A private Canadian holding company used by former media baron Conrad Black to control the Hollinger International newspaper publishing empire has pleaded guilty to defrauding Hollinger.

Toronto-based Ravelston Inc. entered its plea to a single count of mail fraud on Monday as lawyers for Black and the U.S. government prepared to start jury selection March 14 for his racketeering and fraud trial.

Black, 62, and three other former Hollinger executives are charged with plundering $80 million US from Hollinger, mainly by selling off hundreds of community newspapers across the United States and Canada.

Black allegedly received sizable payments from the buyers in exchange for signing agreements not to compete with them by starting or buying newspapers in markets where the ones sold by Hollinger were circulating.

Prosecutors say the non-compete money should have gone to Hollinger shareholders and not into the pockets of Black and other executives.

Black and the three other executives have pleaded not guilty and vowed to fight the charges.

Ravelston had been trying for weeks to plead guilty, but the company was blocked until last week in a Canadian court from going ahead with the plea.

Black tried to block Ravelston plea

Black owns 65.1 per cent of Ravelston and had sought to block the plea. But the company is in receivership and the receiver, who is responsible to the creditors, won permission from a Canadian court last week to go ahead and plead guilty.

Chicago attorney Deborah Steiner, representing Ravelston, entered the plea with authorization from the Toronto-based receiver. Under a signed agreement with prosecutors, the company would pay a $7 million US fine under terms of the plea agreement.

U.S. District Judge Amy J. St. Eve must still decide whether to give her approval to the agreement.

In pleading guilty, Ravelston admitted its role in a complex legal manoeuvre growing out of the September 2000 sale of community newspapers.

The total sale price was $14 million US . Of that amount, $400,000 US was set aside as compensation for agreement not to enter into competition.

Ravelston arranged to have $300,000 US of the non-compete money sent to Hollinger International, based in Chicago, and 25 per cent to Hollinger Inc., a separate Canadian holding company controlled by Ravelston.

Ravelston admitted it knew of no request from the buyer for a non-compete contract with Hollinger Inc., whose name sounds like Hollinger International and which owns part of International but is a separate firm.

Conflict of interest

Ravelston acknowledged that its decision to siphon $100,000 US of International's coffers represented a conflict of interest.

In its plea agreement, Ravelston acknowledged that the loss to Hollinger from the count to which it was pleading guilty was only $100,000 US. But it also acknowledged that the loss from the entire scheme — which took in a number of other sales of Hollinger International assets — came out to $83,950,000 US.

How much the decision of Ravelston to plead guilty will affect the Black trial is unclear, but prosecutors already had key documents involved.

Lead prosecutor Eric Sussman declined to comment.

Also Monday, both sides began sorting out the questionnaires that prospective jurors filled out in advance of March 14 jury selection. Defence attorneys agreed on 16 individuals they wanted to exclude from a list of 106 prospective jurors.

St. Eve set a further hearing in the Ravelston case for June 29.