Convicted fraudsters like Conrad Black "are not welcome" in Ontario's capital markets, especially when they do not accept responsibility for their actions, an Ontario Securities Commission lawyer told a hearing Wednesday.
Lawyer Anna Perschy began opening statements in the OSC's case against Mr. Black and John Boultbee, who were convicted of fraud involving non-competition payments at newspaper company Hollinger International Inc.
The commission is finally holding a long-delayed hearing to determine whether it will impose penalties in relation to the Hollinger fraud, including a possible permanent ban for both men from serving as officers or directors of a public company or working as registrants at a financial company.
Ms. Perschy said Wednesday the case is about stealing, lying and concealment, arguing Mr. Black and Mr. Boultbee participated in a scheme to take $600,000 in contrived non-competition payments from the proceeds of the sale of some of Hollinger's U.S. newspaper assets.
"Convicted fraudsters are not welcome" in Ontario's capital markets, she told the hearing panel, especially when they have not acknowledged their wrongdoing. Mr. Black has steadfastly denied that he was involved in any wrongdoing at Hollinger.
Ms. Perschy said the hearing is intended to ensure that directors and officers of a public company "are held accountable for their conduct when they do not hold themselves accountable."
"The respondents have been tried and convicted, but have they really taken responsibility for their actions? No, not in [OSC] staff's view," Ms. Perschy said.
The hearing started Wednesday after an OSC panel ruled on several motions heard Monday about evidence that will be allowed during the hearing.
Commissioner Christopher Portner said the panel will allow Mr. Black some latitude to testify at the hearing, but said he will not be allowed to "relitigate" the U.S. fraud case. The panel said it will permit Mr. Black's lawyers to call two witnesses – former secretary Joan Maida and former Hollinger Inc. director Donald Vale – but rejected his request to call a third witness, lawyer Ronald Safer, who represented another Hollinger official during the original criminal trial in Chicago.
Also Wednesday, the panel rejected Mr. Boultbee's request for a separate hearing from Mr. Black's, saying there was no legal reason to "sever" the cases and hear them individually.
The OSC case is the last regulatory matter remaining for Mr. Black stemming from allegations of fraud at Hollinger. He is expected to testify Friday in his own defence.
The commission announced its case against Mr. Black in 2005, but it was adjourned pending the outcome of his U.S. criminal trial and subsequent appeals. The OSC reactivated the stalled case in 2013 when it filed a simplified statement of allegations against Mr. Black and other former Hollinger officials, arguing they should be disciplined in Ontario on the basis of their U.S. convictions.
Mr. Black was convicted in 2007 of three counts of fraud and one count of obstruction of justice, but later had two of the fraud counts overturned on appeal. He served 37 months in U.S. prison and was released in 2012, when he returned to Canada.
He was separately convicted by the U.S. Securities and Exchange Commission in a 2008 decision in U.S. district court involving alleged violations of the U.S. Securities Exchange Act. He reached a settlement in 2013, agreeing to a permanent ban from serving as a director or officer of a public company in the United States and to make a $4.1-million (U.S.) payment to his defunct newspaper company.
Mr. Black's lawyer, Peter Howard, said he expects to make his opening remarks in the case on Thursday. During a hearing in April on a preliminary motion in the case, Mr. Howard argued Mr. Black's U.S. convictions that remained after his appeals were "minor," and he represents no danger to Ontario investors.
The OSC previously reached a settlement with former Hollinger executives David Radler in 2012 and Peter Atkinson in 2013. Both men agreed to lifetime bans from serving as a director or officer of a public company in Ontario and from working as registrants in the financial industry, or as employees of financial companies that are registrants in Ontario.