How Conrad Black used libel chill as a weapon

Commentary
The principal legacy of disgraced media mogul Conrad Black, convicted in July of fraud and obstruction of justice, is “libel chill,” writes Toronto Star business columnist David Olive. For decades he used libel writs to neuter coverage of his activities. As a result, reporters and editors across the land engaged in the longest period of self-censorship ever afforded a public figure.

By David Olive
Business Columnist
The Toronto Star

The Conrad Black story ended yesterday as it began, in disgrace.

It began with a 15-year-old child of privilege expelled from Upper Canada College, the most prestigious prep school in the nation, after he stole exam papers and peddled them to fellow students. Scarcely chastened, young Black was then expelled from a second upper-class school, Trinity College School, for insubordinate behaviour.

The saga ended yesterday when a Chicago jury convicted Black, 62, of fraud and obstruction of justice, charges for which the fallen press baron faces a likely minimum of 20 years of hard time in a U.S. prison.

For many Canadians, the outcome will not be cause for sympathy.

As a wunderkind tycoon in the 1970s, Black outwitted two widows to seize control of one of Canada’s greatest conglomerates, Argus Corp. After promising to build on Argus’s earlier triumphs, Black instead dismantled that creaking empire, which saw him preside over the collapse of Massey-Ferguson Ltd., which once ruled the British Empire market in farm equipment; and the rapid decline of the venerable Dominion Stores Ltd.

That first debacle revealed the suspect business acumen of Black and his “associates.” (Black has always described his fellow executives that way, as if they were engaged in law, medicine or some other calling more distinguished than grubby commerce.) It also left behind a sizeable population of aggrieved minority shareholders and laid-off employees who claimed theft of their pensions (an accusation not proved in any court).

The minority investors couldn’t help noticing that Black’s financial engineering – his countless reorganizations of a daisy chain of companies – generally found Black and his associates further enriched while other investors suffered buyer’s remorse.

Come the mid-1980s, Black was engaged in a second career of accumulating newspapers, trade magazines and opinion journals in Canada, the United States, the Caribbean, Israel, Britain and Australia, ranging from the Puxatawney Spirit of Groundhog Day fame to the mighty Daily Telegraph, Britain’s largest-circulation upmarket daily, which by tradition came with a peerage for its proprietor.

Along the way, Black misled the Daily Telegraph’s Berry family into thinking they would have a continued role in a paper from which he planned to evict them, as he would later erase what remained of the Southam influence from their dominant papers in Montreal, Ottawa, Calgary and Vancouver.

It’s often said these days that, for all his faults, Black at least lifted the quality of Canadian journalism, notably with his launch of the National Post. That’s bunk.

Black’s principal legacy is “libel chill.” For decades he used libel writs, usually delivered by top “associate” Peter Atkinson – also found guilty of fraud yesterday – to neuter coverage of his activities.

Rather than risk the enormous aggravation of dealing with Atkinson’s imperious accusations of defamation, reporters and editors across the land engaged in the longest period of self-censorship ever afforded a public figure. None of Black’s libel actions was ever tested in a courtroom; timorous media outlets chose not to call his bluff.

Prospective investors in Hollinger International had difficulty learning, therefore, that the future Lord Black of Crossharbour was chronically given to doing one thing and saying another. The final irony in this regard is that Black laid bare many of his least attractive business methods in his own 1993 memoir, Conrad Black: A Life in Progress (Key Porter).

Black’s lawyers will appeal yesterday’s jury decision, in which he was found guilty of plundering his own flagship firm of millions. But the odds are against him. Appeals turn on technicalities – for instance, was the jury properly instructed by the judge – and the judge in this case, Amy St. Eve, is among America’s most highly regarded jurists.

Black had already lost a great deal before stepping into St. Eve’s courtroom when the trial against him and three co-defendants and colleagues at Hollinger International commenced almost four months ago. Long before his uncomfortable sojourn in Room 1241 of the Dirksen Federal Court building, Black had lost his media empire – sold under financial duress beginning in the late 1990s – along with most of his fortune and much of his credibility. He has suffered the betrayal of handpicked directors ranging from Fred Eaton to Henry Kissinger, whom Black guts like a bloated mackerel in his Nixon biography.

The assault on Black’s credibility began in a Delaware courtroom in an unrelated 2004 dispute, in which Vice Chancellor Leo Strine, one of America’s top corporate jurists, found Black’s testimony to lack “the ring of truth.”

And Richard Breeden, a former SEC chair recruited by Hollinger International to examine the firm’s Black-era compensation practices, issued a report accusing Black and associates of operating the firm as a “corporate kleptocracy,” diverting some $400 million (U.S.), or 95 per cent of Hollinger International’s adjusted net income between 1997 to 2003, to themselves and holding companies controlled by Black.

The world isn’t done yet with Black. He faces more than $1 billion in civil litigation from Hollinger International, its former minority shareholders, and the SEC.

From prison, if it comes to that, Black will pursue his legal battles as best he can. His capacious memory will enable him to compile a rich dossier on the moral shortcomings of his accusers and betrayers. If not the paranoid chief executive chronicled in The Invincible Quest: The Story of Richard Nixon, Black has a sense of victimhood that knows no bounds.

Oscar Wilde was not alone in crafting some of his most important works in prison. For Black, there’s still time to expand a written oeuvre that might someday overshadow a business career that can be charitably described as checkered. But only if Black devotes himself wholly to that ennobling legacy, and acknowledges that in crossing the line once or twice too often, he might just deserve the harsh fate dealt him yesterday.
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David Olive is a Star business columnist who has followed the Black case. dolive@thestar.ca

Published July 14, 2007. Reprinted by permission

Dean Jobb