log-rolling operation that took care of its own but underperformed the vast potential for the country. As much as I was out of favour with the comfortable Canadian centre-right, I could never make common cause with the Canadian left because of their anti-Americanism and their addiction to high taxes and excessive unionization and wealth redistribution and their imitative mediocrity. They received almost no international attention. I often felt like a party of one.
MY ENTRY INTO THE CORPORATE WORLD was a splash. In 1978, following the death of its incumbent chairman,1 one of Canada’s famous holding companies, Argus Corporation, of which my father had been a sizable shareholder, became the subject of a sharp takeover struggle. My parents had died only ten days apart in June 1976, and my brother and I now had our father’s 20 per cent of the shares of the company, the Ravelston Corporation, that owned 60 per cent of the voting shares of Argus Corporation. Factional disagreements ensued. My brother and I were one of the factions, and we were successful. What we took over in Argus was a mixed bag of assets in an obsolete structure.2 There were influential but not really controlling shareholdings in Massey Ferguson (tractors and farm equipment), Dominion Stores (supermarkets), Domtar (forest products), Hollinger (through a subsidiary, iron ore royalties), and a genuine controlling interest in a radio station and television company. The reputation of the founders had made Argus Corporation famous, but the reality was a moth-eaten hodgepodge of positions of questionable value.
Through the Byzantine financial structure the former owners had created, Argus itself owned 14 per cent to 24 per cent of the first four of these companies. Four-fifths of Argus’s shares did not vote. My brother and I now had 57 per cent of a company that had 51 per cent of the company that owned 60 per cent of the shares that voted (i.e., we had 12 per cent of the Argus voting shares and 8.4 per cent of its total equity, as we owned some of the non-voting shares separately). And beneath that were the 14 per cent shareholdings, apart from the radio and television business. Our interest had an apparent economic value of about Can$18 million, and there were significant loans against that. This was my baptism in close-quarters financial manoeuvrings, and I saw both their possibilities and their hazards.
I set about trying to refashion the company toward something the owners would really own and would have some aptitude to manage. In my 1992 book detailing some of the complicated manoeuvres, I cited Napoleon’s dictum that “mass times speed equals force.” In those early business years, I had had little mass but great speed. My corporate performance was far from Napoleonic, but I got on. Deals now occurred with such profusion and rapidity that the Toronto Star referred to me as “Canada’s answer to [the American television program] Let’s Make a Deal.” I gave the Massey Ferguson shares away to the company pension plans to assist in a refinancing, which did then occur and helped to save the company. Over several years, the Domtar shares were sold, the supermarket and radio and television assets were sold, and energy assets were bought and sold. The group was consolidated, with something close to a real owner, and refocused in the newspaper business. All this activity, which was more financial engineering than operational progress, attracted the interest of regulators, who actually rewrote the Canadian “complex transaction” rules in my honour. The convoluted progress through these various businesses stirred up some controversy in Canada at times, but all was resolved without much difficulty.
I was a financier, and a fairly agile one, but still only an industrialist in the newspaper business. I did not seek out controversy, but as someone who expressed controversial views trenchantly and hovered about several different vocations, I was bound to attract a fair bit of comment, especially in such an understated country as Canada. I enjoyed debate and political argument but had an imperfect sense of public relations and never saw the need to concern myself with it. As a result, I became a catchment for many traits and opinions I did not hold, dwarfed by a caricature public image that has lurched about like a clumsy monster for decades. Though wounded at times by this portrayal, I never grasped the real danger in it and simply made a virtue of necessity: I boxed on, still am.
The transition to being truly involved in the newspaper business again came when, on behalf of our company, I acquired control of the Daily Telegraph in London for Can$30 million in 1986. From this, all else follows. The newspaper was suffering from an aging readership, antiquated equipment, all the usual British labour problems, and elderly but conscientious management. We installed an almost entirely new management team and ethos and expanded the Daily Telegraph to be a full-service newspaper. Two-thirds of the aged employees were negotiated into voluntary retirement, which they sought but had been unable to consider under the company’s frugal pension scheme, and the Telegraph titles recovered admirably. Robert Maxwell, the egregious proprietor of the Daily Mirror, whom I did not yet know, said, “Mr. Black has landed Britain’s biggest fish with history’s smallest hook.”
AT A MEETING OF THE DIRECTORS of The Telegraph plc in December 1986, the owner, Lord Hartwell, fainted. His loss of consciousness was prompted by the realization he had lost control of the newspaper that his family, the Berrys, had acquired in late-Victorian times. The boardroom sounded to me like something out of a Mitford novel. “Daddy, Daddy,” called his son Adrian from one end of the boardroom table. His other son, Nicholas, was hissing at his father for what he thought was a rotten deal and at the Canadian “predators” for taking up the deal. Rank and decorum were firmly maintained throughout by Hartwell’s admirable secretary, who stood over him as the paramedics arrived, pronouncing, “I will not allow just anyone to lay hands on Lord Hartwell.”3
Hartwell had done his best to maintain the editorial excellence of The Telegraph plc but had dragged it almost to bankruptcy largely through an ambitious attempt to install modern presses in two vast plants in Manchester and London. But he had made no effort to arrange demanning from the unionized workforces, nor to arrange long-term financing with banks, and just kept writing large and extraordinary construction payments against a current account.
Hartwell, who fortunately suffered nothing more than a fainting spell, remained chairman for another two years as we sorted things out. I would not consider treating him abruptly. The fissiparous Nicholas Berry vowed eternal vengeance and did everything in his power to poison the waters with concocted stories about my associates and me. Adrian Berry, an exceedingly amiable British eccentric liked by all, with esoteric scientific interests that entirely possessed him, remained at the Telegraph as its science writer and a director. Mercifully, the pestilential Nicholas peevishly resigned.
Gaining control of The Telegraph plc in the U.K. changed my life. As its proprietor, I finally had a meaningful political voice (which I did not at that point have in Canada) and access to echelons of international decision-making I had not previously enjoyed, because of the influence of one newspaper and the British custom of deference to national newspaper owners.
For seventeen years the fortunes of the Telegraph and its staff were pre-eminent in my thoughts. Runn...