Business

CBS 2's Mike Parker and the Associated Press contributed to this report.
CHICAGO (CBS) ― The star witness was back on the stand in the Conrad Black trial Tuesday. CBS 2's Mike Parker reports on the testimony about eight-figure wheeling and dealing.

Former Sun-Times publisher David Radler turned on his former business partner Conrad Black on Tuesday. Testifying in Black's fraud and racketeering trial, he told how he and Black skimmed tens of millions of dollars from shareholders of the Sun-Times parent company, Hollinger International.

Radler said he purposely misled former Illinois Gov. Jim Thompson, who was supposed to act as a financial watchdog inside the company.

Prosecutors asked "What, if anything did you tell the governor?"

Radler responded, "I didn't tell him anything. How could I tell him? I just didn't say anything."

In one deal, Radler said he and Black pondered how much to take for themselves.

"We came up with the figure, $9.5 million," Radler testified. But those moments of clarity were rare during Radler's time on the stand. Most of the time, he seemed halting and overwhelmed by dates and details of scores of meetings.

One attorney who's been watching says he was under-whelmed. "This is a witness that is having a hard time connecting each of these individual defendants to a central plot and a central scheme in which they all sat down to defraud a bunch of shareholders," Hugh Totten said

Radler, who was second in command of Hollinger International, tied Black for the first time directly to the planning behind what federal prosecutors describe as an $84 million looting of the company.

Radler said the diversion of funds began when Black ordered that 25 percent of all so-called "non-compete" fees paid to Hollinger International in the large-scale selloff of community papers would be paid to a smaller, sound-alike company that he controlled, Toronto-based Hollinger Inc.

"He confirmed that was the plan," said Radler, who has admitted stealing millions of dollars from Hollinger as part of the alleged scheme and is due to get a lenient 29-month sentence as a reward for cooperating.

Before the selloff was over, Black, Radler and two other executives were themselves getting millions of dollars in non-compete payments, Radler said. The payments were in exchange for promises not to return to the circulation areas of the newspapers to compete with the new owners.

Black, 62, is charged with bilking Hollinger International, largely through selling the community papers and payments from the purchasers.

Prosecutors say all of the money, not just a portion, should have gone to Hollinger International shareholders.

Black and his co-defendants, former vice president Peter Atkinson, former chief financial officer John Boultbee and former Hollinger lawyer Mark Kipnis say they did nothing illegal.

Boultbee and Atkinson allegedly received non-compete payments, while Kipnis is accused of helping to arrange the transactions. Black's attorneys have suggested that Radler himself is to blame for anything wrong with the transactions.

The sale of hundreds of community newspapers was at the core of a Black strategy to divest Hollinger International of numerous small-circulation community newspapers at a large profit for the company.

The selloff began in 1998 with the sale of Hollinger-owned American Trucker magazine and a related publication. Radler said he found out that Black had sent a $2 million non-compete payment to Hollinger Inc.

Next came a $472 million sale of American newspapers to Community Newspaper Holding Inc., which included a $50 million non-compete payment.

Radler said $12 million from that deal was sent to Hollinger Inc. in what became known as "the template" -- 25 percent of the proceeds of all non-competition agreements paid to the Canadian company on Black's orders.

He said Black told him that "Inc. was the parent company (and) as the parent it deserved a portion of the $50 million fee."

Lead prosecutor Eric H. Sussman asked Radler if he offered any objection to diverting the money.

"I certainly didn't say no," Radler said. He said that at a Hollinger International board meeting later that month, "to the best of my knowledge nothing was said" about non-compete payments to the Canadian company.

Likewise, Radler testified that he knew of no occasion when the board or its key audit committee were informed of the non-competition payments.

"I certainly regret today that I didn't object," Radler said, bringing defense attorneys to their feet with objections.

Payments made directly to individuals came with the giant $3.2 billion sale of Canadian newspapers to CanWest Global Communications.

Radler indicated that most of the buyers of Hollinger International papers had no interest in non-compete agreements with either Hollinger Inc. or the individual executives. But he said he was told that CanWest did apparently want such agreements from himself and Black.

He said he received $19 million in return for signing such a pledge.

Boultbee and Atkinson later were made part of the deal, he said. Prosecutors maintain that CanWest never wanted such an agreement with those two executives.

Radler said that in a phone conversation in August 2000, he and Black "talked about the CanWest non-competes and the opportunity to extend the CanWest non-competes to sales in the United States."

"He supported the idea," Radler testified.

He said that payments for the four executives were part of subsequent sales of Hollinger International papers to Forum Communications Corp. for $14 million, Paxton Communications Corp. for $59 million and a second deal with Community Newspaper Holdings Inc. for $90 million.

Whatever the testimony's effect on the jury, Conrad Black does not seem worried.

Speaking in French to a reporter who questioned him in French while Black was leaving the courthouse, Black said, "Wait until he's questioned by the defense."

Radler has already settled his own case with the feds. In return for pleading guilty to fraud, and testifying in the Black trial, he's looking at a likely prison sentence of about two and a half years.

(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)