Black not a danger to markets, lawyer says in bid to dismiss OSC proceedings

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TORONTO – Conrad Black isn’t a danger to Canadian investors and proceedings to keep him from Ontario capital markets aren’t necessary, his lawyer said Thursday.

Lawyer Peter Howard is asking that a proceeding against Black by the Ontario Securities Commission be dismissed, because he says any fallout from his alleged involvement in a complicated system of non-compete payments involving Hollinger Inc. and Hollinger has already been dealt with in civil and criminal matters in the United States.

Any additional proceedings, he argued in his motion “is entirely unnecessary, so as to be unfair and vexatious and to constitute abuse of process.”

The OSC alleges directors and officers of Hollinger Inc. and Hollinger International engaged in “a scheme” to line their pockets with company proceeds through a system of non-competition payments. It said last July it wanted to determine whether Black and two other executives should be banned from buying or trading in securities and from becoming directors of public companies in Ontario.

But Black’s lawyers say there is no need for such an order because Black has been barred from being a registrant or a director or officer of a reporting issuer in Ontario by an OSC order that’s been in place for about eight years. It will continue to be in effect until Black makes a request to have it lifted, or the commission decides to remove the restrictions.

If the proceedings go ahead, Black’s lawyers say he should be granted to right to tell his story during what they expect to be six-week-long proceeding.

“There are victims and villains in this saga,” said Howard. “Mr. Black says that if someone hears the whole story (they) will see he’s in the former category, not the latter. He’s not the villain.”

Black will never settle for a permanent ban, Howard added, because that would imply he did something wrong.

“He’s spent the last 10 years proving that, if nothing else, he will defend himself to the last breath and dollar.”

Lawyers for the regulator, however, said Black had presented no proof of an abuse of process or any reasonable explanation as for a stay of proceedings.

“The harm Mr. Black poses to our capital markets is clear,” said OSC lawyer Johanna Superina.

“These are not just allegations. They’ve been proven by trial and through appeals.”

The OSC lawyers are arguing for a two-day hearing, based on evidence from the U.S. criminal and regulatory proceedings, so that, they say, Ontario investors can be afforded the same protection as those in the U.S.

Black’s proposal to maintain the status quo isn’t good enough, they add, because that ban is only temporary and cannot go on in perpetuity.

They also say Black shouldn’t be allowed to testify, as his lawyer suggests, because he’s already had plenty of opportunities to tell his side of the story in court during years of U.S. litigation.

Howard denied Black was trying to re-litigate the U.S. proceedings, although he did say the former newspaper baron would be able to shed some light on what led to the settlement with regulators in the U.S.

Howard also raised questions about aspects of Black’s criminal trial, saying the fairness of that prosecution and a full accounting of the facts of the case should be taken into account if the commission is to determine whether allowing Black access to Canadian capital markets is in the public interest.

Black managed Hollinger well during his time at the helm, he argued, adding that shareholders lost value when Black’s bid to privatize Hollinger Inc. in 2005 was blocked and not as a result of any questionable compensation system.

If the hearing went ahead, Howard said, he’d call as many as five witnesses — including Black himself and his wife Barbara Amiel — and introduce documents that back up Black’s version of events. Black wasn’t present at the pre-trial proceedings Thursday.

Black, and two other executives — Peter Atkinson and John Boultbee — were each found guilty of one count of fraud. Black was also convicted of one count of obstruction of justice. Two other fraud convictions against the men were overturned on appeal after the U.S. Supreme Court sharply curtailed the “honest services” laws that underpinned part of the case against him. Black ended up serving 37 months out of a 42-month sentence in a Florida prison, and was fined $125,000.

A U.S. Securities and Exchange Commission agreement, announced in August, bars Black from acting as a director of a public company in the United States.

Most of the OSC’s original allegations against Hollinger and its senior executives and officers, filed in March 2005, were removed in a revised version issued July 12, which replaced pages of allegations from the OSC staff with a summary of U.S. proceedings against Black and two of his former senior executives.

Hollinger International was a U.S. public company, under the jurisdiction of the Securities and Exchange Commission, while Hollinger Inc. is a Canadian company under the OSC’s purview.

The proceedings are expected to wrap up Friday, but a decision on the application is not immediately expected.

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