The proceeds from the London sale went to reduce Murray Sinclair’s mortgage on my London and Toronto homes from Can$35.4 million to Can$11.5 million. That mortgage had raised the cash for the payments ordered by Strine to Inc. (and thence to International). I paid Williams & Connolly the very steep sum of US$4.7 million (beyond the US$4 million I had already paid to that law firm). We had left over from that fine house of Barbara’s sad and heroic efforts a total of US$103,000. I had thirteen days in which to cobble together the next deal, which would enable me to pay the Canada Revenue Agency $4.2 million and get them off my back for a while and permit me to bring some of the other legal accounts more or less current. I would need some reserve, as I now had practically no income.
Active sources of financial support simply flaked off in the familiar manner. I explored some potential sources in case of dire need. One very wealthy friend of many years said, “Considering where you were a few years ago, it’s fantastic you’re selling houses to protect yourself.” I would have used a different adjective.
Alfred Taubman, whom I had re-elected as a director after he had been convicted of a felony, had publicly defended at the shareholders meeting, and had visited when he was incarcerated, almost wept his gratitude to me. He was at pains to tell me that, although he was a billionaire, his trustees wouldn’t let him do anything.
I spoke to a senior financial executive at Brascan, with whom we had done many deals, and where I had been a director for nearly twenty years. He expressed the company’s gratitude for what I had done for them in the past, sent a perfectly acceptable term sheet, and handed the matter over to New York affiliates. They phoned me once for information and a second time a couple of days later to announce they weren’t interested.
It is a terrible thing to have assets and be partly ostracized and abandoned while staring down the barrel of a complete cash evaporation. I have rarely felt more helpless than when Barbara dropped her own legal bill on my desk and I knew, but did not tell her, that I had no money to pay it with. It had come to this: I was an inadequate provider.
As I negotiated feverishly with a diminishing number of potential mortgagees in Palm Beach, I was running out of money. For a short time, I did not even have the means to pay the severances for the dutiful people who worked for us to the end in our London house. The agile Joan Maida stretched out what payments she could, as everything went to the wire with D.E. Shaw, a company that includes a high-yield loan unit. They satisfied themselves of the security of the Palm Beach house, coming in after Canada Revenue. Shaw was completely unimpressed by the controversy, which was what enabled them to charge a usurious rate of interest.
The negotiation over details was excruciating. Shaw had an interest rate in the mid- to upper teens depending on the duration of the mortgage, but they rolled up interest, which I correctly calculated would be offset by capital appreciation up to 2008, and they did their best to meet my timeline. In the last week, from May 9 to May 16, I was living on a thin diet: I had little appetite.
Barbara and I were, to all useful intents, alone in the world. We managed. On a couple of occasions, I even balked at Shaw’s terms, though I had only the sketchiest of backup plans, and they softened slightly. I put both the Palm Beach house and our New York apartment up for sale. It was a retreat to Toronto, to a house I loved in a city and a country that hadn’t been especially congenial as I staggered along the gauntlet of the legal enforcers and regulators and jackal press of both countries (and overseas).
When Barbara returned from London on May 16, I was too engrossed in last-minute details to meet her at the airport as I normally would after being parted so long. About an hour after her arrival at our house, it was confirmed that the funds from Shaw had been wired. Canada Revenue was paid out the next morning and did not complain about a delay of a couple of hours. We had a reprieve.
After these few steps, which relieved acute tension, there was almost exhilaration. Barbara and I had taken on very raw tasks after the privatization disaster. She had unflinchingly liquidated our British life. The house was evacuated room by room as Barbara retreated to our bedroom, where she was accompanied by a large cardboard picture of me that she had used years before when I was unable to attend one of our dinner parties at the last moment. Almost all the contents of that house have been in storage, these six years, awaiting our return.
Her description of going down the front steps of our house for the last time and closing the gate behind her was wrenching. She had been wandering since her early childhood and only her sister and I knew how difficult it was for her to leave London this time. She had thrown herself into a lifestyle she did not seek and lost the secure nest she had been building before I arrived. I felt responsible. But this time, at least, she had full confidence in our love. With the mortgage from Murray Sinclair, I had managed to climb back to a point where Brendan Sullivan of Williams & Connolly, instead of going to war as he had threatened to do in collection of his invoices, was reinstalled as an ally and, so he implied, a deterrent to the enemy. The non-criminal legal work (which was most of it, since the Justice Department was still outwardly inactive) was in the hands of Baker Botts, a fine firm with a more tolerant and restrained view of billing practices. I had got rid of the tax collector for at least a year and had kept us in funds for six months.
The media interpreted Ravelston’s receivership as a bankruptcy, though it was public knowledge that the company had $220 million of assets and insignificant liabilities except for the pension plan, whose main participants were the six Ravelston shareholders.
This was the new strategy largely born out of necessity. Let the press, as it did, go cockahoop celebrating my financial demise. We could sell houses we no longer needed, from a life that we no longer led and that now looked less desirable, given the conduct of some of our so-called friends. I had no time to wonder if we would have continued in that society with those “friends” had events not interrupted it, or whether I would have become more discriminating. Our private newspaper companies were making US$30 million per year and would be clear of bank debt in less than three years – although their banking arrangements prevented the removal of any money from them for some time. It was a matter of patching things through until then. The companies, though, were in David Radler’s control, which would soon create other problems.
Our friends in Britain had been magnificent with Barbara during her last month there. Peter (Lord) Carrington, Britain’s greatest nobleman and ultimate Whig, wrote to Barbara a few days after her return from London, expressing admiration for the “great dignity” with which we had handled our troubles. Elton John came to our London home, at a time of chaos and removals, to take her out to dinner. He brought a little box with a beautiful diamond pavé star from the British jeweller (and loyal friend) Theo Fennell. “You’re the star,” he said, giving it to her. So was he.
–
THE CASCADE OF UNBIDDEN IRRITATIONS did not abate even for a few days. Two days after I’d paid Canada Revenue, Toronto’s chief commercial judge, James Farley, confirmed the eviction of Jack Boultbee, Peter White, and me from 10 Toronto Street. This was the latest indignity and humiliation Walker had devised. I had had my office there for twenty-seven years.
Justice James Farley was a local celebrity and self-styled man of decision, a loud-mouthed hip-shooter in fact, though not as commercially naïve as Campbell. He said that physically separating the Walker faction from the owners of the building and the companies in it would de-escalate tensions. Farley had supported Ravelston’s acceptance of U.S. jurisdiction and had made several antagonistic remarks from the bench about “the old guard.” And he eventually contended, after he had retired from the bench, that I had been unfairly treated by the Ontario courts. So I had been, but along with Campbell, Farley’s judgments had been the most Strine-ish in their gratuitous animosity. At least Campbell, unlike Strine and Farley, did not consider himself a blithe wit.
Then Gordon Walker, Paul Carroll, and Tony Kelly
launched a lawsuit claiming I had bilked Hollinger Inc. of more than $500 million. It was a fantastic claim, but in this climate, no attack on me was thought excessive.
The Ernst & Young inspection costs stood at $10 million at this time – no findings, no report, only demands for more money, for prostrate cooperation, and for an ever-expanding mandate. Campbell, for his part, when the inspection he had inflicted on the company was questioned, recoiled and defended the inspector like a child defending a sand castle from an incoming wave. Though I had never laid eyes on either of them, both Campbell and Farley reminded me of Chekhov’s prayer that God might protect him “from provincial officials who imagine themselves to be important.”
More serious than the antics of these Canadian farm-team bit players in Richard Breeden’s assault was the word we received two days after Farley’s order. The assistant U.S. attorney in Chicago, Robert Kent, was about to recommend a criminal prosecution. He had invited Hollinger Inc.’s lawyer in to explain why that company should not be a defendant. Walker would have the news and would doubtless ensure the breathless dissemination of it. Kent had obviously subscribed to substantial parts of the Special Committee report.
It was now clear that it had been an act of great good fortune that Barbara had managed to close up the London house on time and that I had, with the help of my friends at Westwind Capital, negotiated with Murray Sinclair a continuing mortgage adequate to permit full payment of the Williams & Connolly legal fees. As it was, Sullivan was in fighting trim, claimed to be heeding the tocsin, and appeared confident of our case. He thought that the chances of avoiding a prosecution were good and those of defeating one were very good. He urged “cautious optimism.” In such a foreign and terrifying environment, I continued to put my trust in the indispensable man. I was still unwilling to face the extent to which I would have to rely on myself.
There were always rumours that someone among our executives was co-operating with the U.S. attorney to explain the incomplete documentations. The decisive moment would come when Radler had to choose between “copping” a plea and trying to incriminate me, or deciding to fight it out, protesting his innocence. This is the nexus of the severely flawed American system: plea bargaining in order to pursue the biggest fish, regardless of the facts. On balance, since Radler, I thought, had as far as I then knew a defence of honest error in American Trucker, and I was the principal possible complainant in the Vogt affair, and no one else had committed a crime it seemed unlikely that anyone would perjure himself by trying to implicate me in a crime that had not occurred. But I had a lurking fear, based on Radler’s casual attitude to most legal niceties, as well as his role in the Vogt affair, and tendency to lose his nerve under pressure. I thought he might be afraid of conviction in the American Trucker non-competition pay-off which he had ordered (though neither he nor anyone else except Hollinger Inc. had directly profited from it), and of a Canadian perjury charge in the Vogt fraud and perhaps in the Sun-Times circulation excesses. He was a pessimist at all times, and more than in the generic Jewish manner. His lawyer, Anton Valukas, a former U.S. attorney in Chicago and protégé of Jim Thompson, had told him that “defendants have a better chance in North Korea than in the U.S.” I could hardly believe it, yet also feared that he might be tempted to try to push me under the judicial bus in exchange for a very light sentence for himself and retention of the private community newspaper groups whose acquisition Breeden had attacked.
Valukas had always been a problem. He claimed to be concerned about my “lifestyle” and image and as an ex-prosecutor knew how to amplify such concerns. Early on, he had asked Greg Craig whether I was another Dennis Kozlowski, the eventually jailed head of Tyco, who had received a $17 million apartment from the company; spent millions of the company’s money on a party in Sardinia in honour of his wife, including much-publicized ice statues urinating champagne; and had borrowed hundreds of millions of dollars from the company, allegedly on the verbal approval of a deceased director. I don’t know if Kozlowski was guilty or not, but he left a great deal hanging out in public relations terms.
Contemplations of this kind enabled me to see how the prosecutors and Breeden had worked to kill the privatization of Inc. I assumed he had told them, as he had everyone apart from me, from October 2003 on, that crimes had been committed. Even the grandstanding hypocrites of the OSC would not scuttle the interests of the public shareholders out of malice or cowardice alone.
I finally faced up to the full gravity of the likelihood that once Breeden was in the frame, a desperate struggle was inevitable. He was determined to exact complete submission and had sufficient knowledge of the official spider web, and had built such a corporate governance brand for himself that he was a far more formidable adversary than he first appeared, in all his ponderousness. All that had happened since he drove off the private equity investors to get undisturbed access to his financial prey, tore up the restructuring agreement, and easily sold Strine a story to continue gorging himself and destroying our companies and using them as platforms to torment their builders, was inexorable. So was his management of the same tactic again with what he must have regarded (with reason in this case) as the wool-hatted, corn-cobbing yokels of the OSC. The shareholders were doomed, and I would only be rid of him by going through the legal morass until we got to a court of law, and not just another pseudo-legal raising heavenwards of the moist official fingers of bias and psephology.
Once privatization was strangled in its cradle, there was no visible end to the metastasizing litigation. Facing and rebutting criminal charges might be the only way to retrieve my reputation. I had known almost from the start, after he crossed me on the Restructuring Agreement in November 2003, that this was Breeden’s fervent ambition, and except for the nonsense about racketeering, he had won every round. He might again find a cooperating judge, this time in Chicago, where any criminal case against me would be heard, by a judge influenced by, and perhaps even named on the advice of, Jim Thompson. But convincing a jury beyond a reasonable doubt that I had committed a crime that did not occur and in circumstances of which I knew nothing, when faced with a barrister of the ferocity and skill of Brendan Sullivan, aided by Eddie Greenspan and Bill Jeffress, would turn out to be, I thought, at least a tougher challenge than poisoning the shallow wells of the media, the cross-border lower courts, and the easily misled regulators. At some point, I prayerfully reasoned, due process would have to intrude on this ex parte, bloodless dismemberment.
It would be hellfire and dead cats, but it would be the turning point. We should win, and then the momentum would be broken decisively. Breeden had apparently pushed the Chicago prosecutor into action, but he was gambling almost as much as I was.
I was shaken but not demoralized. The prospect of United States of America vs. Conrad Black would have been too horrifying to imagine in my previous life. But as the crisis gradually deepened, one disappointment succeeded another, more people betrayed me and more crowded into the ranks of my enemies, pandering to the basest of the media and one another, it became difficult to be horrified. I would be upholding vital principles, I told myself – honest capitalism and impartial law, both of which had been degraded beyond recognition in this ghastly sequence of outrages.
As I began to accept the likelihood of a criminal trial, I felt like Koestler’s Rubashov. The fear of the event had been more torturing than the reality. I would return to Chicago, a city I had romanticized as a younger man because of its writers, architects, lore, and general muscularity, to be wrongfully prosecuted by the U.S. Department of Justice. My decades of love of America would come to this absurd dead end.
In the two years since the Special Committee had been created, it had become necessary to cast this fight as one for principles – a fight that had at least a historical precedent of victory. A rich businessman being unjustly stripped of the proceeds of his work of thirty-five years, his possessions, and reputation is not a sympathetic figure in our society. I was no Dreyfus or Solzhenitsyn
. But it inspired me that they both survived terrible persecution. My fate was not going to be physical torture or solitary exile but, incredibly, I was fighting for my freedom, for the right to live out my remaining years with my wife and family. Injustice on the scale I had experienced, even in a society that has abandoned the rack and Devil’s Island, is painful beyond measure, particularly when you alone seem to be singled out.
As I was acclimatizing myself to this new test of nerves and fibre, I called Brendan Sullivan, who assured me that the prosecutors were incapable of laying a charge, that they were engaging in a standard tactic to try to shake loose parties ready to cop a plea and inculpate others. He thought they would have a problem cracking David Radler, and that if Radler didn’t roll over, they could not charge me. If he did, they would, but they wouldn’t win. He thought that the U.S. attorney had not really looked at the evidence and was simply responding to the badgering of Breeden. His firm had recently cross-examined Breeden as an expert witness and judged him lacking.
It soon came to light that that Kent’s antics were motivated by a concern about the statute of limitations closing out his right of action (only months were left on the five years since the questioned transactions). And that Nate Eimer, Hollinger Inc.’s amiable Chicago counsel, who had presumably been selected as the recipient of the intelligence from the assistant U.S. attorney, because of his excitability, was running around as if his hair were on fire, exclaiming that we were all about to be indicted – as Kent had doubtless intended.
THE ELEGANT LITTLE BUILDING at 10 Toronto Street with its Greek-columned stone façade, which had been built in 1851 and was for many years a post office before Argus Corporation had bought it in 1959 was to be off-limits to me as of May 31, courtesy of Farley’s order. There was an order from his like-minded colleague, Campbell, prohibiting removal of documents from the building without the agreement of the inspector and a further order from Farley prohibiting the removal of anything but personal papers. Still, I had to move my office, and remove personal papers. There were a good many boxes that had been returned from England to Greenspan’s office (having already been examined), and Joan Maida had had some of them brought over to 10 Toronto Street to see what she ought to move to her new office, which was to be in her home.
Conrad Black Page 33