CHICAGO — A former Hollinger International executive told the jury in Conrad Black's trial Monday that he was ordered to move $2-million in January, 1999, from Hollinger International Inc. to its Canadian parent company, Hollinger Inc.
The request came from Todd Vogt, another former executive of Hollinger International, who was involved in non-compete payments during a sale of newspapers that had occurred seven months earlier.
“Todd was quite agitated that morning to have the funds moved,” Craig Holick, a former financial manager at Hollinger International, told the jury.
Mr. Holick said Mr. Vogt told him that there had been a mistake in the newspaper sale and that the non-compete payment should have gone to Hollinger Inc., not Hollinger International. Mr. Holick said he found the request unusual and said he wanted something on paper directing him to make the transfer.
Conrad Black leaves federal court on the first day of his trial on fraud and racketeering charges on March 19 in Chicago. (Tasos Katopodis/Getty Images)
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He said Mr. Vogt drew up a memo that said that the money should have gone to Hollinger Inc. and that he had told Mr. Holick that seven months earlier. Mr. Holick said he could not recall being told that but he trusted Mr. Vogt and transferred the money.
In a related development earlier Monday, defence lawyers lost a ruling after complaining about the types of questions prosecutors are asking witnesses.
Since the trial began, prosecutors have been calling witnesses who bought newspapers from Hollinger International Inc. between 1999 and 2000.
The deals are central to the allegations against Lord Black and his co-accused — John Boultbee, Peter Atkinson and Mark Kipnis — who are all former executives of Hollinger International. Prosecutors are trying to prove the men inserted themselves into the newspaper sales, using the cover of non-competition fees, to skim off some of the proceeds.
Documents filed in court show that each transaction included a non-competition agreement, and fee, with Hollinger International and its Canadian parent, Hollinger Inc. Lord Black controlled both companies at the time. Prosecutors allege that none of the buyers requested a non-competition agreement with Hollinger Inc., but it was included in the deals in order to funnel more money to Lord Black and the others.
Prosecutors have asked the witnesses if they had ever heard of Hollinger Inc. and they have all replied that they knew little about the company. The witnesses have also said that they would have bought the newspapers without Hollinger Inc.'s inclusion.
On cross examination, lawyers for the defence have been trying to ask the witnesses what they would have done had they known Hollinger Inc. was controlled by the same people as Hollinger International. Judge Amy St. Eve has been limiting those questions.
Late Friday, the defence filed a motion asking the judge to give defence lawyers more latitude. In the motion, lawyers for Mr. Kipnis cited questions they want to put to David Paxton, one of the buyers of several Hollinger International newspapers.
Under questioning by prosecutors, Mr. Paxton said he wanted a non-competition clause with Hollinger International because that company had experience in the newspaper business and he did not want it re-entering the same markets. Mr. Paxton told prosecutors he didn't know Hollinger Inc. very well and didn't feel he needed a non-competition agreement with that company.
Mr. Kipnis's lawyers wanted to ask Mr. Paxton if he “had known that [Hollinger Inc.] was managed by the same people who managed International — people with the same ‘experience in the industry,' and with the same ‘knowledge of the market' — would he have wanted to protect [his company] against those same people competing against [him] using Inc.'s money?” according to the court filing. “These questions are necessary to test the bases for Mr. Paxton's testimony that he did not want [Hollinger] Inc.'s non-competition agreement.”
Defence lawyers believe the questions would have challenged the prosecutors' theory that Hollinger Inc. was only added to the agreements to siphon money to Lord Black and the others. They wanted to show the jury that Hollinger Inc. was properly included and they believed the buyers would agree once they understood the relationship between the companies.
Prosecutors objected to the defence request. In a court filing Saturday, they argued the defence questions are irrelevant and hypothetical.
The prosecutors said Mr. Kipnis's lawyers wanted to ask Mr. Paxton “what he might have wanted if he had known more about Hollinger Inc. Unlike the government's questions, Mr. Kipnis's are totally hypothetical.”
Judge St. Eve agreed and rejected the defence lawyers' request on Monday, ruling that it was indeed too hypothetical. However, she said the defence lawyers are free to explore the non-compete agreements more broadly and she will rule on individual objections as they come up.
Lord Black and his daughter Alana were in court on Monday but his wife, Barbara Amiel Black, did not attend.
The jury will not sit on Tuesday. The trial will resume on Wednesday.
