Hugh Hewitt recently linked Mark Steyn's wrap up column on the Conrad Black trial, in which Steyn opined:
Lord Black of Crossharbour is now a convicted felon. And those of us who believe he's innocent of any crime have to acknowledge that reality.
Hugh concludes: "Steyn is so skilled at his craft, he could have made TimesSelect work."
Glenn Reynolds links to Steyn's blog covering the Black trial, in which Steyn launches a blistering attack on the fairness of US criminal justice. On that blog, we also find such gems of objective journalism as the following:
Conrad Black is only in his present predicament because of his love of America and therefore, when his tribulations began four years ago, an undue faith in the integrity of its judicial process. Were it not for his excessive respect for the US justice system, Conrad would have done a Garth Drabinsky or a Marc Rich and been holed up far away somewhere. After all, it's hard to see, say, Switzerland extraditing to the US for something that wouldn't even be a criminal case in Geneva or Lucerne, never mind one commanding a century in jail. It is because of a touching and naive love for America, its law and even the SEC (see his Roosevelt book) that Conrad stands right now in the well of Judge Amy's courtroom and faces the prospect of never seeing his home in Toronto again.
About that Roosevelt book Steyn mentions, I once blogged:
Black also is the author of a recent biography of Franklin Delano Roosevelt. Interestingly, one of the charges against Black is that he caused Hollinger to spend $8 million to buy FDR historical papers, which he presumably then used in writing his FDR biography. For a critique of Black's analysis of FDR's economic policies, see Jim Powell's review, which Alex Tabarrok of Marginal Revolution strongly endorsed.
In other words, even when it came to writing that book, Black used company funds rather than his own money.
In any case, I haven't been paying much attention to Steyn's coverage of the Black trial, since it became obvious so early on that Steyn was intent on providing a whitewash for his former employer. (From Wikipedia: "Steyn became a close ally of former Canadian and Hollinger chief Conrad Black, and subsequently wrote for many of Black's newspapers.")
Let's put Steyn's hagiography in perspective by going to Delaware Vice Chancellor Leo Strine's opinion in Hollinger Intern., Inc. v. Black, 844 A.2d 1022 (Del. Ch. 2004), in which Strine made the following findings of fact:
- "Conrad M. Black, the ultimate controlling stockholder of Hollinger International, Inc. (“International”), a Delaware public company, has repeatedly behaved in a manner inconsistent with the duty of loyalty he owed the company." (1028-29)
- "During the course of his dealings, Black misrepresented facts to the International board, used confidential company information for his own purposes without permission, and made threats, as he would put it, of “multifaceted dimensions” towards International's independent directors." (1029)
- "By late October 2003, the Special Committee had come to a troubling conclusion; namely, that $15.6 million in so-called “non-competition” payments had been made by International to Black, Radler, Atkinson, and Boultbee-i.e., the International management team-without proper authorization. Furthermore, another $16.55 million in “non-competition” payments had been made by International to Inc.-even though Inc. had no operational capacity to compete with anyone. Of these amounts, Black had received $7.2 million personally, as had Radler." (1036) In other words, Black paid himself $7.2 million of the shareholders' money (remember that his economic stake was only 15%) with no - nada, zilch, nil - independent authorization. Hollinger was not Black's personal piggybank, but he treated it as such.
- "After performing its own inquiry into the non-compete payments, the [Hollinger] Inc. audit committee presented a report to the full Inc. board on November 19, 2003 that included various recommendations. Among other things, the Inc. audit committee recommended that Black, Radler, and Boultbee immediately resign from their management positions at Inc., and that Atkinson, Boultbee, and Radler resign from Inc.'s board of directors. On November 21, 2003, the five non-independent directors voted against taking these actions, over the objection of all four independent directors. The independent directors promptly resigned from the Inc. board." (1044)
- In violation of contractual obligations he had undertaken, Black interfered extensively with efforts to undertake a financial restructuring of Hollinger. (1045ff)
- "In late December, Black was questioned by the SEC about matters within the scope of the Special Committee's investigation, including the non-competes. He invoked the Federal Constitution's privilege against self-incrimination and refused to cooperate. Specifically, Black refused to answer any questions regarding the non-competes on the ground that his answers might incriminate him. By doing so, he denied the SEC the full cooperation of International that had been promised when the Restructuring Proposal was announced in November." (1049)
- "Black also began steps to repudiate his commitment to repay the monies due back to International under the Restructuring Proposal." (1049)
Strine concludes: "First, having had a three-day evidentiary hearing, I am in a good position to make certain credibility determinations and have done so. ... As to Black himself, it became impossible for me to credit his word, after considering his trial testimony in light of the overwhelming evidence of his less-than-candid conduct towards his fellow directors. In some ways Black was feistily direct, flat-out admitting that he viewed himself as having no obligation to spend time on the Strategic Process after his removal as CEO, despite ¶ 6 of the Restructuring Proposal. Black also vigorously defended his failure to inform the International board of his discussions with the Barclays. But then again, he could hardly deny these facts. On more debatable points, I found Black evasive and unreliable. His explanations of key events and of his own motivations do not have the ring of truth. I find it regrettable to say so but it is the inescapable, and highly relevant, conclusion I reach."
In contrast, as the Independent observed after the criminal trial:
For Black's defence to be believed, the jurors would have had to conclude not only that [David Radler, Black's business partner since 1969, who decided to admit his part in the crime and become a government witness in September 2005] was a liar, but also that the board directors of Hollinger who gave evidence for the prosecution, including a former US ambassador, a former governor of Illinois, and Marie-Josée Kravis, who has served on the boards of several public companies, were also inveterate liars.
Given their longstanding personal and professional ties, it is perhaps understandable that Steyn would wish to see the best in his former boss. (But see The Independent, which called Steyn "Black's indefatigable supporter and – some would say – useful idiot....")
As for me, I've never met Steyn and read him only rarely. In contrast, as a corporate law professor, I read Leo Strine's opinions routinely. And I agree completely with Len Costa:
IN THE POST-ENRON WORLD, many fallen moguls have had their transgressions laid bare in court. But in February 2004, newspaper baron Lord Conrad Black of Crossharbour received an unusually explicit judicial whipping. That was the day Black's bad behavior ignited the pen of a sharp-tongued young Delaware Chancery Court judge named Leo Strine. Strine, who was confirmed to the court in November 1998 at the age of 33, has emerged as the hardest-working, wittiest, and most outspoken judge on the world's most important court dealing with corporate law. More than 60 percent of Fortune 500 companies are incorporated in his tiny home state, drawn by a lax corporation law and the court's propensity not to second-guess decisions made by businessmen. ...
Strine's record is enviable. Since his confirmation to the bench in 1998, he has written more than 100 business law decisions. Only a handful have been reversed. "They are extremely well crafted legally," says Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.
It may be that the Black trial is yet another example of the criminalization of agency costs, a trend I have criticized. It may be the case, as I speculated, that the verdict was a compromise. But let's not kid ourselves. In my opinion, Conrad Black was the worst example of the Imperial CEO who repeatedly plundered and pillaged his shareholders for his own personal gain. (I emphasize that this is just my opinion in light of Black's reported use of libel suits "to neuter coverage of his activities.") As the Toronto Star reminds us:
Richard Breeden, a former SEC chair recruited by Hollinger International to examine the firm's Black-era compensation practices, issued a report accusing Black and associates of operating the firm as a "corporate kleptocracy," diverting some $400 million (U.S.), or 95 per cent of Hollinger International's adjusted net income between 1997 to 2003, to themselves and holding companies controlled by Black.
Again, from the Independent:
According to their (very unofficial) biographer Tom Bower, Conrad Black and Barbara Amiel were millionaires who behaved as if they were billionaires, desperate to keep up with the Kravises, Manhattan's pre-eminent power couple, who definitely are billionaires. Ms Amiel envied the Kravises their two private jets and encouraged Black to acquire two corporate jets for Hollinger. Once, when her Concorde flight was delayed, she tried to reach Lord King, the British Airways chairman and a Hollinger director. Instead she had to pass on a message for him via a Telegraph journalist: "Tell Lord King that I'll never fly commercial again. I'm finished with British Airways, public transport and the lot of them."
It was Black's arrogant refusal to abide by a November 2003 agreement to pay back $7.2m in non-compete fees and admit that they were "not properly authorised on behalf of the company" and his underhand attempt to sell the Telegraph Group to the Barclay twins that proved his undoing. What followed was an investigation by the Securities and Exchange Commission, the Delaware court case in February 2004, at which Judge Leo Strine characterised Black as an "evasive and unreliable witness", and Hollinger's May 2004 $1.25bn lawsuit against the Blacks, culminating in the seizure of their principal assets and the indictment against him in the autumn of 2005.
