News

The debate over the crime and punishment of Conrad Black is going to be chewed over for the rest of our lives, let alone his.

But there are a couple things that have come into clearer focus in the week since the jury found him guilty of three counts of mail fraud and one of obstruction of justice. Let's talk about the crime first. Lord Black, who is appealing his conviction, said he was cleared of the "central charges" in the case, nine of them in all, including payments relating to the sale of most of his Canadian newspapers in 2001 and to the champagne-soaked lifestyle he enjoyed, in part, on his expense account.

That is true, but one scheme that he and three colleagues were convicted of was blatant and actually kind of dumb.

I'm referring to what was known in court as "APC," short for American Publishing Co. This was the name of the chain of hundreds of small-town newspapers that David Radler built up over the years and began selling off in the late 1990s when financial pressures pinched Hollinger International, the Chicago-based public company where he was president and Lord Black was chief executive.

While much of the trial focused on so-called non-compete agreements that were signed when newspapers were sold off, APC involved an agreement that Lord Black, Mr. Radler and the others signed that was made up out of whole cloth.

For his share, Lord Black received $2.6-million. But there was no actual transaction pegged to APC — at the time those non-competes were drawn up, the division consisted only of one remaining weekly paper in Mammoth Lakes, Calif. (a copy of which prosecutors purposefully handed to jurors to peruse and pass on). And how do you agree not to compete with your own subsidiary anyway? A huge image of the cheque sent to Lord Black for his share was projected on a giant screen in the court. The prosecutor also pointed out that the Mammoth Lakes paper was subsequently sold to a private company owned partly by Lord Black and Mr. Radler for $1.

Those dramatic touches aside, the unearthing of the APC deal was among the more striking reasons Lord Black and Mr. Radler were kicked out of Hollinger in the first place back in November, 2003.

Remember? Lord Black's initial reaction to the disclosure of these and other unauthorized payments totalling $32-million was that it had been some kind of administrative error by underlings and that he would simply pay back his share of the money and move on. That's what Mr. Radler did, along with Peter Atkinson, a colleague who had also received some of the funds. But, then, Lord Black abruptly changed course and refused to pay, saying his own investigation of the payments showed that they were legit and he was going to fight to keep control of the company he built.

Four years later, the outcome of that fateful decision is that he has been disgraced, is on the brink of heading to jail, but at least can find comfort in the fact that the jury did not find evidence to convict him on most of the payments in question.

In light of APC, Conrad Black's defiance has been a puzzler from the beginning. In fact, on route to the courtroom after a lunch break during Lord Black's lawyers' closing arguments, I ran into the man, adjusting his tie in the men's room, and we chatted for the first time during the three-month trial. I told him that the big thing he needed to worry about was APC. He was confident that his side would deal with it that afternoon.

But, really, they didn't. Of all people, admitted fraudster David Radler had offered the most plausible alibi on the witness stand when he said that he had initially thought the $5.5-million paid out under the APC contract was management fees that Hollinger's bosses were already owed. The APC contract, he said, was really a tricky way to avoid paying taxes on the money since non-compete payments were then tax-free in Canada. In his closing arguments, Lord Black's lawyer Edward Genson said that this was so and added that it was all above board because the men were contractually obliged not to compete with APC for three years if they ever left Hollinger International. (Which means, by the way, that Lord Black's non-compete with APC would be expiring just about now.) Needless to say, the jury didn't buy it.

There are other counts for Lord Black to tackle on appeal, including two sales of small newspaper groups that yielded non-compete fees of another $600,000. And there is Lord Black's obstruction of justice conviction for taking those boxes out the back door of his Toronto office. It's easy to wonder: How could someone with his prodigious mind have not seen the peril APC presented? Part of the answer could lie in the fates of Mr. Radler and Mr. Atkinson, one of the co-accused who also was found guilty.

Both men paid back their share of the booty in 2003, but that didn't stop the feds from coming after them. Mr. Radler, of course, eventually crumbled and cut a deal. Mr. Atkinson's reward for admitting a mistake — but not a crime — and paying back the money is that he now faces years in jail along with Lord Black and the others.

Now, about the punishment. If anything, Thursday's bail hearing underscored that U.S. Attorney Patrick Fitzgerald has only ramped up his efforts since the verdict and is coming after Lord Black ever more aggressively. Lord Black was found directly to have taken $2.9-million — most of it from APC — which is a far cry from the "corporate kleptocracy" he was accused of running when he was turfed out of Hollinger International. Which isn't to say that Lord Black didn't milk his company every way till Sunday; just that there is a gulf between corporate malfeasance that results in CEO expulsions, regulatory action and lawsuits, and true criminality. That's part of the debate the Chicago jury settled for themselves but will go on for decades in the peanut gallery. Just as Lord Black portrays his guilty verdict as a temporary setback while his lawyers launch an appeal, Mr. Fitzgerald and his associates do not consider his conviction to be the final chapter either.

Mr. Fitzgerald's assistant U.S. attorneys offered a range of reasons why they think Lord Black should be on the hook for virtually all the wealth he has left and, why, by their calculations, he faces "potentially the rest of his life" behind bars, as much as 30 years. (That seems a bit absurd, given that it's longer than the former CEOs of Enron and WorldCom are serving.) Prosecutors also, unsuccessfully, argued that Lord Black be remanded in custody till sentencing. Instead, he is confined for now to the Chicago area and his mansion in Palm Beach.

Proportion has been an issue for Lord Black in nearly every aspect of his life and career — and part of the reason why he has been such a polarizing and outsized figure. What has been clear from the beginning of the unravelling of Lord Black's career is that if he were found guilty of anything illegal, the punishment would not fit the crime. If his appeals fall short, unlike other convicted CEOs who have found themselves in similar situations, it is difficult to imagine any sudden outpouring of contrition from Lord Black at his sentencing. The time for that passed long ago.