Black Says Case is Far from Over Despite Jail Sentence

By Romina Maurino
From Canoe.ca

Conrad Black appeared unfazed and as determined as ever Monday after a U.S. court sentenced him to six and a half years in prison for defrauding shareholders of his former newspaper empire of millions of dollars.

His lawyers vowed to appeal the sentence, and Black, though apologizing to the court for huge shareholder losses at the Hollinger newspaper group, heaped the blame on executives who ousted him and took over the company more than four years ago. On top of his time in jail, Black's convictions for fraud and obstruction of justice also carry a US$125,000 fine and the forfeiture of US$6.1 million.

Standing before Judge Amy St. Eve in a Chicago courtroom Monday, his hands gripping a podium, the former newspaper magnate was told he will serve a total of 78 months in prison and afterwards a two-year period of unsupervised release. "No one is above the law in the United States," St. Eve told Black.

"I cannot understand how someone of your stature could engage in the conduct you engaged in and put everything at risk," she said. "But in the United States, Mr. Black, there is equal justice under the law."

After giving Black a lighter than expected prison term, St. Eve also sentenced three other co-defendants who were convicted of fraud earlier with him. Toronto-based executive John Boultbee, former CFO of the Hollinger group of newspaper companies controlled by Black, was sentenced to 27 months in jail and will pay $152,500 in restitution and a $500 fine.

Meanwhile, Peter Atkinson, chief legal counsel for Hollinger, was sentenced to 24 months in jail and was given a $3,000 fine. And late in the day, Mark Kipnis, a senior executive at Black's former U.S. operating company, Hollinger International, was given five years' probation, including six months of home detention with an electronic tag.

Kipnis got no jail time or fine and was ordered to do 275 hours of community service. About a dozen members of Kipnis's family smiled and some cried and hugged him when the sentence was handed down. "I physically shook, I had no sense of that," a smiling and red-eyed Kipnis said after the verdict.

Earlier Monday, lead prosecutor Eric Sussman asked that Black be taken immediately into custody,his own lawyers responding that Black was neither a danger to society nor at risk of flight. "He's not one to run and hide. He's not a coward," said lawyer Marc Martin.

St. Eve gave Black a March 3 date to report to a federal prison. She recommended Eglin Prison Camp, not far from his Palm Beach, Fla., mansion, but officials later said the federal facility - the first to be dubbed "Club Fed" for its lax rules and relative comfort - had been closed. Later, the recommendation was changed to the Coleman Federal Correctional Complex in Florida.

In a brief statement to the court before sentencing, Black said he was sorry about the losses suffered by Hollinger shareholders, telling St. Eve "we have the verdicts we have and we can't retry this case."

"I do wish to express profound regret and sadness for the severe hardship inflicted on all the shareholders" when Hollinger stock plummeted after allegations of corporate wrongdoing against Black and other executives.

Black spoke softly and without some of his former bluster, saying he has "never once uttered one disrespectful word about this court, your honour, the jurors or the process." Black also thanked St. Eve for her openmindedness, considering that he came in with an "almost universal presumption of guilt."

But he stopped short of taking any blame for the crimes, saying only that he was sorry for the money lost and the illnesses suffered as a result of the trial. Black said Hollinger's stock was still in double digits when he was removed as CEO and suggested that the collapse of the company was the fault of those who followed him.

"I do wish to profess my profound regret and sadness at the severe hardship of all the shareholders at the evaporation of $1.8 billion in shareholder value under my successors," he said defiantly.

Black and the others were originally charged with swindling shareholders out of an estimated US$60 million by collecting payments from purchasers of Hollinger's U.S. and Canadian newspapers. The payments were in exchange for promises not to return and compete with the papers' new owners.

The Hollinger group once controlled a chain of big-city Canadian dailies, the National Post, the London Telegraph and the Jerusalem Post, as well as the Chicago Sun-Times and hundreds of smaller publications. Most of those assests have been sold.

The Black trial was one of the last high-profile fraud cases in which U.S. prosecutors, stocks regulators and others cracked down on white collar crime in the wake of the Enron Corp. scandal that wiped out billions of dollars of stock value about five years ago.

Besides tough new U.S. rules that required more detailed corporate disclosure to shareholders, U.S. prosecutors also won jail sentences against Martha Stewart, former WorldComm CEO Bernie Ebbers, Adelphia cable group CEO John Rigas and executives of Enron and numerous other companies accused of corporate fraud and wrongdoing. Earlier Monday, Black had walked into the courthouse confident and smiling, accompanied by his wife Barbara Amiel Black and daughter Alana Black.

After the sentencing he was still smiling, offering only "No comment," as he left the courtroom with his family and a tight-lipped "the fact that we're appealing speaks for itself," as he and his family edged through a knot of reporters and into the familiar Cadillac Escalade to be whisked away.

In a later e-mail to The Canadian Press Black said: "This is far from over, but I won't say more while an appeal bond is being sought". Defence lawyer Eddie Greenspan said he was not happy with the verdict and "I'm not pleased today that he got a single day in jail."

"But, given when we came into in this trial, we were facing allegations that included $90 million in (anti-racketeering law) RICO-related fraud and we were facing what might have been tantamount to life in jail," Greenspan said. "At the end of the day to end up where we ended up is a hell of a lot better than where we started, but it's not over."

"Conrad has good appeal lawyers and hopefully he's going to prevail on appeal," Black's U.S.-based defence lawyer Edward Genson said as he left court. "I'm daily impressed by Judge St. Eve and I thought she gave us a fair trial and a fair hearing."

Author Peter C. Newman, a longtime Black critic, said Monday's sentence could make it harder for his defence team to win an appeal to a higher court. The 79-year-old author said Black was rescued by Eve, who gave him a more lenient sentence than expected.

"She is very ambitious and she wants to be on the U.S. Supreme Court and she doesn't want any successful appeals in her record," Newman said. St. Eve cut off "all the avenues to a successful appeal - because she was so lenient with him that he basically has no reason to appeal."

Black, however, will "go through the motions," said Newman. "I don't expect he will win." Earlier, St. Eve made several rulings that were good news for Black and his team. She used more lenient sentencing guidelines for Black and also dismissed the prosecutor's request to consider the full amount of the alleged fraud - $32 million - instead of the $6.1 million estimated by a pre-sentencing report.

As well, she added, Black's former partner David Radler was offered a plea bargain to testify against Black his deal under the 2000 guidelines, and he is "at least equally culpable as Mr. Black." Radler has agreed to go to jail for 29 months and pay a fine and will be officially sentenced next week.

St. Eve dismissed a government's request to consider Black the ringleader of the fraud scheme, saying that "the evidence at trial demonstrates his co-defendant Radler was calling just as many shots in directing, in many instances, where the money was going."

She also noted it was Radler who was in charge of the running media company Hollinger's U.S. operations and ordering the money. But she did dock Black a few points for his lack of contrition ahead of sentencing.

Jeffrey Steinback, Black's chief sentencing counsel, told court that Black is a respected historian and loving father fighting for his soul, whose lack of remorse stems from his heartfelt belief that he did nothing wrong.

Black, he said, is not the bank robber prosecutors claimed but an entrepreneur, writer and devoted husband. "Nobody can seriously contend that Conrad would do anything to cause that company distress." An unwillingness to see Black's human side led, in part, to the obstruction of justice charge, he added.

Sussman said regardless of defence contentions that Black would not have pocketed money from his own company, the convictions prove otherwise. "What brought him here today is his own greed and his own disdain for the rule of law," Sussman told court.

It's a mistake to interpret Black's brazen assertions of innocence outside court and rejection of the verdict as righteous outbursts, Sussman said, adding that Black's attitude "goes beyond defiance." "It's the next step - it's disrespect for the system."

Patrick Fitzgerald, the U.S. Attorney for the Chicago area, said he was pleased with the sentence because it sends a message that white collar crime doesn't pay. "Mr. Black is going to jail as a convicted felon, convicted of fraud. So we proved the case," Fitzgerald said outside the courtroom "The bottom line is Mr. Black will do 6 1/2 years in jail. That's a serious amount of time."

"We feel very optimistic that we have very good issues on appeal, that the evidence does not establish that Conrad committed any of the crimes of which he was convicted, but of course we'll have to see what the court of appeals thinks about it," Black appeal lawyer Andrew Frey said outside court.

Eugene Fox, a managing partner at Cardinal Capital Corp., said in a victim impact statement that as an institutional shareholder of Hollinger stock, he was called an "idiot" and lied to "repeatedly and openly."

"We trusted these individuals with the retirement savings of our clients," Fox said. "These men were concerned only with their own social desires and private ambitions."

Meanwhile, the Ontario Securities Commission said Monday that a hearing involving Black previously set for Tuesday has been put off until at least Jan. 8. The OSC action against Black, Toronto holding company Hollinger Inc., and associates Radler, Boutbee and Atkinson alleges diversion of up to C$89.7 million along with incomplete and misleading disclosure. The Ontario commission's action dates back to March 2005 but was put off during the U.S. criminal proceedings.



Mulroney Offers No Explanation
Harper rode a wave of outrage over the Liberal scandals all the way to 24 Sussex.

By Linda McQuaig
From Linda McQuaig.com
2007

There's already an energetic campaign by the Conservatives and their supporters to keep us distracted from the central image in the Mulroney-Schreiber affair.

That central image is former prime minister Brian Mulroney, in secret meetings in hotel rooms shortly after leaving office, accepting $300,000 in cash from lobbyist Karlheinz Schreiber, a key figure in the billion-dollar sale of Airbus planes to Air Canada.

It's a hauntingly powerful image — an image more potentially damaging than any that emerged from the Gomery inquiry into the scandals of Jean Chrétien's Liberal government. Imagine if there'd been reports of Chrétien in a hotel room accepting bagloads of cash.

So as the Conservative spin doctors do their work, keep the image of what went on in those hotel rooms front and centre in your mind, and wait for an explanation. Because Mulroney hasn't given one.

In his public comments in Toronto on Monday night, Mulroney bellowed with outrage, portraying himself a victim of a vendetta by bureaucrats and journalists. But he offered no explanation as to why he accepted the cash, nor why he didn't report it in his tax returns at the appropriate time.

All this is a nightmare for Prime Minister Stephen Harper, who rode a wave of outrage over the Liberal scandals all the way to 24 Sussex. In order to retain his credibility as a crusader for clean government, Harper has now been obliged to call a public inquiry into the dealings of Mulroney, his former mentor and fellow Conservative.

Harper made it sound as if his decision to call an inquiry was based purely on allegations by Schreiber. This is convenient for Harper (and Mulroney), since Schreiber can be dismissed as unreliable. After all, he's currently in jail fighting extradition to Germany, where he faces charges of bribery, fraud and tax evasion.

But the case doesn't hang on Schreiber's word. Mulroney himself has indirectly confirmed receiving the $300,000. Indeed, he's paid tax on it, filing a voluntary tax disclosure — a practice permitted by Canada Revenue Agency — to correct his earlier failure to report the payments in the tax periods in which he received them.

Perhaps Mulroney has an explanation for the payments — an explanation he's chosen not to share with the public. His spokesman Luc Lavoie has referred to the payments as a "retainer".

Mulroney has greatly contributed to suspicions by declining to acknowledge his financial dealings with Schreiber, even throwing investigators off track. When the RCMP launched an investigation in 1995, Mulroney sued for libel and testified under oath that he had only met Schreiber for coffee "once or twice" and "had never had any dealings with him".

Really? Does Mulroney not consider the payment of $300,000 some form of "dealing"? If he had no "dealings", what was the payment or "retainer" for? On the basis of Mulroney's testimony, the Canadian government ended up paying Mulroney a settlement of $2.1 million. But there's much more at stake here than money. What's at stake is the most basic public interest — whether Canadians can have confidence in the integrity of our political system.

As the inquiry proceeds, the Conservatives will attempt to muddy the waters with a barrage of partisan counter-attacks. Mulroney will suck up precious airtime casting himself as the injured party. All this sound and fury is designed to distract us. Ignore it. What matters is what happened in those hotel rooms: a former prime minister, a lobbyist and $300,000 in cash.



Social Programs Outgunned
Canada's military has been on the receiving end of almost all of Ottawa's new spending.

By Linda McQuaig
From Linda McQuaig.com
2007

With Ottawa expecting a budget surplus of more than $14 billion this year, the debate is on in earnest: Should there be tax cuts... or tax cuts?

As federal surpluses have ballooned wildly in recent years — theoretically increasing our options as a country — in reality, most of the options have been quietly removed from the table. A front-page headline in the Globe and Mail last week declared: "Swelling surplus heightens tax cut hopes."

Nowhere in the article does it even mention the possibility that any portion of the swelling surplus could be invested in social programs — such as health care and education — despite the fact that polls have consistently shown Canadians strongly favour this sort of social investment over tax cuts.

While the Harper government avoids putting surplus funds into social programs, it has found a new favourite place to direct our surplus tax dollars: the military. One of the most dramatic changes — and one that has received surprisingly little attention in public debate — is the way Canada's military has been on the receiving end of almost all of Ottawa's new spending.

Canada will spend $19.4 billion on the military by 2010 — an increase of $3 billion a year over our 2007 military spending, and the highest level since World War II, notes Steven Staples, a defence analyst for the Canadian Centre for Policy Alternatives.

All this is the product of heavy lobbying by Washington and by corporate and pro-military groups in Canada, such as the influential Calgary-based Council for Canadian Security in the 21st Century, whose founders include well-heeled members of the Canadian elite like Fredrik S Eaton and Sonja Bata.

While clearly pleased with Ottawa's higher military spending, the pro-military set sees these extra billions as just a prelude to still bigger military budgets. For instance, another Calgary-based pressure group, the Canadian Defence and Foreign Affairs Institute, is advocating pushing our military spending to 1.5 or 1.6 percent of GDP, which would divert an additional $6 billion a year or so to the military.

These groups argue Canada spends less on its military than our NATO allies — a conclusion they reach by measuring military spending as a percentage of GDP. Using this measure, our military spending looks smaller than that of Latvia or Slovenia or Estonia. But that's only because Canada has a much bigger GDP than any of these tiny NATO countries.

If we measure actual dollars spent, Canada spends vastly more — well over 10 times more — than these three little nations combined. In fact, Canada is now the sixth largest military spender in NATO, notes Staples.

Canada's increased military spending is of course funding our combat mission in Afghanistan — a mission that a majority of Canadians oppose but that the Harper government is keen to continue. On a CTV broadcast last April, then Defence Minister Gordon O'Connor explained why Ottawa needed 120 new tanks: "Afghanistan and these types of engagements are the future for 10, 15 years."

The Harper government has managed to cultivate a media image as moderate and well within the Canadian mainstream. But its spending priorities tell another story. While it has lavished money on the military, it has been miserly when it comes to social needs, even cancelling the fledgling national child-care program.

It's hard to imagine that, if Canadians really understood the choices available, they'd favour spending an extra $3 billion a year on the military — rather than on their own children.



The Economic Costs of Poverty
Ending child poverty has economic as well as moral benefits

By Ed Finn
From CCPA Monitor
2007

The main arguments raised for reducing the appallingly high rate of childhood poverty in Canada have mostly focused on its social costs--on the misery and deprivation inflicted on our youngest and most vulnerable citizens.

This is indeed the most compelling reason for ending the impoverishment now blighting the lives of one in every six children in Canada. The moral case for lifting them out of poverty is so strong that it should have impelled our political and business leaders to take the necessary remedial action long ago. Their continued indifference to this moral outrage suggests that appeals to their conscience are never likely to work.

But there’s a powerful anti-child-poverty case to be made on economic grounds, too. Politicians and CEOs may be heartless, but any proposed action that would boost the GDP should appeal to their business-first bias. At least, it should unless they lack brains as well as hearts.

It shouldn’t take all that much intelligence, surely, to realize that people mired in poverty when young are likely when grown up to engage in criminal activities, to be less skilled and productive workers, and to be ill more often and thus require more costly health care treatment.

The Center for American Progress (CAP), a progressive think-tank in Washington, recently did a study on the economic costs of child poverty in the United States. Their researchers’ estimated figures are staggering. They calculated that Americans who were poor as children—and there are now 37 million of them—are much more likely than other citizens to commit crimes, to need more health care, and to be less productive in the workforce.

One CAP researcher, Harry J. Holzer, described the results of their study to a House Ways and Means Committee hearing last January. He told the stunned Congressmen that the costs to the U.S. in crime, health care, and reduced productivity associated with childhood poverty amount to an estimated $500 billion a year. This breaks down to about $170 billion a year in increased crime, $160 billion in increased health care costs, and another $170 billion in decreased productivity.

Now, we have to be careful about applying these U.S. statistics to Canada. We can’t just make a demographic projection and assume that, because our population is one-tenth that of the U.S., the overall economic cost of child poverty in this country amounts to one-tenth the U.S. figure, or about $50 billion a year. It could be less, it could be more. On the one hand, there may be a lesser propensity for poor kids in Canada to become criminals when they grow up, but on the other hand, because of our universal public health care system, the per-capita costs of treating the sickness-prone poor in Canada is probably higher.

Even if the economic costs of child poverty in this country were as “low” as $40 billion, that’s still an awful lot of money being wasted—billions spent, in effect, to maintain a scandalously high poverty rate rather than reduce or eliminate it.

Are our politicians and CEOs really this stupid? Can’t they see that investing $40 billion a year in poverty reduction would save the same amount or more in crime, health care, and low-productivity costs? The money is being spent (mis-spent), anyway, so why not divert it into a constructive channel? It would fund an effective campaign to give every Canadian child a decent upbringing — free from poverty and hunger, free to get the best possible education, free to live in adequate comfort and security.

How many break-ins and robberies in Canada are committed from desperation by people deprived of the legitimate means of earning money? How many violent crimes are committed by people so embittered by a poverty-stricken youth that they vent their rage in anti-social behaviour? Such crimes, of course, are inexcusable, but they could also be preventable. If we provided everyone with a safe, secure, and happy childhood, we’d have a much safer and secure society.

The same rationale applies to health care and incomes. Poor people tend to have poor health because they’re denied proper nutrition, hygiene, and preventive care as children. Poor kids are also denied the physical and mental (and emotional) potential to acquire the best education, and so many of them end up with low-waged, dead-end jobs—or no jobs at all.

A recent UNICEF report ranked Canada in a dismal 19th place among 26 rich nations in its rate of child poverty. It’s shameful, it’s unpardonable—and it’s as much an economic as a moral disgrace because the financial means to end child poverty in this country is so readily available.

The specific measures to achieve this goal would include a national child care program to allow poor parents to get waged work; big improvements in welfare rates and other subsidies; more and better low-cost housing; lower tax rates on the working poor; greater access to job training; higher minimum wages; and more unionization and collective bargaining.

And if the moral imperative for taking these initiatives is not enough to persuade the skinflints in our boardrooms and legislatures, the enormous economic benefits certainly should be.