Wednesday Testimony, Taped

Paul Waldie of the Globe and Mail reports that Beth DeMerchant testified that the Hollinger Inc. sale to CanWest was hurried because there were no other bids for the properties being sold, and "Hollinger International Inc." didn't want Izzy Asper to find out about that. She also testified that the non-compete payments were increased from $57 million to $80 million, just before the deal closed. "Much of that money went to Lord Black and his co-accused. Ms. DeMerchant said she did not know why the payments increased. She also said she was not aware until several weeks later that most of the money went to Lord Black and three other executives. "

[In a later BNN interview, Mr. Waldie disclosed that Ms. DeMerchant pointed out a "lot of inconsistencies" between the deal memos she read, the final deal terms, and what the board thought was in the deal. He said that, if this part of the testimony holds up under cross-examination, the prosecution will be a significant step closer to proving their case. He also noted that Paul Saunders, another lawyer from Cravath, Swaine and Moore, is due to testify tomorrow, and that Csr. Saunders was not only Henry Kissinger's lawyer, but also he had done some personal legal work for Conrad Black himself. BNN has webbed this interview, which aired at 1:50 PM ET; it'll be available on broadband until tomorrow morning.]

Romina Maurino has a report out too; it points out that Ms. DeMerchant was the one who had made the call on the non-compete payments not being disclosed, because they were not executive compensation in her judgment. She also explained why she shifted direction to Csr. Rogers' advice: the audit committee had referred to the payments as bonuses in their minutes. "DeMerchant said she called a meeting to discuss the payments after Boultbee said calling them 'bonuses' was wrong, because 'as far as he was concerned, they were not bonuses.'”

Bloomberg's report, written by Andrew Harris and Joe Schneider, is entitled "Ex-Hollinger Lawyer Tells Jurors Her Firm Gave Bad Legal Advice." From it: "DeMerchant said another lawyer in her Toronto firm was wrong when he said the payments didn't need to be disclosed." The Associated Press report is also out, as webbed by the Ilinois Journal-Gazette Times Courier. It's also been webbed by the Daily Southtown.

An updated report from Ms. Maurino, webbed by 680 News, names the name of the other lawyer; it was Csr. Sukonick. It also discloses that she realized that "'the ball had been dropped'" after hearing from Cravath, Swaine and Moore. Near the end, it quotes from a memo from Peter Atkinson to Conrad Black, from which, Ms. DeMerchant testified, she first learned about the individual payments. That quote ends with "'We have put a higher weighting on the restrictive covenants due to our hope that these payments can be free of tax'". A little after that quote, the report mentions that Ms. DeMerchant "also backtracked on a previous statement about Atkinson and Boultbee adding their own names to the non-competes, saying she had been misunderstood when questioned by a special committee investigating the fees." [This last statement was elicited under cross-examination.]

Reuters' report has also been webbed; it's by Andrew Stern. He relates that Jack Boultbee was "shocked" when he had heard that the non-compete payments to Conrad Black, David Radler, Mr. Atkinson and himself were categorized as "bonuses." Furthermore, when he had heard that the non-compete to Ravelston was pegged as an early break-up fee, "DeMerchant testified, Boultbee had said: '"Where on earth did this come from?"'" She also testified that she preferred to explain the inconsistencies as "'errors'" to the board, rather than as "'inadvertent mistakes.'"


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Mark Steyn, in his latest blog entry, actually has some good things to say about William "Bud" Rogers as a prosecution witness.

Over at Toronto Life's trial blog, Roger Martin has some good things to say about Darren Sukonick, with whom Mr. Martin has worked with in the past: "I know Sukonick because he did a securities deal for a company of which I am chairman. The press descriptions of him are pretty much accurate: he is smart, hard-working, intense and ambitious. Having worked with him, I can’t help but feel considerable sympathy for him." The rest of his post deals with the doleful fact that "can-do" service professionals are in greatest demand by companies; consequently, the corporate governance movement depends most upon whistle-blowing at the time when a company's top management is most likely to seek out an accomodator. The term that Dr. Martin uses is "adverse selection."

Lest you think that today is Compliment Day, Rick Westhead of the Toronto Star has passed along two less-than-complimentary quotes, said by Conrad Black to Mr. Westhead himself: "'I’m not talking to you anymore,' Conrad Black said to me during one break in the proceedings at his fraud trial. 'You're too friendly with the prosecution.'... Black reiterated his observation after I invited him for dinner. 'I'm not having dinner with you so long as you are so friendly with (prosecutors). The sight of people being civil with those Nazis is sickening.'"