One By One

In three recent entries in his Maclean's Conrad Black trial blog, Mark Steyn has some information on two witnesses called by Peter Atkinson's counsel. The first was Ralph Neville, an accountant who testified on the common use of non-cometition payments in Canada for tax purposes. A Home Depot analogy that he used was shot down easily by Eric Sussman on cross-examination. The second witness was Daniel Rosenthal, who "had testified that he'd received an email on May 19th 2005 but hadn't forwarded it to anyone else, either the defendant or his lawyers up in Canada." This attempt to show lack of intent with regard to the obstruction-of-justice charge was impugned by Csr. Sussman: Mr. Rosenthal had to admit that he hadn't looked at any of his E-mails "he'd received or sent that day," so his memory of what he sent that day isn't exactly flawless.

A report by Paul Waldie, webbed by the Globe and Mail, relays some testimony from lawyers who used to work for Peter Atkinson. They had testified that Mr. Atkinson had blocked a plan put forward by other executives to have Hollinger International buy back their stiock options "at a premium." He asked about the legality of the plan through E-mails with lawyers at Torys LLP, who stipulated its legality but raised conflict-of-interest concerns. "The e-mails show that Mr. Atkinson also questioned the proposal. He called it inappropriate and 'a potential investor relations fiasco.'" Mr. Waldie's report also mentions that Conrad Black's defense team does not plan to call Paul Healy back; it implies that they dropped the attempt.

Mr. Steyn also has details on two more defense witnesses. The first, Larry Sicular, testified that the government evaluator of the apartment used a methodology that wasn't quite accurate; the proper way to evaluate the swap is to see the transaction as an exchange of "'partial interests.'" When asked how to evaluate them by Edward Genson, Mr. Sicular replied that he couldn't, because "'[t]here's no market in partial interests of cooperative apartments.'" Only relative desires can be used to estimate. The next witness Mr. Steyn mentions is Pat Ryan, the first hostile witness to be called to the stand in the trial. Mr. Ryan, who was KPMG's head partner for the Hollinger Int'l account, testified: "'The Audit Committee didn't explicitly approve these payments... They approved the financial statements containing the disclosures of the approvals of these payments.'"

The Bloomberg report is out, and has excerpts from the testimony of Mr. Neville. He testified under direct examination that "[b]uyers of assets are usually 'concerned about the individuals behind the company and their expertise,' and wanted noncompete payments... 'It's rare that a company would sign a noncompete.'" Under cross-examination by Jeffrey Cramer, Mr. Neville testified that a procedure should be followed regarding non-compete agreements, that "'appropriate people'" should both know of and approve them. The report, written by Joe Schneider and Andrew Harris, also mentions that more testimony from Beth DeMerchant was heard from, in support of Peter Atkinson. She was the witness whose testimony Mr. Waldie reported on in the report exerpted above.

An AP briefing, webbed by WQAD.com, focuses in on a particular moment in Mr. Ryan's testimony: he saying that "James R. Thompson didn't react during a 2002 meeting when told about the $15 million" in individual non-compete payments, implying (or so the defense hopes) that those payments were not news to Mr. Thompson.

The Chicago Daily Southtown has webbed a fuller AP report, written by and credited to Mike Robinson, which also focuses on the testimony of Mr. Ryan. The excerpts from Ron Safer's direct examination asks closely whether or not there was any reaction showing surprise from Mr. Thompson. Mr. Ryan's answers suggested that the former chair of Hollinger Int'l's audit committee didn't.

Another Bloomberg report, also written by Joe Schneider and Andrew Harris, centers on the testimony of Mr. Sicular, the rebuttal witness to the testimony of government expert Jonathan Miller. Mr. Miller provided a valuation of the Manhattan apartment as of December 2000. Mr. Sicular, as noted above, testified that there is no market for partial interests, so there's no way to value the swap. "'No real estate expert can do this,' he said." The reason explaining why the apartment has to be considered a partial interest is, "because its ownership was divided between Black and Hollinger." The rest of the report recounts testimony from Mr. Ryan and Mr. Neville.

An expanded AP article, which includes some details of the cross-examination of Mr. Ryan by Julie Ruder, has been webbed by Forbes.com. As a prelude to the part that reports on that cross-examination, it has a reminder that "Thompson testified earlier in the trial that he didn't remember exactly what had transpired at the February 2002 audit committee meeting." The cross-examination itself built on the prosecution's interpretation of Mr. Thompson's testimony: "Assistant U.S. Attorney Julie B. Ruder sought to resuscitate the government's claim that Thompson had no inkling of what the payments were. Prompted by Ruder, Ryan testified that discussion of the payments took up five or six minutes of the meeting that lasted at least 90 minutes.... [He also testified that] he had not asked for a vote on the payments and that he just wanted the audit committee to sign off on disclosure of the amounts." (This report has also been webbed by ABC7 Chicago.)

Mary Vallis has written a report, webbed by Canada.com, which has more excerpts from Mr. Ryan's testimony. It begins with: "An external auditor for Hollinger International Inc. testified on Thursday he believed the company’s audit committee had approved $15 million US in non-compete payments now at the heart of the case against Conrad Black." It also contains testimony from Mr. Ryan saying that he had brought the individual non-compete payments to the attention of Mr. Thompson, contra to what he had testified at an August 2004 Ontario Securities Commission hearing. He also testified that the purpose of the 2002 meeting with the audit committe was: "the firm was looking for confirmation that the dollar amounts of the non-competes were also approved." On cross-examination, the statement elicited from Mr. Ryan by Csr. Ruder, that Mr. Thompson didn't say anything to Mr. Ryan after hearing about the amounts, was intended to show that the sizes of the non-compete payments weren't explicitly approved. Mr. Ryan also testified that he had spent over two hours meeting with prosecutors, but "he had refused all requests to meet Safer."

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In the Canadian Business Black trial blog, Matthew McClearn starts off by admitting that the issues being testified about recently are ones he finds boring, even though they seem to be enough of a luller to make Conrad Black himself yawn, and then he thoroughly plows through the evidence provided by defense witnesses as of yesterday. He concludes that they've been quite credible, including Mr. Neville (who started on the stand yesterday afternoon.) One interesting factoid he discusses is a tax precedent from a case in Britain's House of Lords, "IRC vs. Duke of Westminster."

Also, in the Toronto Life Conrad Black trial blog, Roger Martin, the dean of the University of Toronto's Rotman School of Management, puts on his professor's hat after admitting that he knows strategizing, but very little about the law. He then reveals the four criteria he'll be using to assess the prosecution, as strategists: "One is to have a clear goal, and everything you do has to be in service of that goal. Two, you need to have a sense of the individual battles and how they piece together to make a whole campaign; and building momentum in that overall campaign is really important. Three, you take the opponent deadly seriously and assume they will fight intelligently even though there is a possibility they will make grievous tactical or strategic errors. Four, if you can’t figure out a plan for winning, you don’t start the battle in the first place." He then grades the prosecution team, as strategizers: on sticking to the formulated stategy, they have "failed utterly;" on momentum-building and taking the opponent seriously, they have "failed miserably;" and, on the decision to jump into the battle, he offers no grade, just this observation: "I see what I so often see when I work with companies on strategy: a plan for giving it a whirl."

(No, dere's not much softness in biz school.)