Conrad Black, the embattled newspaper magnate, testified on Friday that he was duped, coerced and ultimately threatened by the independent directors of Hollinger International into agreeing to resign as its chief executive last November and to repay millions of dollars in payments that it considered improper.
But in testifying for the first time during the trial, which is intended to determine whether he can proceed with plans to sell his controlling interest in the company, Black conceded that he signed regulatory documents in recent years that might have misled shareholders about the size of those payments and the circumstances under which they were obtained.
Though ordinarily an outspoken figure prone to statements of bombast -- he had bragged outside a book signing last year that the value of his shares was skyrocketing as the company's controversies grew -- Black was strikingly subdued in nearly six hours of testimony in Chancery Court here in Delaware, where Hollinger International is chartered. Hunching his broad shoulders over the witness stand and occasionally closing his eyes tightly to consider his answers, Black was instructed at least three times by Vice Chancellor Leo Strine to move a microphone closer to his mouth so his voice could be heard.
For Black, a Canadian who transformed a small mining company into an operator of more than 100 newspapers, including The Daily Telegraph of London and The Jerusalem Post, the proceedings stood in stark contrast to the life he has cultivated for several decades: that of a worldly and sophisticated entrepreneur who renounced his Canadian citizenship to become a British lord and a fixture in political and social circles on both sides of the Atlantic.
"I have been horribly defamed and, in fact, I've been characterized and stigmatized as an embezzler," he told the court, which was crammed with reporters and lawyers, some of them arbitrageurs, who had begun lining up two hours before the courtroom doors opened. "I am trying, apart from the direct legal proceeding, to retrieve my reputation as an honest man."
Aside from whatever fascination there is with Black, the case here is being closely followed by corporate governance experts because it pits his rights as a controlling shareholder of a public company -- one who holds about 30 percent of the company's stock, but controls 70 percent of its vote -- against the rights of a board responsible for representing all shareholders.
The independent board members of Hollinger, who have been operating the company since Black agreed to resign as chief executive in November, have asked the court to effectively block the sale of his controlling stake to David and Frederick Barclay, a pair of British entrepreneurs. The board members hope to sell the company's assets in an orderly fashion. They contend that the sale of those assets, including perhaps The Telegraph, The Post and The Chicago Sun-Times, would benefit all shareholders, as opposed to only Black.
Black has filed a countersuit here, arguing that as the controlling shareholder he has the right to amend the company's bylaws as he did last month to preclude the asset sales. He has also asked the court to invalidate a so-called poison pill provision that the board adopted last month, which would create so many new shares in the company that the Barclays' voting majority, in the event they bought Black's stake, would disappear.