The Conrad Black trial got the normal amount of overnight coverage, with the initial testimony of Richard Burt being the almost exclusive focus:
1. The report by Rudolph Bush of the Chicago Tribune starts off with Mr. Burt testifying that Conrad Black and David Radler were so closely knit, "they could seamlessly interrupt each other during board meetings while discussing complex business strategies and operations..." It also mentions that part of the cross-examination so far has had the aim of presenting Mr. Radler as a "lone operator who was cagey and unscrupulous -- a portrait that has been filled in through testimony that he was disdainful of employees and dismissive of auditors."
2. From NewsMax, a webbing of a Reuters report on Mr. Burt's initial testimony under direct examination.
3. A briefer Reuters report, by Andrew Stern, summarizes yesterday's testimony by Mr. Burt in a briefer version. It mentions that Mr. Burt served on the Hollinger International board from 1996 to 2005.
4. Paul Waldie's report, webbed by the Globe and Mail, mentions that Mr. Burt "explained that directors met about four times a year and didn't always get an agenda for meetings." He also mentions that the sale of 18 small newspapers to Black- and Radler-controlled American Publishing took place in 1999.
5. Jennifer Wells of the Toronto Star has written another article today, which contains more background on Mr. Burt than the others'. She notes that this is the first time in the trial that the "commingling of Black and Radler" has been put into the trial itself by the prosecution, and concludes that "Burt's testimony, which continues today, is a deep excavation of a fossilized corporate culture...."
6. The Edmonton Sun has webbed the latest CP report on the trial. It's the only one on the list that even mentions Marilyn Stitt.
7. The second part of Neil Sternberg's latest Chicago Sun-Times column recounts him paying a visit to the courtroom while trial was in session. What struck him, as he relates in the part entitled "Trust in the common man," was the middle-Americanness of the jury. His overall reaction, though, was one of excruciating boredom.
8. Also from the Sun-Times, Mary Wisniewski's report, which mentions that Mr. Burt's testimony will be followed by that of "economist Marie-Josee Kravis and former Illinois Gov. James R. Thompson..."
9. A much briefer summarization of Mr. Burt's testimony has been webbed by the Edmonton Journal.
10. Also from Paul Waldie, an article which discloses that Mr. Black wants to reclaim control of Hollinger Inc. It also notes that another Chicago Tribune motion to have the jurors' names release was rejected by Judge St. Eve.
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In "Seeking Alpha," Mark McQueen, after relating that Steve Jobs was let off the hook by the SEC despite their finding out about backdating of Apple stock options for his executives, wonders out loud if "Conrad Black [had] been a Silicon Valley icon, and not an English Lord, would he be on trial today in Chicago?" He may have answered his own question in the Financial Times write-up he quotes, which says that "the SEC said it would not take any action against Apple itself. The regulator on Tuesday said its decision was due in part to the company’s 'swift, extensive and extraordinary cooperation' in the government’s investigation..." (Apple's general counsel, but no other Apple executive, got hit with fraud charges according to that quoted report.)
Also, Mark Steyn returns to making fun of the prosecution's objection process in his latest Maclean's blog entry. Those who discern a disguised compliment of Julie Ruder's taste in clothes should be aware that Mr. Steyn has already pegged her as an "earnest bluestocking."
Wednesday, April 25, 2007
Tuesday, April 24, 2007
Richard Burt Has Taken The Stand
The defense is finally finished with Marilyn Stitt, and the prosecution has called up Richard Burt to testify. The first part of Romina Maurino's updated report on today's testimony details what he's said so far, as elicited by Jeffrey Cramer, the same prosecutor who delivered the opening address. Mr. Burt testified that he saw Conrad Black and David Radler as close-knitted teammates: "'I saw those two gentlemen in particular as being a team and in tandem,' Richard Burt, who is both a former U.S. diplomat and Hollinger director, told the court. 'I understood they were representing themselves and senior management (when they spoke at board meetings). I always found they were a very close team.'"
He also testified that the documents upon which he had to assent or object to were very complex, so he tended to trust, or "'assumed,'" that management gave "'a full description of the affairs of the company.'" He has yet to mention Peter Atkinson. Bloomberg's report, written by Andrew Harris and Joe Schneider, adds to the picture by relaying, "[t]he board, not having any staff, depended on the 'good faith of management' and the information it provided." (Only the top third of their report discusses Mr. Burt; the rest of it deals with Ms. Stitt's testimony and background to the case.)
The Reuters write-up, by Andrew Stern, reports that Mr. Burt testified that the board was not aware of Mr. Black's and Mr. Radler's ownership of Horizon Publishing, a company to whom Hollinger International had sold newspapers. Board members' knowledge of that fact "could have changed the outcome of the board's approval of that deal." Mr. Burt also testified that this possibility of non-approval would have resulted from knowledge that the transaction was a related-party one. "Such deals involving company executives, Burt explained, are called 'related party transactions' and require independent scrutiny by the board." The report ends with Mr. Burt flatly denying that Conrad Black had told him anything about a $2 million non-compete payment from the "American Trucker transaction," where Hollinger Int'l sold American Trucker and Mine and Quarry Trader to Intertec Publishing, in February 1999.
The sale to Intertec, now Primedia, was completed as of May 1998, with the $2 million non-compete payment agreed to at the same time, and the $2 million was diverted to Hollinger Inc. on January 27th, 1999, according to the indictment (p. 10.) An earlier witness, Peter Laino, testified about this transaction, as mentioned in this Globe and Mail report (now available to "Globe Insider" subscribers only.)
The Belleville News-Democrat has webbed the Associated Press article on Mr. Burt's initial testimony, which mentions that the first sale to Horizon was completed in November, 1998. (According to p. 14 of the indictment, that sale agreement was dated March 31, 1999.) He testified that the sale to Horizon and the payment of some of the non-compete fee associated with the sale to Horizon (24% of it, according to the indictment) were all related-party transactions; thus, knowledge of both would have "been important" and "mattered" (respectively) to him as an audit committee member. It ends with Mr. Burt testifying that, to his knowledge, Mr. Black and Mr. Radler had never disagreed with each other.
A PDF copy of the indictment itself can be found by clicking this "Superseding Information" link, found in the "US v. Black, et al." table on this DOJ page.
As of now, I haven't been able to find out whether the Horizon transaction date discrepancy in the AP report was due to the reporting, or to the the Mar. 31 date being a finalized date in a months-long deal process, or to a memory inconsistency on the part of Mr. Burt.
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Douglas Bell of the Toronto Life trial blog has announced that he and Albert Schultz, the actor who played Conrad Black in a CTV TV docudrama entitled "Shades of Black" that's mentioned here, have a two-dollar bet on the trial's outcome for Mr. Black. Mr. Schultz bet on "not guilty of all charges," and Mr. Bell agreed to cover the bet.
He also testified that the documents upon which he had to assent or object to were very complex, so he tended to trust, or "'assumed,'" that management gave "'a full description of the affairs of the company.'" He has yet to mention Peter Atkinson. Bloomberg's report, written by Andrew Harris and Joe Schneider, adds to the picture by relaying, "[t]he board, not having any staff, depended on the 'good faith of management' and the information it provided." (Only the top third of their report discusses Mr. Burt; the rest of it deals with Ms. Stitt's testimony and background to the case.)
The Reuters write-up, by Andrew Stern, reports that Mr. Burt testified that the board was not aware of Mr. Black's and Mr. Radler's ownership of Horizon Publishing, a company to whom Hollinger International had sold newspapers. Board members' knowledge of that fact "could have changed the outcome of the board's approval of that deal." Mr. Burt also testified that this possibility of non-approval would have resulted from knowledge that the transaction was a related-party one. "Such deals involving company executives, Burt explained, are called 'related party transactions' and require independent scrutiny by the board." The report ends with Mr. Burt flatly denying that Conrad Black had told him anything about a $2 million non-compete payment from the "American Trucker transaction," where Hollinger Int'l sold American Trucker and Mine and Quarry Trader to Intertec Publishing, in February 1999.
The sale to Intertec, now Primedia, was completed as of May 1998, with the $2 million non-compete payment agreed to at the same time, and the $2 million was diverted to Hollinger Inc. on January 27th, 1999, according to the indictment (p. 10.) An earlier witness, Peter Laino, testified about this transaction, as mentioned in this Globe and Mail report (now available to "Globe Insider" subscribers only.)
The Belleville News-Democrat has webbed the Associated Press article on Mr. Burt's initial testimony, which mentions that the first sale to Horizon was completed in November, 1998. (According to p. 14 of the indictment, that sale agreement was dated March 31, 1999.) He testified that the sale to Horizon and the payment of some of the non-compete fee associated with the sale to Horizon (24% of it, according to the indictment) were all related-party transactions; thus, knowledge of both would have "been important" and "mattered" (respectively) to him as an audit committee member. It ends with Mr. Burt testifying that, to his knowledge, Mr. Black and Mr. Radler had never disagreed with each other.
A PDF copy of the indictment itself can be found by clicking this "Superseding Information" link, found in the "US v. Black, et al." table on this DOJ page.
As of now, I haven't been able to find out whether the Horizon transaction date discrepancy in the AP report was due to the reporting, or to the the Mar. 31 date being a finalized date in a months-long deal process, or to a memory inconsistency on the part of Mr. Burt.
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Douglas Bell of the Toronto Life trial blog has announced that he and Albert Schultz, the actor who played Conrad Black in a CTV TV docudrama entitled "Shades of Black" that's mentioned here, have a two-dollar bet on the trial's outcome for Mr. Black. Mr. Schultz bet on "not guilty of all charges," and Mr. Bell agreed to cover the bet.
Tuesday's Auditor Examination
BNN had an interview with Paul Waldie (1:55 PM ET), which discussed Marilyn Stitt's testimony from this morning. Her testimony under direct examination was about the concerns she had about the non-compete payments to the defendants and ex-defendant David Radler, and the questions she raised about non-disclosure and audit committee approval of them. Today, she was shown a lot of internal KPMG documents that showed KPMG knew of them since 1999, but had never raised the issue. She replied that she didn't know about those documents, because she was not with the Chicago office that handled Hollinger International's accounts. Her cross-examination is not finished yet; it may be this afternoon. Richard Burt is scheduled to appear whenever she's finished. His story about Conrad Black's lawyers filing motions to block David Radler's settlement package has a six-paragraph write-up on Ms. Stitt's testmony, including cross-examination, at the bottom of it.
A report by Romina Maurino, which has been webbed by 680 News, describes Ms. Stitt sticking to her guns even when shown facts that she had been unaware of. "Unlike previous witnesses who admitted to making errors in their advice to Hollinger and its executives, Stitt remained confident and firm, dismissing attempts by the defence to link the CanWest and U.S. deals." Unswayed, she testified that even when she had made errors, she was (in effect) wrong for the right reasons.
Bloomberg's Andrew Harris and Joe Schneider recount both the direct and the cross-examination in their report. It notes that "[h]er testimony in federal court in Chicago belies prosecutors' claims that the defendants hid the payments....'My staff did a great job,' Stitt, a prosecution witness, said as she defended the firm's auditors, while being questioned by defense attorneys during her second day of testimony." (Since she and her staff were in the Toronto office, this statement of hers in't directly relevant to the Chicago office's performance on the Hollinger accounts in 1999 and 2000.)
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Mark Steyn notes a recent tendency on the part of prosecutor Julie Ruder to object on the basis of "'asked and answered,'" which often is overruled. Evidently, defense counsels are trying to check for internal inconsistency in Ms. Stitt's testimony.
A report by Romina Maurino, which has been webbed by 680 News, describes Ms. Stitt sticking to her guns even when shown facts that she had been unaware of. "Unlike previous witnesses who admitted to making errors in their advice to Hollinger and its executives, Stitt remained confident and firm, dismissing attempts by the defence to link the CanWest and U.S. deals." Unswayed, she testified that even when she had made errors, she was (in effect) wrong for the right reasons.
Bloomberg's Andrew Harris and Joe Schneider recount both the direct and the cross-examination in their report. It notes that "[h]er testimony in federal court in Chicago belies prosecutors' claims that the defendants hid the payments....'My staff did a great job,' Stitt, a prosecution witness, said as she defended the firm's auditors, while being questioned by defense attorneys during her second day of testimony." (Since she and her staff were in the Toronto office, this statement of hers in't directly relevant to the Chicago office's performance on the Hollinger accounts in 1999 and 2000.)
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Mark Steyn notes a recent tendency on the part of prosecutor Julie Ruder to object on the basis of "'asked and answered,'" which often is overruled. Evidently, defense counsels are trying to check for internal inconsistency in Ms. Stitt's testimony.
Media Roundup: Not Done Yet
The overnight stories on the Conrad Black trial all focused upon the testimony of Marilyn Stitt, whose turn on the stand is not yet over. It must be an unusual experience for Richard Burt to be kept waiting, to the benefit of a KPMG auditor:
1. Rudolph Bush of the Chicago Tribune sums up Ms. Stitt's testimony during direct examination.
2. The Belleville News-Democrat has webbed the AP report on Ms. Stitt's testimony so far, including the cross-examination of her by Mark Kipnis' counsel.
3. WQAD.com has webbed a much briefer AP recap, which doesn't mention any cross-examination.
4. The Sydney Morning Herald's wrapup includes a note that Ms. Stitt asked the members of the audit committee to confirm the amount of the individual non-compete payments, which they did.
5. 1130 News has a CP note which mentions that Ms. Stitt's cross-examination isn't over yet. It was posted right at the stroke of midnight, Pacific time.
6. The New York Post has a Bloomberg four-paragraph recap.
7. The Edmonton Sun has webbed the more detailed CP write-up. It ends with: "Had there been any questions about whether the non-competes were not actually required by the buyers, as prosecutors argue, KPMG may have found otherwise, [Ms. Stitt] told prosecutor Julie Ruder."
8. Jennifer Wells of the Toronto Star conveys the impression that Ms. Stitt's testimony was actually exciting. Her report recaps not only Ms. Stitt's testimony under direct examination, but also an admission that she made under cross-examination by Michael Swartz, Mr. Kipnis' counsel. It begins with congratulating Ms. Stitt for going down to Chicago and testifying in person, and contains a quote from Conrad Black about KPMG's services: "In a letter he wrote 3 1/2 years ago, Conrad Black said that KPMG had every opportunity over the years to question the payments. Their 'failure' to do so was not, he intoned, 'a flattering reflection of their thoroughness.'"
9. The Montreal Gazette has a report by Therea Tedesco and Peter Brieger, which reports that Ms. Stitt's notes about her meeting with the audit committee recalled that she took their silence as giving assent to the non-competes.
10. The Globe and Mail has a summary of Ms. Stitt's testimony yesterday, written by Paul Waldie, which focuses on her testimony under direct.
11. So does the Chicago Sun-Times, written by Mary Wisniewski. It ends with a mention of a "'pregnant pause'" after Ms. Stitt heard no objections to the non-competes from the two members of the audit committee she had met with, those being Richard Burt and James R. Thompson.
12. Sun-Times columnist Michael Sneed has a mention of the notorious "possessed" cell phone of Patrick Tuite. "Tuite told Sneed, 'I think they thought it would keep the prosecutor demons away from our Hollinger clients.'"
13. Mr. Waldie has another report, webbed in the Globe, which details a new minority-shareholder-based legal action, launched by Conrad Black against David Radler's settlement with both Hollinger International and the SEC. That agreement also committed Horizon Publishing; Horizon's second-largest shareholder is Mr. Black. He also filed a motion with Judge St. Eve to have the deal struck from the record on these grounds. It'll be decided on next month.
An update of the story contains six paragraphs at its bottom that report on the cross-examination of Ms. Stitt so far. It notes that Ms. Stitt admitted, while being questioned by Mark Kipnis' defense lawyer Michael Swartz, that the Chicago office of KPMG worked on the Hollinger Int'l account, not the Toronto one that she's with. She further testified that she personally worked on the account of Hollinger Inc., the parent company of Hollinger Int'l.
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Mark Steyn has his own take on Ms. Stitt's testimony, in which (in addition to making fun of prosecutorial inconsistencies) he pokes fun at generally-put-up-with accounting standards: "As I understand it, the upshot [on Generally Accepted Auditing Standards] is: just because you’ve had it audited doesn’t mean it will withstand an audit."
More seriously, Steve Skurka mentions, in the opener to a blog entry on the Sherry Sherrett case, that Ms. Stitt's claim, that an auditor is not expected to ferret out fraud, is flat-out wrong.
Also: Douglas Bell's latest entry in the Toronto Life Conrad Black trial blog has a long excerpt from the diary of Chris Silvester, of the Independent, and adds an unkind thing to say about the British view of the world after done with the excerpt.
Conrad Black, along with his new biography of Richard M. Nixon, have gotten a mention in "Nixon, Bush and the Writing of History" by the Century Foundation's Peter Osnos.
1. Rudolph Bush of the Chicago Tribune sums up Ms. Stitt's testimony during direct examination.
2. The Belleville News-Democrat has webbed the AP report on Ms. Stitt's testimony so far, including the cross-examination of her by Mark Kipnis' counsel.
3. WQAD.com has webbed a much briefer AP recap, which doesn't mention any cross-examination.
4. The Sydney Morning Herald's wrapup includes a note that Ms. Stitt asked the members of the audit committee to confirm the amount of the individual non-compete payments, which they did.
5. 1130 News has a CP note which mentions that Ms. Stitt's cross-examination isn't over yet. It was posted right at the stroke of midnight, Pacific time.
6. The New York Post has a Bloomberg four-paragraph recap.
7. The Edmonton Sun has webbed the more detailed CP write-up. It ends with: "Had there been any questions about whether the non-competes were not actually required by the buyers, as prosecutors argue, KPMG may have found otherwise, [Ms. Stitt] told prosecutor Julie Ruder."
8. Jennifer Wells of the Toronto Star conveys the impression that Ms. Stitt's testimony was actually exciting. Her report recaps not only Ms. Stitt's testimony under direct examination, but also an admission that she made under cross-examination by Michael Swartz, Mr. Kipnis' counsel. It begins with congratulating Ms. Stitt for going down to Chicago and testifying in person, and contains a quote from Conrad Black about KPMG's services: "In a letter he wrote 3 1/2 years ago, Conrad Black said that KPMG had every opportunity over the years to question the payments. Their 'failure' to do so was not, he intoned, 'a flattering reflection of their thoroughness.'"
9. The Montreal Gazette has a report by Therea Tedesco and Peter Brieger, which reports that Ms. Stitt's notes about her meeting with the audit committee recalled that she took their silence as giving assent to the non-competes.
10. The Globe and Mail has a summary of Ms. Stitt's testimony yesterday, written by Paul Waldie, which focuses on her testimony under direct.
11. So does the Chicago Sun-Times, written by Mary Wisniewski. It ends with a mention of a "'pregnant pause'" after Ms. Stitt heard no objections to the non-competes from the two members of the audit committee she had met with, those being Richard Burt and James R. Thompson.
12. Sun-Times columnist Michael Sneed has a mention of the notorious "possessed" cell phone of Patrick Tuite. "Tuite told Sneed, 'I think they thought it would keep the prosecutor demons away from our Hollinger clients.'"
13. Mr. Waldie has another report, webbed in the Globe, which details a new minority-shareholder-based legal action, launched by Conrad Black against David Radler's settlement with both Hollinger International and the SEC. That agreement also committed Horizon Publishing; Horizon's second-largest shareholder is Mr. Black. He also filed a motion with Judge St. Eve to have the deal struck from the record on these grounds. It'll be decided on next month.
An update of the story contains six paragraphs at its bottom that report on the cross-examination of Ms. Stitt so far. It notes that Ms. Stitt admitted, while being questioned by Mark Kipnis' defense lawyer Michael Swartz, that the Chicago office of KPMG worked on the Hollinger Int'l account, not the Toronto one that she's with. She further testified that she personally worked on the account of Hollinger Inc., the parent company of Hollinger Int'l.
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Mark Steyn has his own take on Ms. Stitt's testimony, in which (in addition to making fun of prosecutorial inconsistencies) he pokes fun at generally-put-up-with accounting standards: "As I understand it, the upshot [on Generally Accepted Auditing Standards] is: just because you’ve had it audited doesn’t mean it will withstand an audit."
More seriously, Steve Skurka mentions, in the opener to a blog entry on the Sherry Sherrett case, that Ms. Stitt's claim, that an auditor is not expected to ferret out fraud, is flat-out wrong.
Also: Douglas Bell's latest entry in the Toronto Life Conrad Black trial blog has a long excerpt from the diary of Chris Silvester, of the Independent, and adds an unkind thing to say about the British view of the world after done with the excerpt.
Conrad Black, along with his new biography of Richard M. Nixon, have gotten a mention in "Nixon, Bush and the Writing of History" by the Century Foundation's Peter Osnos.
Monday, April 23, 2007
What A Standard Financial Statement Certification Looks Like
What should appear at the end of any financial statement, in any annual or quarterly report, is an Unqualified Opinion. As the Wikipedia article just linked to states, this kind of external auditor's Opinion Report carries three paragraphs, which are exactly the same except for particulars. Paragraph 1 states the scope of responsibility of management and the auditors, Paragraph 2 describes the audit method, and Paragraph 3 gives the opinion. It's worth quoting in full:
"In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20XX, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in (the country where the report is issued)."
If you don't see exactly that, with the appropriate particulars filled in, then the company's in some sort of difficulty.
In the 2002 meeting with Jack Boultbee over the 2001 Hollinger Int'l annual report, Marilyn Stitt threatened to issue a Qualified Opinion because of the non-competes. Ostensibly, a Qualified Opinion is no big deal, as it simply states that one or more accounts either don't conform to generally-accepted accounting principles (GAAP) or else it's impossible to tell. A Qualified Opinion says that the statements do not contain any material misstatements nonetheless.
Legally, this says that there was no chicanery afoot as of the time the audit was conducted and to the best of the auditor's knowledge; an adverse opinion may indicate crookedness somewhere. From an investor's standpoint, though, a Qualified Opinion says that the company is keeping a sloppy set of books. Hence its status as a warning flag, whose flagpole points to the "Exit" door.
"Fine; I sold my shares through no fault of my own."
"In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20XX, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in (the country where the report is issued)."
If you don't see exactly that, with the appropriate particulars filled in, then the company's in some sort of difficulty.
In the 2002 meeting with Jack Boultbee over the 2001 Hollinger Int'l annual report, Marilyn Stitt threatened to issue a Qualified Opinion because of the non-competes. Ostensibly, a Qualified Opinion is no big deal, as it simply states that one or more accounts either don't conform to generally-accepted accounting principles (GAAP) or else it's impossible to tell. A Qualified Opinion says that the statements do not contain any material misstatements nonetheless.
Legally, this says that there was no chicanery afoot as of the time the audit was conducted and to the best of the auditor's knowledge; an adverse opinion may indicate crookedness somewhere. From an investor's standpoint, though, a Qualified Opinion says that the company is keeping a sloppy set of books. Hence its status as a warning flag, whose flagpole points to the "Exit" door.
"Fine; I sold my shares through no fault of my own."
Monday With The Auditor
Paul Waldie was just interviewed on BNN and detailed the testimony of Marilyn Stitt, a partner with KPMG. She testified about a 2002 meeting she had had with Jack Boultbee, wherein she found out about the individual non-compete payments. She wondered why they had not been disclosed, and told him that they should be disclosed. Mr. Boultbee said that they weren't related-party transaction according to the then-current meaning of the term, but Ms. Stitt got her back up and said that the audit report (found at the end of the financial statements of a shareholders' quarterly or annual report) would be modified if those payments were not disclosed. (Any modification of the standard auditor's report is considered a red flag; it isn't taken lightly by the investment community.) She then had raised questions about board approval and buyer knowledge of the payments, as it would have affected the audit. When today's morning sitting ended, Mark Kipnis' lawyer was cross-examining her. The defense will likely ask questions about why Ms. Stitt didn't dig deeper into the records, as those payments had been disclosed at other times and in other places. With regard to David Radler testifying, there are only rumours as of now. It seems sensible, Mr. Waldie related, to expect that the other members of the audit committee will testify before Mr. Radler goes on the stand.
[His report has been webbed by the Globe and Mail. It notes that Mr. Boultbee, according to Ms. Stitt, "was quite forceful and the two engaged in a debate about the issue." The ending has this significant snippet of testimony, given under direct examination: "Ms. Stitt said that an audit is only an opinion based on selective testing of a company's financial transactions and management representations. She also said that fraud is difficult to detect because it involves an intentional intent to deceive auditors are not generally looking for fraud when they carry out an audit."]
Romina Maurino has filed a report, as webbed by 680 News. It explains why Mr. Boultbee refused to disclose those payments in the 2001 annual report, which was what the 2002 meeting was about. "Stitt said Boultbee told her the company did not consider the CanWest payments fell under the related-party transaction category because Hollinger International 'was just acting as an agent' to help distribute the money to individual executives named in the agreements. " Ms. Stitt also testified that she gave a "clean" audit for the 2001 financial statements once the payments were disclosed in the annual report, as she believed that the audit committee had approved the payments. The report ends with a note that Richard Burt is expected to testify that the audit committee was misled, which would tie his testimony in with hers for the prosecution.
Bloomberg's report, written by Joe Schneider and Andrew Harris, has a summary of Ms. Stitt's testimony. It notes that she was "surprised'" that the non-compete payments were disclosed to regulators in a first-quarter 2001 filing, but doesn't note if she said so under direct or cross-examination. [It also notes that another non-compete agreement, for newspapers sold to Osprey Media and another party (presumably Community Newspaper Holdings Inc.) in exchange for $16.1 million, was brought into evidence by the prosecution.]
Ms. Maurino's report has been updated, with some of the cross-examination of Ms. Stitt near the end of it; it's been webbed by 680 News too. She describes Michael Swartz, defense lawyer for Mark Kipnis, making the point that KPMG staff could have brought up any suspicious items to the audit committee themselves, and that "various experienced, high-priced accountants had vetted Hollinger's results."
A further updated Bloomberg report has more details on the cross-examination. When asked by Csr. Swartz if she knew that other KPMG accountants had seen evidence of the non-compete payments associated with a sale of newspapers to CHNI, Ms. Stitt admitted that she hadn't. Coverage of the direct testimony has also been webbed by Reuters.
[His report has been webbed by the Globe and Mail. It notes that Mr. Boultbee, according to Ms. Stitt, "was quite forceful and the two engaged in a debate about the issue." The ending has this significant snippet of testimony, given under direct examination: "Ms. Stitt said that an audit is only an opinion based on selective testing of a company's financial transactions and management representations. She also said that fraud is difficult to detect because it involves an intentional intent to deceive auditors are not generally looking for fraud when they carry out an audit."]
Romina Maurino has filed a report, as webbed by 680 News. It explains why Mr. Boultbee refused to disclose those payments in the 2001 annual report, which was what the 2002 meeting was about. "Stitt said Boultbee told her the company did not consider the CanWest payments fell under the related-party transaction category because Hollinger International 'was just acting as an agent' to help distribute the money to individual executives named in the agreements. " Ms. Stitt also testified that she gave a "clean" audit for the 2001 financial statements once the payments were disclosed in the annual report, as she believed that the audit committee had approved the payments. The report ends with a note that Richard Burt is expected to testify that the audit committee was misled, which would tie his testimony in with hers for the prosecution.
Bloomberg's report, written by Joe Schneider and Andrew Harris, has a summary of Ms. Stitt's testimony. It notes that she was "surprised'" that the non-compete payments were disclosed to regulators in a first-quarter 2001 filing, but doesn't note if she said so under direct or cross-examination. [It also notes that another non-compete agreement, for newspapers sold to Osprey Media and another party (presumably Community Newspaper Holdings Inc.) in exchange for $16.1 million, was brought into evidence by the prosecution.]
Ms. Maurino's report has been updated, with some of the cross-examination of Ms. Stitt near the end of it; it's been webbed by 680 News too. She describes Michael Swartz, defense lawyer for Mark Kipnis, making the point that KPMG staff could have brought up any suspicious items to the audit committee themselves, and that "various experienced, high-priced accountants had vetted Hollinger's results."
A further updated Bloomberg report has more details on the cross-examination. When asked by Csr. Swartz if she knew that other KPMG accountants had seen evidence of the non-compete payments associated with a sale of newspapers to CHNI, Ms. Stitt admitted that she hadn't. Coverage of the direct testimony has also been webbed by Reuters.
Brief note concerning the Intrade Conrad Black trial contracts
They haven't changed at all over the last week or so, and the FTPredict ones are showing the same stagnancy. I'm not going to bump the post date forward to match the checking of the data any more unless some data has changed. Today, nothing has, so the update entry is floating downwards.
Media Roundup: Enter The Audit Committee
The sixth week of the Conrad Black trial is about to begin; here are the media reports anticipating Richard Burt's testimony today:
1. From 680 News, a Canadian Press report outlining what Mr. Burt's testimony is supposed to bring to the prosecution's case: proof that Mr. Black and the other defendants lied to the Hollinger Int'l audit committee. A rearranged and slightly paraphrased version of the same report has been webbed by Accountancy Age.
2. From Bloomberg, a much longer article discussing David Radler, by Erik Schatzker and Michael Janofsky. Although it notes that Mr. Radler agreed to his plea bargain largely out of pragmatism, it also hints at a reason for a falling out between the two. The article also notes that the plea bargain has yet to be approved by Judge St. Eve.
3. Also from Bloomberg, a story of the conviction of Joseph Nacchio, of insider trading. He's one of several CEOs convicted in the last several years; they are also named in the write-up. Conrad Black is mentioned too.
4. The Globe and Mail's Paul Waldie has an anticipatory article of his own, but it anticipates what Ms. Stitt will be testifying about. There has already been controversy over her expected testimony, as the defense has alleged that her purpose is to insinuate the existence of fraud(s) that never took place.
5. From The Age, a note in the "Business Day" column, entitled "R-day for Conrad Black," which predicts that David Radler will testify this week.
1. From 680 News, a Canadian Press report outlining what Mr. Burt's testimony is supposed to bring to the prosecution's case: proof that Mr. Black and the other defendants lied to the Hollinger Int'l audit committee. A rearranged and slightly paraphrased version of the same report has been webbed by Accountancy Age.
2. From Bloomberg, a much longer article discussing David Radler, by Erik Schatzker and Michael Janofsky. Although it notes that Mr. Radler agreed to his plea bargain largely out of pragmatism, it also hints at a reason for a falling out between the two. The article also notes that the plea bargain has yet to be approved by Judge St. Eve.
3. Also from Bloomberg, a story of the conviction of Joseph Nacchio, of insider trading. He's one of several CEOs convicted in the last several years; they are also named in the write-up. Conrad Black is mentioned too.
4. The Globe and Mail's Paul Waldie has an anticipatory article of his own, but it anticipates what Ms. Stitt will be testifying about. There has already been controversy over her expected testimony, as the defense has alleged that her purpose is to insinuate the existence of fraud(s) that never took place.
5. From The Age, a note in the "Business Day" column, entitled "R-day for Conrad Black," which predicts that David Radler will testify this week.
Sunday, April 22, 2007
Three Period Pieces, And Another "Prediction Market."
Presented are three blogs that have discussed the Conrad Black trial, plus another "prediction market" that uses play money and an algorithm:
1. From "Toronto Estate Lawyer," an April 11 comment, on why Mr. Black seems to be turning things around for himself: "perseverence in the face of adversity." The author of it, Justin De Vries, argues that such an attitude is the key to getting through an unavoidable litigation.
2. The Law Blog of the Wall Street Journal has a category on Conrad Black - one that was frequently updated until March 23rd, but has fallen into disuse since.
3. A pre-opening (Mar. 7) entry in the blog of veteran Canadian business reporter Diane Francis, which describes Chicago as a town that is blue-collar at heart, respects self-made success, disdains ostentation and roots for the underdog. She concludes that Mr. Black will have a tough time with a Chicago jury - common-sensical in its time but now unusual, given how the defense has really fared. Edward Genson may be the man credited for the reversal in the courtroom; the most obvious candidate for the turnaround in the media would be Mark Steyn.
Also: a small prediction market, run on play money, has a contract on the outcome of the Conrad Black trial: "Will former Sun-Times owner Conrad Black be found innocent in federal court in Chicago?"
1. From "Toronto Estate Lawyer," an April 11 comment, on why Mr. Black seems to be turning things around for himself: "perseverence in the face of adversity." The author of it, Justin De Vries, argues that such an attitude is the key to getting through an unavoidable litigation.
2. The Law Blog of the Wall Street Journal has a category on Conrad Black - one that was frequently updated until March 23rd, but has fallen into disuse since.
3. A pre-opening (Mar. 7) entry in the blog of veteran Canadian business reporter Diane Francis, which describes Chicago as a town that is blue-collar at heart, respects self-made success, disdains ostentation and roots for the underdog. She concludes that Mr. Black will have a tough time with a Chicago jury - common-sensical in its time but now unusual, given how the defense has really fared. Edward Genson may be the man credited for the reversal in the courtroom; the most obvious candidate for the turnaround in the media would be Mark Steyn.
Also: a small prediction market, run on play money, has a contract on the outcome of the Conrad Black trial: "Will former Sun-Times owner Conrad Black be found innocent in federal court in Chicago?"
Media Roundup: Earth of the Salt
There are only three stories on the Conrad Black trial posted overnight. One summarizes what's happened so far, another discusses the current status of the Conrad Black home away from home [and the third spells out what Richard Burt is expected to add to the prosecution's case]:
1. From Mary Wisniewski of the Chicago Sun-Times, a quick recapping of all the evidence shown up to now. She compares the trial to a jigsaw puzzle, with the prosecution entering "pieces" into evidence as well as fitting them with others already introduced, and the defense attempting to show that the prosecution is jamming misfit pieces into places of its liking.
2. A profile of the Black house, at 1930 S. Ocean Blvd, in the Palm Beach Daily News, with the notification that it has been withdrawn from sale. "Two people who have spoken with him recently say that's because he expects to be acquitted and return to the estate." Both are quoted in the rest of the story.
3. Romina Maurino details that the prosecution has to prove some sort of intent to mislead, and that Richard Burt, expected on the stand tomorrow after Marilyn Stitt is done with, is expected to provide ear-witness testimony that Peter Atkinson confessed to misleading the board. Mr. Burt has had brain surgery, and the expectation is that the defense will use it to show that he misremembered, as Mr. Atkinson denies ever saying it. (This report has been webbed by 570 News.)
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Mark Steyn's latest on the trial is uncharacteristically quiet for him. Its theme is that he and a couple of other Black defenders have, with respect to the press, turned out to be the vanguard. One of the reasons for this change of heart, as he notes, is the impression that Conrad Black has been underrated as a CEO, specifically with regard to his dealmaking skills. This underrating brings up the suspicion that he's been hauled into the docket largely as a result of malice. (Mr. Steyn is careful to note that these points are irrelevant to the trial process itself.)
1. From Mary Wisniewski of the Chicago Sun-Times, a quick recapping of all the evidence shown up to now. She compares the trial to a jigsaw puzzle, with the prosecution entering "pieces" into evidence as well as fitting them with others already introduced, and the defense attempting to show that the prosecution is jamming misfit pieces into places of its liking.
2. A profile of the Black house, at 1930 S. Ocean Blvd, in the Palm Beach Daily News, with the notification that it has been withdrawn from sale. "Two people who have spoken with him recently say that's because he expects to be acquitted and return to the estate." Both are quoted in the rest of the story.
3. Romina Maurino details that the prosecution has to prove some sort of intent to mislead, and that Richard Burt, expected on the stand tomorrow after Marilyn Stitt is done with, is expected to provide ear-witness testimony that Peter Atkinson confessed to misleading the board. Mr. Burt has had brain surgery, and the expectation is that the defense will use it to show that he misremembered, as Mr. Atkinson denies ever saying it. (This report has been webbed by 570 News.)
----------
Mark Steyn's latest on the trial is uncharacteristically quiet for him. Its theme is that he and a couple of other Black defenders have, with respect to the press, turned out to be the vanguard. One of the reasons for this change of heart, as he notes, is the impression that Conrad Black has been underrated as a CEO, specifically with regard to his dealmaking skills. This underrating brings up the suspicion that he's been hauled into the docket largely as a result of malice. (Mr. Steyn is careful to note that these points are irrelevant to the trial process itself.)
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