Black's ex-partner says payments were "wrong"

By Andrew Stern and James Kelleher

CHICAGO (Reuters) - Conrad Black's business partner of 30 years testified on Wednesday that he knew the scheme he and the former media mogul devised to pay themselves bonuses was wrong.

David Radler, star witness at Black's trial who has already pleaded guilty to fraud and faces jail time, described how he and Black divided up $600,000 (300,000 pounds) from the proceeds of two deals made as Black was selling off the media empire they had built.

Prosecutors contend Black and three co-defendants stole $60 million from his main company -- Hollinger International Inc. -- by using non-compete payments that should have gone to the company to give themselves tax-free bonuses.

Such payments were set aside from the proceeds after newspaper sale prices were determined, and were designed to give the buyer a guarantee the seller would not reenter the same media market.

"Did you advise the Hollinger board or audit committee?" of the $600,000 that was kept, lead prosecutor Eric Sussman asked Radler.

"No I didn't," Radler replied.

"Why not?" Sussman asked.

"I knew the process of creating these non-competes was wrong," Radler said.