Wednesday, May 9, 2007

Radler on the stand

Posted By on 05.09.07 at 12:59 AM

A friend who used to have his offices in the Sun-Times building says David Radler, his landlord, was a shifty guy who would never look him in the eye in the elevator and never seemed to remember his name. I knew Radler only by telephone, where he always spoke loud and clear. Of course, the subject was usually the perfidy of labor unions. I didn’t ask him about noncompete fees.

Tuesday in court, assistant U.S. attorney Eric Sussman did. And in answering Sussman Radler incriminated himself -- which he’d done already when he pleaded guilty to fraud. We’ll find out when the trial ends if he also successfully incriminated Conrad Black. He talked about a “template” that “Toronto” decreed would govern the sale of Hollinger International properties: 25 percent of all noncompete fees would be kicked upstairs to Hollinger Inc., the holding company he and Black controlled. “Toronto,” he explained, was what the Chicago office that he ran called Black and the other execs headquartered there.“What reasons, if any, were you aware of for Hollinger Inc. to deserve 25 percent of the noncompete fees,” Sussman asked at one point.

“There were none,” Radler replied.

He recalled a board meeting in early 1999 when Black and he said nothing about a $2 million noncompete fee assigned to Hollinger Inc. when a Hollinger magazine was sold. Radler was uneasy. “I didn’t think the transaction -- I didn’t know if it was legal or not legal,” he said. “I didn’t like the transaction, and I regret to this day that I didn’t say anything.”

But apparently telling the board -- in particular the audit committee, headed by former governor Jim Thompson -- either nothing or too little about noncompete agreements was a habit Radler was able to get into. Sussman ran Radler through a series of sales a year or so later in which Hollinger Inc. got its 25 percent because “it was part of the template.” In no case was this slice of the pie acknowledged to the board. Why? Sussman asked. “It would have been impossible to present a noncompete which the [purchasing] company hadn’t requested,” Radler said. “I don’t think they would have approved.”

And about another sale: “It would have been very difficult to go to the audit committee and say ‘They didn’t ask for noncompetes but here are our noncompetes.'”

The government’s theory of the crime has Black and Radler using illegitimate noncompete payments (tax exempt in Canada) to channel money upward from Hollinger International to Hollinger Inc. and on to Ravelston, the private management firm controlled by Black that controlled Hollinger Inc. According to the government, a Hollinger International dollar worth 16 cents to Black was worth 46 cents to him if passed along to Hollinger Inc. and 65 cents if it reached Ravelston.

A lot’s been said and written about the tan Radler sported in court, as well as his poise and good humor. I didn’t see much of that. I saw someone who didn’t want to look Black’s way either from the stand or when he was slipping out of court during breaks. I saw someone a little nebbishy, and more of a peril to Black for it. Radler looks like a classic number two, like someone who might have seethed a long time at his partner’s arrogance and grandiosity and is now getting back. The idea of the cross-examination that’s coming is to tear him down. But I think it also will have to be to build Radler up, to make him into someone forceful enough to do bad things on his own authority, without Black’s sanction. The cross-examination alone probably won’t do it. Eventually the defense will probably want to bring on character witnesses to say what a sonuvabitch, what a little emperor Radler was in Chicago. They can be found.

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