I Was Right

Scott Olson / Getty Images Many have blamed Conrad Black for the troubles of Sun-Times Media Group. But as the company he built declares bankruptcy, Black, writing from prison, tells how he was prevented from selling the company at a price that, in hindsight, looks very rich.

The bankruptcy filing of the Chicago Sun-Times this week brings down a curtain on one of the most squalid and shameful episodes in the recent annals of American corporate governance. My associates and I rescued that famous newspaper in the early ’90s from the edge of the state to which our enemies have now returned it, raised the operating profit of the company from $11 million to $85 million in five years, and relocated it to new presses from the neo-Gutenberg antiquity that awaited us.

I sold the parent company to British interests who expressed a willingness to pay $18 per share. Breeden persuaded a Delaware Chancery Court judge that he would do better. He did: for himself.

When a greenmailing shareholder demanded a special committee in 2003, I instantly agreed, to clear the air of any suggestion of improprieties. A member of the audit committee engaged a special-committee counsel before that committee was composed. He handed a lucrative mandate to a Bush Sr. administration acquaintance and prospective business partner, Richard C. Breeden, former SEC chairman.

It emerged that my former partner of 30 years, David Radler, had committed crimes that none of the rest of us had any connection to or knowledge of, (including frauds against me in private companies), and in the corrupt manner of the U.S. plea-bargain system, negotiated incriminating perjury against his colleagues for a brief, golfing holiday sentence for himself in Canada. Radler went to 13 catechetical sessions with the U.S. prosecutors in Chicago, shaping and amplifying his incriminating perjury until the bargain was struck: false testimony toward my conviction in the absence of one shred of corroborative evidence, for Radler's soft correctional landing.

I agreed with Breeden about a division of operating functions in October 2003, while matters were sorted out. He acknowledged there was no evidence against me and I was invited to remain as (non-executive) chairman. Breeden violated all of the points in that agreement from the start. We entered into "substantive negotiations" in January 2004 to iron out the problems. (Having just finished an extensive biography of Franklin D. Roosevelt, I told Breeden, who did not deny it, that Stalin had honored the Yalta Agreements more faithfully than he had our agreement of six weeks before.) I offered various proposals, including a first refusal on the sale of the parent company. His only response was to demand, in effect, the bankruptcy of the parent company and disappearance of the controlling shareholder. We were to fall on our swords as an ex gratia preemptive concession. I sued Breeden and other Hollinger directors and advisers in an Ontario Superior court on six libel actions. Breeden and the other defendants tried to get the suit dismissed. "There is no merit to any of these ridiculous claims. If (Lord) Black thinks that by bringing baseless litigation he can intimidate Richard Breeden he has seriously misjudged Mr Breeden," Breeden’s lawyer Thomas Kavaler said at the time.

I sold the parent company to British interests who expressed a willingness to pay $18 per share for Hollinger International, as Sun-Times Media Group was then called. Breeden persuaded a Delaware Chancery Court judge that he would do better. He did: for himself. He even intervened with the Ontario Securities Commission in 2005, to prevent us from buying out the minority in the Canadian parent.

He managed the considerable feat of maintaining himself as court-protected blood-sucker for our companies until there was not enough left to appease the famine of a new-hatched mosquito. He took $50 million for himself and $250 million for his accomplices and protégés. Our strong operating profit gave way to major losses. Breeden piled spurious lawsuits onto the back of the company, which guaranteed him a huge cash flow, and he tried unsuccessfully to weasel out of the indemnity for past officers' and directors' legal fees. Those who built the company were to be denied the means of self-defense as our company was transformed into a platform for Breeden to torment us. Even the Red Queen didn't try that one, and even the Delaware judge, whose 2004 decision was a catastrophe for the shareholders, wasn't having it either.

The Sun-Times stock price descended from $18, where it was two years after I left, unable to stomach any continuing association with the Breeden thugs, despite my love of the company I spent nearly 40 years building, to two cents last year, to 00.00 this week. Breeden's rubber-stamp chief executive, who had no newspaper background and no management experience of any kind, was paid $17,000 per day, $13 million in total, for his indispensable role in this commercial miracle. He was replaced by a septuagenarian banana marketer who spent much of his time explaining to a grand jury his relations with Colombian terrorists as the collapse of the company he was ostensibly managing gained velocity.

Breeden, whose career highlights include whitewashing George W. Bush on his lucrative insider trade in Harken Energy shares before the Gulf War in 1991, while he was Bush Sr.'s SEC chairman, and his immensely well-paid stints as special monitor or counsel of KPMG, WorldCom, and Fannie Mae, produced his special committee report in August 2005. (He has since, with no background at all, set up an offshore hedge fund and has promptly lost more than half his investors' money.) The report had cost over $100 million, accused us of a $500 million kleptocracy, and promised a future of unheard-of profitability for the company. On this, Breeden has delivered, as no profit has been heard of since he usurped the management. He also promised $1 billion of recoveries for the shareholders, and has instead wiped them out; $2 billion from the pockets and retirement and college funds of scores of thousands of people. His report did fulfill his objective of generating criminal charges that, if substantially successful, could vacate or at least mitigate my $1 billion libel suits against him, the largest defamation claims in Canadian history.

On the day the Sun-Times finally sank, an Ontario court rejected Breeden's effort to slither out of my libel suits. The court expressed skepticism, to say the least, about the Breeden report. After all, the shareholders have suffered at the hands of judges, some of whom should have bells on their heads like medieval lepers, to warn people of their approach. It is hard to do other than stare as if at a mirage, mumble words of thanks and think of Schiller: "Late you come, but still you come."

Predictably, the final explanation of the suicide party Breeden left behind at Sun-Times, when he fled on foot a few months ago, is that the destruction of $2 billion of shareholder value was the result of paying $108 million of the legal fees for the (90% vindicated) defendants, who created the money that the Breeden terror has squandered. There have been the inevitable references to the legacies of our era. And there have been the inevitable credulous excrescences of this bunk in some of the media.

There have indeed been crimes in these violated, broken, shamefully cast-away companies. As the chief victim of those crimes, I'm not too concerned about what I have lost financially myself, but I tremble with horror at what has been done to the shareholders, the employees, some of whom have lost or will lose, their pensions as well as their jobs, and at what has happened to some of the world's great newspaper titles. My gratitude to the very large number of readers I reach in all the countries where I write is beyond my ability to express here. But on behalf of the thousands of my former Hollinger and Sun-Times colleagues, I offer this Easter greeting to the growing and gratefully appreciated army of the readers: "God of vengeance; God to whom vengeance belongs, show Thyself!"

Conrad Black is the author of biographies of Maurice Duplessis, Franklin D. Roosevelt, and Richard M. Nixon, was the publisher of the London Telegraph newspapers and Spectator, and founded the National Post of Canada. He has been a life peer in the British House of Lords as Lord Black of Crossharbour since 2001.