Thepending guilty plea on fraud charges from Conrad Black associate David Radleramid rumours that he is "ratting out" his long-time friend and businessassociate has changed the landscape of an important appeal from an OntarioSuperior Court decision.
May 31 decision of Justice Colin Campbell in Catalyst Fund General Partner 1
Inc. v. Hollinger Inc. requires Black, Radler, and John Boultbee, the principal
officers and directors of Hollinger Inc., to answer questions under oath posed
by Peter Griffin of Lenczner Slaght Royce Griffin of
directors resisted the inspector's application on the basis that they were
facing criminal investigation before a grand jury in the state of
The directors appealed. At press time, the hearing was set for Sept. 6 in the Court of Appeal.
But, in what amounts to a remarkable irony, it seems that Radler will now be telling the Court of Appeal that he doesn't want to be examined because it will undermine the integrity of the prosecution's investigation.
Black and Boultbee, of course, are sticking to their original argument.
According to Jack, Radler's imminent indictment and plea strengthens his client's case.
be asking the court to hear new evidence, and I believe the court will do so
because we had no way of knowing when charges would actually be laid before
Jack maintains that the indictment of other directors is "beyond peradventure," since they appear as unnamed co-conspirators in the indictment.
cross-border dilemma arises because of Canadian legislation designed to help
the minister approves the
request, the U.S. Justice Department hires Canadian lawyers to apply for an
order before a judge of the province in which the evidence or some of the
evidence is located.
the evidence is located.
application for such an order is ex parte. The judge hearing the application
may make an order if he has reasonable grounds to believe that an offence has
been committed and that relevant evidence is available in
other words, there is no explicit requirement for a Canadian judge to consider
Although both nations have raised the right to a constitutional principle, the differences in their rules can be a trap for the unwary.
Catalyst has raised the issue squarely.
The case's origins date to August 2003, when a special committee investigating fraud at Hollinger International and led by former SEC chair Richard Breeden, accused Black, Boultbee, and Radler of presiding over a "corporate kleptocracy," where "ethical corruption was a defining characteristic of the leadership teams."
The Breeden report alleges the three men and others received $88 million in "sham non-compete payments" from Hollinger International, engaged in "textbook money laundering" with the proceeds of the payments, and "affirmatively misrepresented" their compensation plans to the audit committee.
December 2003, Black responded to a subpoena from the SEC by invoking the Fifth
Amendment and declining to testify. Eleven months later, the SEC filed a
securities fraud complaint in
complaint alleged that Black and Radler fraudulently diverted cash and assets
from International. About the same time, the
Meanwhile, Catalyst, a shareholder in Hollinger Inc., had in October 2004 persuaded Ontario Superior Court Justice Colin Campbell to order an inspection involving various transactions at the parent company. These included the sale of three corporate jets; management fees paid to Black's personal holding company; non-competition payments received by Hollinger Inc. amounting to $16.5 million; and real estate transactions at Inc.'s subsidiary Domgroup Ltd.
believed that it was, and in early January 2005,
opposition, the directors relied on the evidence of Barry Bohrer, a partner in
Jack puts it more plainly: "Once the cat's out of the bag, it's going to scamper across the border and that will be a big problem for our clients."