Conrad Black has been convicted of some of the charges that were directed against him.
Whatever the rights and wrongs of the case (my own view is that the whole case was bullshit and the jury convicted him because of envy of his ‘lavish lifestyle’) it underscores the old point that being a director of corporation is a very dangerous thing to be in the United States. Far more managers go to jail in the United States than in any other Western country (even as a percentage of the total).
Perhaps the first Henry Ford had it right. After losing some civil cases against him by minority shareholders, he bought them out – every one of them. Only if owned 100% of the company could he feel secure against someone saying he was not doing right by the shareholders.
As for the other shareholders, the campaign against Lord Black has cost them vastly more than his pay and perks ever did. Too late perhaps some of them now understand that he was the company and, without him, it was nothing.
All the above should not be held to mean that I now accept Lord Black’s opinions. For example, I still do not agree with his opinion that FDR was a moderate man or a good President. However, it is possible that Sir Conrad may now revise his opinion of the person who did more than anyone else in the 20th century to help create the vastly powerful (almost arbitrary) American government that was directed against him.
Interesting person. The link article was like watching ants attacking an elephant, and the “Ruthless Tycoon” profile caused me to respect him enormously and hope that he wins. It all boils down to the law of the crab bucket. He is obviously a superior being, and has carried much more than the normal load (like it or not, business tycoons create jobs, cause money flow, and initiate progress, and poor people need them much more than they need poor people) and now he will be punished for those qualities. The mob will never really let him crawl out of our big bucket.
I wonder if there was just one juror holding out at the start and that person was bullied when they went on with their considerations.
I have not studied the case in sufficient detail to know whether your broad judgement is correct, Paul. On the face of it, Black misused money that was not intended for him; he had a fudiciary responsibility to his shareholders, in the same way that a trustee of a charity has a duty not to use the money for spending on himself. I agree that the penalty is harsh and that Black came in for a lot of the “tall poppy” syndrome, but I also think that he may have done wrong and should have been punished.
That said, there clearly is a problem with how corporate executives are treated in the US; the Sarbanes-Oxley legislation has encouraged many perfectly honest firms to move offshore and explains part of the private equity boom (the process of taking listed firms off the stock market so they have less need to comply with all this crap). People like Steve Jobs and others are constantly harassed over things like backdated options, even though he has created enormous wealth and value for millions of people which vastly outweighs his personal fortune. We are living through a period rather similar to the late 19th century when the myth of the “robber barons” took hold and a whole swathe of great entrepreneurs had their reputations sullied by politicians and others who would not know how to run a railroad or a steel mill
Perhaps the worst example of corporate witchhunt in modern times has been the Martha Stewart case (insider trading laws are so vague and arbitrary as to be a weapon of personal destruction), but there are many less well documented ones.
Even so, Lord Black, I think, is not quite innocent. A shame: he was a good proprietor of newspapers and the respect in which he is held by the likes of Mark Steyn etc, speaks volumes.
I agree with Jonathan, the Telegraph was at its best when he was the proprietor and Charles Moore was its editor.
Conrad Black was not convicted on any of the major charges
Black was convicted on “mail fraud” and “obstruction”,part of the scattergun techniques used by some of the out of control US prosecutors.
As far as I can see this was a pretty malicious prosecution, and I’m certainly glad the jury found him not guilty on the RICO counts, since those would have sent him to prison for ever.
I believe his argument was that he was paid personally for agreeing to non-compete deals because the buyers wanted guarantees that he personally, not Hollinger, would not compete with them. If they had paid the money to Hollinger, there would have been nothing stopping Black setting up a shell company and launching a new paper. They were paying the man, not the company, for a good reason. The board of Hollinger were, as far as I know, aware of this situation and accepted it, and the tax authorities in Canada were also made aware of the deals.
In cases like this, it seems the federal prosecutors throw so many charges against the accused in the hope that some will stick. That looks like the case here, as he was found not guilty of racketeering, tax evasion and most of the fraud charges.
Not the most likeable of men perhaps, but I hardly think he deserves to spend years in jail for what may not even have been crimes. I hope he does better on appeal.
Tip to senior business men: never be photographed dressed as Cardinal Richelieu, that never plays well with a jury.
The career of this particular Federal Prosecutor Patrick Fitzgerald needs examining,see the recent”Lewis “Scooter” Libby case.Fitzgerald seems to operate by giving a witness immunity to bring charges against the accused.
Most worrying is the fact that the “obstruction”,removing documents from Black’s own office, took place in Canada,where Black was born,not in the US.
From the time Conrad Black worked a fast and loose jiggery pokery with Dominion Stores pension funds way back when I’ve referred to him as Conman Black. People like Black enjoy living on the edge and flirting with potential disaster while managing to accomplish great things. That’s their thing. No use trying to understand it or explain it. I sincerely hope that this nonsense is reversed on appeal or if not Sandy Berger is invited to share a cell with him.
Sandy Berger will never spend a day in jail – in spite of not just stealing but destroying classified documents. Indeed we will never know exactly what he stole or destroyed (as there was not one incident – he did it several times, and some of the documents had handwritten notes on them). We will never know exactly how much the Clintons knew about the terrorist threat, and what limitations they put on the fight againt it.
Conrad Black:
I see I called him “Sir Conrad” rather than Lord Black – that was beyond even my senility.
I was shaken a bit when I heard the verdict. My guess was that he would only be convicted on one count (I had head the jury were in dispute on one count) – I did not think it would be four.
Mark Steyn thought he would win out – but Mark Steyn does not really understand people (this is not an attack on Mr Steyn – I am saying that he does not have the horrible view of humanity that I do).
Mark Steyn was surprised by New Hampshire going for Kerry in 2004 (even though he lives there – and the Governor, who was a good Governor, fell as well) he was also shocked by the fall of both members of the House of Representatives and the fall of the State Legislature (after more than a century in Republican hands – i.e. it did not fall even in the “low dishonest 30’s”) in 2006.
And, of course, Mark Steyn thought that Lewis Libby would win.
“But Lewis Libbey did nothing wrong” – so what? The jury were on the left which (as Mr Fitzgerald understands) is what matters in a political trial.
My guess is that it was the same with Lord Black – he lost when the jury were selected, in spite of evidence and argument (although evidence and argument did some good – otherwise he would have been convicted on the other charges as well).
“But he took lots and lots of money Paul”.
Yes – and the Board of Directors approved the payments.
If you do not like how a company is run (for example the amount of money the CEO is getting) and you have not got enough votes to force the management out then SELL YOUR SHARES.
Do not and use the government to destroy someone – you will lose vastly more money that way.
On a personal note:
I said a lot of very nasty things about Lord Black when I read his book about F.D.R.
It is almost impossible that he heard about any of them and compared to what he faces it hardly matters.
However, although my opinion of the subject of the work has not changed, I would take back the hateful things I said (if I could). Of course what is said in anger can not be unsaid.
John K,
If the non-compete fee were paid to Black to avoid him personally setting up a company to compete with the buyer (as opposed to Hollinger doing so), then there would have been a clear conflict of interest. It would have been in his personal interest as head of Hollinger to sell off Hollinger titles so that he could benefit from these fees. Chief execs should avoid such conflicts of interest.
On the other hand were the fees due to Hollinger then he should not have pocketed them.
Either way, he did wrong. I have no beef with someone being successful, but I do with people abusing their position whatever their level in any organisation.
Let’s also remember that it was essentally the investors in Hollinger (i.e. the owners) who instigated the investigation into Black’s activities, not the “Authorities”. It was not down to jealous people motivated by envy – it was down to those who could have been expected to support him, had he not been using their money for his own purposes. Every commentator I’ve read who has followed the case has agreed that the evidence on which the jury convicted him was damning and incontrovertible.
Yes, perhaps Henry Ford had it right – but Black didn’t take the precaution of owning the company before he started treating its money as if it were his own.
I’m surprised that as someone who abhors politicians accumulating and abusing powers over the rest of us, you defend someone who has done just the same in business. There are plenty of crooks in business (as there are in other fields) and we should be pleased when they get their comeuppance. Defending their behaviour just gives ammunition to those who attack free markets and companies.
I don’t like Black one bit, but if the law actually applied to federal employees as well as everybody else, most of the federal jobholders in Washington would be in jail too. Its pretty laughable hearing the US government lock anybody else up for fraud and obstructing justice. They are some of the only things the jackasses in Washington actually have any competence in.
And I think the press should look more at the fact that Black is a worshipper of statist and quasi-socialist politicians like FDR and Nixon if they wish to know where he may have got his naughty tricks from. It certainly wasn’t because he was some laissez-faire werewolf.
I was not aware that Lord Black had written anything on Richard Nixon (but, O.K., Martin has come upon something).
Milton Friedman found Richard Nixon a very odd man.
For example, Nixon would make a good case against price controls (he had been arguing against them since World War II) and then introduce them (he explained why they would not work just before he introduced them in 1971 and often whilst they were in place).
And Richard Nixon (again in conversation) would denouce regulations (not just generally but in specific cases as well) whilst his Administration introduced new regulations faster than any Administration since that of F.D.R.
It was not even corrupt (Nixon did not gain anything by doing things that he knew would have bad consequences – by the way by the, very low, standards of Washington the Nixon Administration was not very corrupt – it just irritated powerful people who decided that what every Administration had done since F.D.R. was not acceptable when Nixon’s people did it) it was sort of crazy.
I am not saying that Milton Friedman thought that Richard Nixon was mentally ill – but he found it very hard to come up with any rational reason for his actions.
If a statist does statist things that is understandable. But if a man who knows they will not work (has explained to you again and again that he knows they will not work) does them – well it is confusing.
Conrad Black:
Did people above miss the bit where I pointed out that this man’s pay and perks were approved by the Board of Directors.
This included the noncompete fees.
I say again IF YOU DO NOT LIKE HOW MUCH PAY AND PERKS A CEO IS GETTING, BUT DO NOT HAVE THE VOTES TO DEPOSE HIM – SELL YOUR SHARES.
Do not chant “he is a crook” – when the Board of Directors approved the payments.
The shareholders in the company have lost vast sums of money by the campaign against Lord Black.
He was the company – and it was nothing without him.
Come off it Paul. By force of personality and by getting his cronies on the board, Black had the other directors in his pocket. The fact that they then approved his activities has absolutely no bearing on their illegality.
The shareholders owned the company. The idea that if they didn’t like what the directors were doing they should just sell their shares and not complain is laughable. THEY OWNED THE COMPANY – it was theirs not Black’s. When they set up a special committee to look into what Black and the other directors were up to, it concluded that he had been running a “corporate kleptocracy”. It was not anti-business laws, or jealous jurors who concluded this, it was the owners of the company.
Paul: Your arguments are poor and lack any substance or logic
HJHJ,
Shareholders can change directors if enough of them wish to. If they find themselves a minority, then the exit door is always there.
Richard Breeden wrote the “corporate kleptocracy” report because it’s the only report he knows how to write (and a very profitable one at that).
Btw it would seem that Breeden is a one man corporate kleptocracy judging from the pay he takes and the damage he did to Hollinger.
Specially for our popinjay HJHJ Stick to rowing sweet lips
I see the point you are making, but equally it appears to be a fairly standard practice in this industry. The idea of the non-compete fees seems to be to pin down the executives who receive them, and it seems that it is the buyers who insist on the security of such arrangements. I would argue that so long as all parties understand what is happening and agree with it, then it should be accepted as a lawful transaction. So long as Hollinger received a fair price for its titles, and the board of Hollinger agreed that its executives could make these agreements, then I can’t see the fraud in this. Indeed, it looks as if Lord Black was not convicted on most of these non-competes.
This really looks to me like a case of a jury thinking that someone facing so many charges must be guilty of something, so convicting him on the lesser charges. It just does not sound right to me, and I hope this gets a proper examination on appeal.
HJHJ
The pay and perks of a CEO are not normally determined by shareholder votes (although they sometimes are – if the shareholders vote to cut your pay or perks it is a sign that they want you to resign).
However, you are correct about the “big names” that Conrad Black supported to be elected to the Board.
Lord Black found out too late that the sort of politicals who will say you are the most wonderful man in the world (and agree to pay you lots and lots of money) when things are going well, will be the first people to turn on you when the heat is on.
He would have been much better off with a hard nosed board who argued back.
Sure they might have not given him so much nice stuff (and it IS legal if the Board agrees – even the Chicago Democrat jury accepted that), but they would not have back stabbed him when the headlines got bad either.
I apologize for my use of the words “would not work” in relation to the price controls and the vast wave of other regulations introduced by the Nixon Administration – the words “would not work” give a false impression.
What I should have typed is “do vast harm”.
Paul,
First, I have never had any beef against Black. I rather admired what he had done until the facts became so apparent. But now it’s clear that he behaved dishonesty, it’s good that he has been found out.
As was said at the trial “Just because the guards are asleep, it doesn’t make it legal to rob the bank”. Whether the directors approved the payments is neither here nor there when it comes to their illegality. Interestingly, the directors testified that they were deceived over the payments. You can hardly be claiming that it’s perfecctly OK to take the shareholders money in the intervening period between getting directors to agree to something illegal and the shareholders taking action (even if they knew). There is a very good reason why the status of limited companies exist. If Conrad Black had wanted to do whatever he wanted with the company’s money, then he should have operated as a sole trader and done as he pleased with his own money.
Those who say that Black did a great job and that the trial was motivated by envy should consider whether the shareholders agree. Overwhelmingly, it is clear that they did not. Had he been making them rich, don’t you think that more of them would have shown support? Shareholders tend to be in favour of people who make them lots of money regardless of foibles.
Regardless of the above, what is not disputed is that the directors were not even asked to approve the non-compete payments when Black sold Hollinger titles to Hollinger subsidiaries. They weren’t told about them for the very obvious reason that non-compete payments in these instances weren’t necessary and could not have been in any way justified. It is clear that the ‘sales’ were engineered simply to put money in Black’s pockets. So the argument that the direcors approved the payments is false – they only approved the ones that they knew about.
“Concerned” – the article you posted a link to plays hard and fast with the facts of this case. I could probably post you a link to an article (probably by someone who he’d done a favour for in the past) saying what a nice man Stalin was – but it doesn’t mean anyone should take it seriously. How easily you are deceived into believing what you want to believe. Stick to whatever it is you do that indulges your gullible nature.
HJHJ
The Board of Directors approved the payments.
Nothing to do with “being asleep”, it was “you want lots of pay and perks (non compete fees and so on) O.K. have it”.
C.E.O.s do not tend to work for nothing so “it was the shareholders money” is not a valid point.
If you do not like Conrad Black – join the club, I have said (in the past) a lot of very nasty things indeed about both his manner and his opinions (for example on F.D.R.).
If you think he was getting too much pay and perks, you may well be 100% correct – but there was nothing criminal in this.
If you want to vote him out, or to vote out the Board of Directors (and I despised that bunch of politicals – and said so years ago) then try and do so. Better still, sell your shares.
But do not pretend that something criminal was going on.
You do not have to invest money in a enterprise run by Conrad Black, if you do you know the Board will give him some of it (that is the deal – perhaps he gets more pay and perks than other C.E.O.s, but that was well known).
And, I repeat, the shareholders have lost vast sums because of the campaign against Conrad Black.
He was the company and it was nothing without him.
You seem to have a problem understanding that.
Paul,
You are factually incorrect. The directors approved non-compete payments when Hollinger titles were sold outside the group. However, they DID NOT approve (and indeed didn’t even know about) the non-compete payments when Black engineered the sales of titles from Hollinger to Hollinger-owned subsidiaries. This was never disputed in the trial, so I don’t know why you are disputing it. This, ultimately was why he was convicted.
In any case, as I’ve said, director approval does not automatically make something legal. You seriously dispute this? On what basis do you argue that decisions by company directors override the law? Please answer.
Black had an agreement with Hollinger (his employer) on his pay and perks. Nobody says he wasn’t entitled to these, whether extravagant or not. The problem is that he started taking money that his contract did not entitle him to, but by dint of his position, he was able to engineer.
No, Black was not the company. The company was a separate legal entity which he did not own – you seem to have a problem understanding that. Most of the money he used to build it up (and subsequently squandered in price battles against Murdoch and failed ventures like the Post) was other people’s. The shareholders appear to agree with me, not you. But then, they only legally own the company so who are they to be listened to?
It’s good to hear opinion on this blog and I usually like to hear yours whether I agree or not. But in this instance you are just plain wrong because you have got your facts wrong.
What “law” – there are a vast number of regulations in the United States, most of which have no connection with the principles of common law and some of which contradict each other.
Also some are wildly vague – such as the modern concept of “obstruction of justice” which has evolved to mean virtually any action or inaction.
To talk about “the law” in the context of the modern United States is absurd. There are many (very many) “laws” but no “the law” or “rule of law” as classically understood.
As for the Board – they made clear years ago that they were happy for Conrad Black and co to be paid X, Y, Z. and did not want to be bothered with financial details.
That is why I said “they approved the payments” – they approved the whole thing in advance (years ago) they made it perfectly clear that they were not interested in management (which is just as well considering the bunch that were elected to the Board).
Of course you could say “this bunch of political big names should not have been elected” – but I said that a long time ago.
As for the noncompete fees going to Conrad Black.
OF COURSE THEY DID.
Who should they have gone to? You?
Perhaps me?
Or a mythical “Mr Hollinger”?
Or the other shareholders?
Why? Were they going to set up enterprises and compete?
Of course the whole concept of selling off enterprises from the main body to subsidiaries is dodgy – but it is done all the time. And non compete fees go to the principle managers-shareholders of an enterprise.
They do not get shared out among all the small shareholders.
Give me one example of non compete fees being shared out among thousands of small shareholders. Even though the money to pay the non compete fees comes from the main company (actually it is the customers of the enterprise rather than the shareholders who actually pay – but there we go).
Although, personally, I do not think that noncompete fees should ever be paid – it is too easy to get round such agreements.
For example even though Conrad Black got paid money when enterprises were sold to Hollinger subs (from Hollinger) I am sure he could have found a way of setting up new enterprises under his own name to compete with them (if he had felt like it).
That is why non compete payments do not make sense. And why should not buy such enterprises – if one is concerned about the managers setting up new ones.
I remember when a security comany I worked for was bought – for a vast sum of money.
“Why pay this sort of money for a company with no real assets” I asked.
“All the contracts” I was told.
“But contracts can go fast and surely the old top managers will poach them”.
“We have non compete agreements”.
You can guess the rest.
It reminds me of the time we got the N.T.L. (British cable television) contract.
“But is not N.T.L. is serious trouble”.
“But our contract is with the insurance company of N.T.L.”.
Guess who owned that.
As I have said many times. Conrad Black was the company and it was nothing without him.
If some shareholders were upset about him getting noncompete fees when enterprises were sold from H. to subs owned by H. they should have sold their shares – or got a formal contract from Lord Black that he would not do this again (most likely I would have sold the shares – but then I never liked the man in the first place, for quite different reasons).
By “going to law” (first civil – long before this criminal stuff) the shareholders have lost vast sums of money (which make the non compete fees seem very small indeed).
They (or rather the people who represented them) cut off their nose to spite their face.
You know the details of this case.
Can you tell me if shareholders owning the majority of the shares were in favour of all this?
I find it difficult to believe that they could have been so self destructive.
By the way if anyone really is interested in the details of the noncompete fees paid to Lord Black and Mr Radler they are talked about by Mark Steyn on his web site (Steynonline).
As I was never an employee of the enterprise or a shareholder in it my interest in the details is less than that of Mr Steyn.
I continue to believe that the vast majority of the shareholders are of the opinion that the campaign against Lord Black was folly – it has certainly cost them a fortune.