In becoming so sanctimonious about routine corporate expenses, and in trying to incriminate an old friend whom she should have known to be innocent and, indeed, morally incapable of crimes, and who had done her many favours in days when she was less exalted, she was betraying the professed ethos of the big business, big philanthropy culture where she had coquettishly bluffed, conferenced, and made her way to the summit. Her perseverance was commendable, and I had been happy for her, despite her recently acquired and unbecoming du haut en bas self-importance. At her new socio-economic echelon, inculpating former close colleagues and social friends was unseemly.
The jurors, unworldly in these matters though they were, were not inexperienced and recognized moonshine when they heard it, and saw at least that her testimony was not believable. So did the press, and they pierced the lingering prosecution bias of much of the media to arraign my formerly good and glamorous friend for incompetence and lack of credibility. She was guilty of both; worse, and bitterly surprising, she was contemptible.
Romano again brought out the non-prosecution deal with the SEC, which tore the rug out from under whatever was left of the credibility of the former Audit Committee. Kravis walked upright and ostensibly shameless from the courtroom. She had walked brazenly away from many embarrassments before, but she did not have the dominating air she had affected on her second day. She had the slightly wan air of the naughty convent girl who has endured Mother Superior’s wrath, the rosary, even the hairbrush.
The New York Times revealed that she had returned to New York in time to be the hostess at one of the MOMA evenings, which I was thankful I was no longer asked to contribute $25,000 to attend. Being spared the rigours of the New York society charity circuit was one of the few dividends of my present thralldom. Press reaction to her performance under Greenspan’s questioning was uniformly disrespectful.
A final thought on the Kravises: a few weeks later, Marie-Josée expressed the hope to a mutual friend that I be acquitted. That may be how it works in the heady echelon where she now lives and reigns, but it won’t do. Albrecht has his Laurentian Rhine-Maiden, and Marie-Josée has the magic (cushion-diamond) ring and the gold, but she was speaking for the record under oath, before a federal judge, a jury, and the press of the Western world, on matters of high principle and public policy interest.
She chose the path of the low and mindless Park Avenue gossip. I had thought better of her as an aventurière who had hit the jackpot and had raised herself up.
I had admired her and rejoiced for her success, and success it was: she is a good wife and chatelaine and carried off her relaunch in New York with tremendous aplomb before the most skeptical audience in the world, including many “friends” to whom Barbara and I strenuously championed her and who now coo about her French savoir faire.
I had watched as Marie-Josée left the Bilderberg conference I invited her to near Athens, in 1993, when she got into a taxi with Henry Kravis, whose acquaintance she had recently made. She was wearing a short pink mini-suit, to start, I surmised, a new life. Most of what followed was foreseeable and, for me, who liked her, heart-warming. She was moving off a rough road onto a great boulevard.
Unfortunately, her success had affected her sense of decency. If she would go before the press of the world and under oath to incriminate me in matters that had nothing to do with her or the SEC, nothing was beneath her. I didn’t expect the truth from many witnesses, and would have been astonished to hear it in these circumstances. I did expect a closer approximation of it from her.
She would have lost nothing and gained much if she had stuck to the “story” she told the SEC but not looked down her nose at an air trip that it was now public knowledge I had overpaid the company for, and a dinner that she knew to be a largely corporate event, which she had helped plan.
The wanton climber is morally clothed with some rules of the road. Once arrived at her destination, in that one sense, Marie-Josée was naked; there was no haute couture or expensive lingerie to disguise her performance. The spectacle of her testimony was ugly.
NOW THAT THE TRIAL HAD REACHED the Audit Committee, the stakes were greater, the theatre was higher quality, and the possibilities were intriguing.
The press leapt at the appearance of Eddie Greenspan in the role that he had been touted to fill. He was an instant hero, and left Eddie Genson feeling quite disconsolate. Fortunes shifted quickly, and where there had been some thought of importing Terry Gillespie to cross-examine Radler, Greenspan was now the leader of the defence counsel. I had a reprieve from my fears about the competence of my counsel, even if my daughter and wife did not. If Greenspan could thrash the nimble M-J Kravis to a pulp, as he had, I knew he would not have much problem with the ponderous Thompson, who was in the muck of the Audit Committee’s lapses more than Burt and Kravis.
He had been the well-paid committee chairman, and anyone who had seen his rather inept performance as a member of the 9/11 committee would know what a mismatch there would be between Thompson’s amnesia and Greenspan’s questions.
Sussman gave Thompson a very breezy, flippant, direct examination and then tendered him to the defence. Greenspan tore him limb from limb. He dragged him like an un-housetrained dog to the sight of his many incontinences and asked him how he could claim to be unaware of the payments. Thompson acknowledged, as every director of a public company knows, that the first item to be read in any 10K or financial statement is the related-party section. When asked if he had read the eleven versions of the 10Ks he had signed and the offering memorandum and the proxy circular that he had signed and approved that contained approvals of the contested payments, he said, “I skimmed” them.
Greenspan instantly saw the potential for that. “Skimmed?” This started a long series of questions brilliantly played by Greenspan. He established that Thompson made $80,000 a year for two days work for Hollinger International and that he spent as much of the company’s money travelling with his wife to one of our corporate dinners in London as the company paid for its part of the December 4, 2000, dinner I was charged with embezzling. Thompson blundered headlong into one baited trap after another for about four hours. It was a thoroughly enjoyable performance. Greenspan concluded with a mortally damaging question: “I suggest to you that you and the other Audit Committee members knew all about these payments, that you approved them all, and that when criticism arose, you all conveniently forgot. No more questions.” Greenspan left his podium while Thompson spluttered his unconvincing demurral.
Everyone in the courtroom knew that they had all given inaccurate and misleading testimony and only the protection of distinctly uncomfortable U.S. attorney Patrick Fitzgerald, who favoured us with one of his visits to the courtroom, prevented them from suffering for it.
Safer took a line at some distance to the position of the other defendants, as Kipnis had been a salaried officer and had received no non-compete payments, but he did a great deal more harm to Thompson’s credibility than to the co-defendants when he wrung from Thompson the fact that his committee had approved more than $216 million of payments over seven years to the senior management (not an unreasonable figure given the number of people involved and the performance of the company), without once asking for a single page of documentation. Safer ripped into Thompson with great histrionic emotion and scored very heavily for his client, an evidently decent man who was following Radler’s orders and had not profited at all from the contested payments. Safer presented a very large demonstrative exhibit (a panel about twelve feet long and four feet high), detailing the many Audit Committee approvals of the disputed payments.
Where he had arrived as the former U.S. attorney and four-term governor, much deferred to, Thompson left as a joke, discredited and unconvincing. For weeks after, weather girls on Chicago television and traffic reporters in helicopters spoke of “skimming clouds” or “skimming over” an expressway. The truth-sayers who were to pave the way for Radler, and respectabilize and render credible his orchestrated story,
had failed completely. They had been torn to pieces, and were revealed as, in Mark Steyn’s words, “Olympic-scale synchronized skimmers.” They accustomed the jury to the relentless exposé of the frailty that comprised the prosecution’s case. I suggested to counsel that they say that these witnesses are indistinguishable from bank robbers and street thugs. As usual, my advice was too bold for the lawyers. There were three of them (on the Audit Committee); they had eleven draft 10Ks, which each had two prominent references to the contested payments, plus proxy circulars and the due diligence teleconference and visits from KPMG. There were more than seventy-five sightings of these approved payments by Audit Committee members. The government case was a shambles, and knives were noisily being sharpened for their long-awaited star witness.
There were temperamental problems with both Greenspan and Genson, as well as physical ones. They frequently slumbered in the afternoons, facing the jury, not a very dynamic or purposeful image to project to those who would decide if I would spend the rest, or any, of my life in prison. Greenspan would awaken occasionally, like a crocodile whose nostrils have been tickled by a ripple on the water, and advise me to sit differently, that my posture was too erect for the jury, and then doze off again. (Mark Steyn called them “the dream team.”) It was very disconcerting.
Any new development tended to panic them. On several occasions they rushed into our little luncheon room and announced we had to demand a mistrial. I asked why, since there was no chance of obtaining one; wasn’t there a tactical response? Usually there was. When it was suggested that my “Musings” – which I had written periodically for the Ravelston partners and which tended to be intricate, and florid at times, but were always respectful of the shareholders and certainly never came anywhere near anything unethical – could be brought into evidence, Greenspan immediately said that in that case I would have to testify. This was nonsense. I didn’t think he had read any of the Musings anyway, and I said we would have no problem explaining them.
The issue of my testifying was something Greenspan and I had always thought was an ace up our sleeve. The prosecution had so oversold the idea that I was a snob and a brigand that I would be like an owl to crows. I knew the facts and had already memorized a great deal of the material. We put it about that I was desperate to testify and that Greenspan was horrified at the prospect.
Neither was the case. I could have seen off the prosecutors, but we were not sure how jury-friendly it would have seemed. Under U.S. rules, if I had testified, the prosecutors could have questioned me on many subjects they were not otherwise allowed to touch. Under U.S. rules of procedure, the prosecution can designate a wide range of subjects it reserves the right to raise if a defendant consents to testify on his own behalf. I could have fielded any admissible question, but my testifying would have prolonged the trial, made it much more complicated, and put us more on the defensive. It would have vastly raised my status as an accused above the other defendants, among whom I was trying to obscure myself, as much as they were trying to pretend this had nothing to do with them. We were doing very well pummelling government witnesses.
The government was promising to play the audio tapes of the 2002 and 2003 shareholders meetings, and I was confident that I would come through them well. In the end, we felt we got most of the benefit of my testifying through those audio tapes, with none of the downside that could have arisen from the Picador antics of Sussman and Cramer. I would have enjoyed slapping them around, but I might not have won friends on the jury doing so.
I had written hundreds of pages of explanations covering every allegedly inconvenient statement I had ever said or written, covered by condensed summaries. I rarely had the impression that either of my principal lawyers read much of it, other than when something was directly related to a cross-examination of theirs, though the junior counsel certainly did. Chief counsel were expected to be cool, unflappable, and physically and intellectually vigorous. Mine were not always encouraging in these respects.
On Monday, May 7, Sussman brought on a snoozer from KPMG, whose testimony was not relevant to anything, and then my former New York secretary Jan Ackerhielm, who was innocuous but irritatingly allied to the enemy. A pleasant, loquacious woman, she had been the secretary to Democratic Party chairman Larry O’Brien.
Then, at long last, David Radler emerged. He was hunched, very tanned, and trying to put a positive face on the shameful tale he had to tell, after ratcheting up his version of events to clear the hurdle set by the prosecutors. He seemed fairly cheerful, and at times witty, and less odious than defence counsel had prepared the jurors to expect. He had a bright-orange tie. No family members accompanied him. After all that we had been through together, and after such a build-up of anticipation, his appearance, though dramatic, was an anti-climax; it was hard to believe, even as it unfolded, in his first days as a witness, that any such preposterous scene was really happening.
The Rat bit on the second day. It had been a scheme to defraud the shareholders. He had picked it up a notch since his grand jury testimony, when he had claimed a silent conspiracy. Then he had simply not reported these payments to the Audit Committee and no one spoke of it. They augmented his grand jury statement by saying that there had been two or possibly three telephone calls, the last possibly involving Boultbee as well as, or instead of, me. This was where and how he received his orders to cheat the company out of $30 million in now claimed, undeserved, unapproved non-competition payments to individuals and to Hollinger Inc.
It need hardly be stated that no such conversations ever took place. The snitch, the whistleblower, one of the exalted figures in contemporary American commerce, is a familiar and generally despised figure, in schools and families, now revered only by the prosecutors and emasculators of the U.S. executive class. But Radler was operating on a different plane. He told a story that would bring me down and thus hold Breeden harmless from the consequences of his misconduct. Like dog trainers, Sussman and his interrogators kept raising the bar and told Radler he would have to incriminate me convincingly if he wanted a deal, to alleviate the punishment of his own crimes. Thus appeared in Radler’s sworn testimony the “two or three” telephone calls.
To inculpate me and equally totally innocent colleagues as collateral damage, to satisfy Breeden’s and Fitzgerald’s rabid lust for the big fish, and Breeden’s fear of my Canadian libel suits, and to secure an almost painless reprieve from his own crimes and the enjoyment of his newspaper acquisitions, Radler told his version and swore under oath to its authenticity. To Radler, it was a shabby but comprehensible business proposition. But it was despicable for the chief law enforcement officials of one of the country’s greatest cities, and the U.S. Department of Justice itself, to be full, knowing accomplices.
On the afternoon of May 8, as court was adjourned, I wrote a summary of the many errors and falsehoods in Radler’s testimony. He had implied, echoing the Audit Committee, that there was no geographic division in our company and that we were both immersed in all the operations of the company. This was a complete fiction; the East-West division had existed since he moved to British Columbia in 1972. (Israel, which he ran, and Australia, which Dan Colson and I ran, were exceptions to the rule.) He tried to involve me in American Trucker and now claimed that his fax to all of us that the buyers in Paxton and Forum wanted non-competition agreements from us was a joke. Radler had the effrontery to wave at my son Jonathan (to whom, I must say, he had always been very kind), who joined us for the week, in the corridor, and who resisted the temptation to give a digitally coarse, or any, response.
Radler claimed that we could not show these Paxton and Forum payments to the Audit Committee. In fact, as they represented a small percentage on a book profit of $562 million on the community newspaper sales, and a real profit of about $1 billion (because accumulated profits from the assets had retired their acquisition cost), there would have been no difficulty with them, if they had been requested, which previous testimony at the trial confirmed, throug
h the buyers’ wish for non-competition from “affiliates” of the vendor company. Otherwise, the Audit Committee would not have reconfirmed the contested payments at least fifteen times.
As has been mentioned, when Radler had told me of his sales of the community newspapers, which I had proposed, I told him that his success would have to be rewarded. I spoke to Boultbee about giving Radler a $1-million note from Ravelston, to be cashed when this would be practical. He had called back a few days later and said that there was no need for that, as recent buyers had requested and the Audit Committee had approved additional non-competition payments. And the executive committee (with only Richard Perle voting, as Radler and I were interested parties) approved the Forum and Paxton payments and was ratified by the whole board after what the adopted minutes of the meeting called accurately “extensive discussion.”
After Israel Asper had requested non-competition payments from me, Radler had become intoxicated with them, especially their tax-free character in Canada, and devised them where he could, but failed to get an orthodox approval for some of them. The rest of us accepted his word that they had been specifically approved and requested, as the CanWest ones were, in a deal I had made and supervised, and we kept seeking routine confirmation from the Audit Committee of what we believed they had done. They gave that confirmation many times, and were confirmed in that by the auditors. This was the most fantastic fable of a silent conspiracy I have heard of; Gus Newman was correct when he said in his opening remarks that Soldier Field or one of the other Chicago stadiums would be necessary to hold all the conspirators, including dozens of lawyers and auditors.
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