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Thursday, November 17, 2005
Lord Black
Today Conrad Black was charged with fraud. As I understand it, there are two main complaints: That he and other executives, and not Hollinger, received non-competition payments from CanWest when it bought newspapers from Hollinger. The second is that personal expenses were paid for with corporate money.
On the first matter, as David Asper wrote in the Post on Sept. 16, 2003,
I am aware of one such non-compete arrangement because it was with the parent company of this newspaper, CanWest Global Communications Corp. And both the Chairman and President of CanWest have confirmed that they wanted and were willing to pay for the non-competition agreement with Conrad Black and his colleagues, in their personal capacities. If Lord Black ever decided to sell his interest in Hollinger, it is he -- and not Hollinger -- with whom we did not wish to compete.
The clumsy bureaucrats who have run Hollinger since Black was sidelined are no competitive threat to anyone but themselves. See our cover story on that subject if you need convincing.
As to the second complaint, of luxurious expenses, those were approved by Hollinger's board, and were indeed part of the corporate style of Black and his company. Hollinger's shareholders' advocates, namely the company's directors, approved them. If they seem excessive, that is the company's business, not the state's. How ironic that politicians who rack up inappropriate expenses at, say, the mint, on the taxpayers dime are immune from such "corporate governance" jihads, typically led by vote-seeking U.S. district attorneys. Those attacks seem to be saved for private sector creators of wealth.
The left will cheer the indictments; they cheer anytime some capitalist is under attack, but they'll cheer extra hard because of their ideological hatred for the man who turned Southam around and who built the National Post (not to mention his foreign successes).
I for one predict that Black will beat these charges and regain control of his company. Anyone familiar with the facts of the case, the law, and Black's own stamina would bet the same way if they weren't blinded by their own personal or ideological grudge against the man
Posted by Ezra Levant on November 17, 2005 | Permalink
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Agree one hundred percent Ezra. He'll be back.
Posted by: MikeP | 2005-11-17 4:04:47 PM
http://innocentbystander.typepad.com/innocent_bystander/2005/01/always_bet_on_b.html
Wesley Snipes says:
"Always bet on Black."
Posted by: Plato's Stepchild | 2005-11-17 5:25:52 PM
Just reading the indictment now and not one paragraph in there's already this mistake -International owned and published ...The Daily Telegraph in the U.K., the National Post in TORONTO, The Jerusalem Post in Israel ..
Guess the National Post isn't a national rag after all.
Doubt it's enough to get your man off however. Don't think Radler would be cutting a deal for 2 and 1/2 at club fed if there weren't something to it.
Posted by: Nbob | 2005-11-17 5:26:44 PM
BBC World News television at 1800 EST had a major story on Black's being charged. The words "Canada" or "Canadian" were never uttered.
Dodged that bullet.
Mark
Ottawa
Posted by: Mark Collins | 2005-11-17 5:51:35 PM
Black is a dead duck in the US. Remember the Loewen Group? Combine that with the vote seeking egotistical district attorneys and he’s likely to do jail time.
Posted by: AsISeeIt | 2005-11-17 6:00:36 PM
Much as I agree that the law and the facts are on Lord Black's side, I don't think he will win this one. No jury will have sympathy with him, and they will bend the law like a pretzel (and ignore facts as required) to put him in jail.
Posted by: DCardno | 2005-11-17 6:03:01 PM
Factoid: The district attorney responsible for this indictment is a certain Pat Fitzgerald...
Posted by: Anonymous | 2005-11-17 6:07:26 PM
DCardno I might agree with you if it wasnt for the fact that Conrad Black's lawyer is Edward Greenspan. The best. Hope I am right.
Posted by: MikeP | 2005-11-17 7:28:14 PM
I hope you are right too Mike P. Lord Black is unflappable - watch him win!!(I hope). I am cheering for his side because he earned his money, if he took money it was his own! He didn't drop his convictions at the door and he wouldn't take any 'buy offs'(eg. shut -up), that is the real reason he is being prosecuted. He will not crumble. This is a set up by a bunch of left wing wackos in USA and Kanadar. Left wing wackos with LOTS of money who did not like this Man treading on their toes! I hope he crushes them when this little kangaroo court is over.
Posted by: jema54j | 2005-11-17 8:08:52 PM
Just remember, an indictment (in the U.S., anyway) is one thing, a conviction quite another. Our system proceeds on the assumption of "innocence until proven guilty" (tho it doesn't always seem like that in the surrounding brouhaha!). I think Mr. Radler a) may be listening to the anti-Black media and analysts too much, b) not have a great lawyer, c) have had a loss of nerve, or d) any combo of the above. I'm sure Lord Black will have the best lawyer and not make the sort of stupid Martha-Stewart-ish ego-and-pride mistakes. American juries don't mind rich people (especially self-made), but they sure don't like wafflers.
Posted by: Meg Q | 2005-11-17 8:18:40 PM
>As I understand it, there are two main complaints: That he and other executives, and not Hollinger, received non-competition payments from CanWest when it bought newspapers from Hollinger. The second is that personal expenses were paid for with corporate money.
You understand wrong. There is nothing in the indictment about CanWest. It involves 4 sales to US corps ( including one allegation of a sale where they sold assets to themselves and agreed not to compete with themselves).
The second issue involves compensation bonuses (taxable under Cnd. law) that were paid out as non-competition fees ( not subject to tax)
On the first issue Hollinger did indeed get the non-comp payments but the problem is it was Hollinger Inc. in Toronto and not Hollinger International in Delaware (who were the owners of the assets that were sold). None of the buyers asked for a non-comp against Hollinger Inc. except the one transaction where they were the buyers.
Why skim off some of the non-comp funds from Hollinger International ? Because Black et.al. own Ravelston , who own 62% of the equity of Hollinger Inc -which in turn is the controlling shareholder of Hollinger International through the issue of “super voting” class B shares ( 10 votes for every one common-or equity-share ) yet they only own 19 % of the equity of Hollinger International.
So $100 in the pocket of Hollinger International would eventually put $ 19 in the pocket of Black and his buds but $100 in the pocket of Hollinger Inc. would work out to $ 62.00 in the pocket of Black et al.
Now despite being in a conflict of interest .- and despite the fact that none of the buyers asked for it - Black & co inserted a non-comp payment to Hollinger Inc. ( and latter also directly to themselves ) in the sales agreements without getting the required approval from Hollinger International’s audit committee.
The bottom line - all the non-comp money that went to Hollinger Inc was good for Black & Co because they get $ 62.00 of every $100 ( 3 times what they would get if the money stayed at International ). It’s good for the shareholders of Hollinger Inc , like pension plans etc. because they get to divide up the remaining $38 but it’s bad for the shareholders of Hollinger International, like pension plans, because for every 100 that went to Hollinger Inc they’re out $ 79 . This “corporate governance jihad” is seeking justice for the common shareholders of Hollinger International who- if the allegations are proven- have been the victims of theft - plane and simple.
They are all allegations and Black & Co deserve the presumption of innocence but if the facts as set out in the indictment are proven they are most certainly against Black - as is the law. Lets hope you’re right about that stamina thing otherwise I’d put my money on Lord Black of CrossHarbour soon becoming a convicted thief and tax cheat.
Posted by: Nbob | 2005-11-17 10:42:39 PM
Actually the International common shareholders would be out $ 81.00 for every $ 100 sent to Inc. Spelling and math -not my stong suits
Posted by: Nbob | 2005-11-17 10:47:41 PM
Yet another correction - There's a 2nd part of the indictment that does go on to talk about the CanWest sale and the "perks" all of which , it is alleged, deprived Hollinger Intrnational shareholders.
The quote above from Asper is correct - but they did not ask for two of the alleged co-defendants to sign those agreements.
Posted by: Nbob | 2005-11-17 11:57:46 PM
Conrad Black started and intended The National Post to be a Conservative newspaper which Canada much needs.Thankfully The National Post is back being a conservative paper and is better than the Globe n Mail which went to front colour cover to compete more with the National Post.For awhile the N.P.had drifted away some from conservative unfortunately.Plus a big thanks to the liberal Aspers for allowing the National Post to be as intended a conservative paper.Media still needs a Conrad Black.
Posted by: Larry | 2005-11-18 3:24:50 AM
Lord Black is not being prosecuted by a "vote-seeking U.S. district attorney". A district attorney is a local-level (e.g. city or county) position, usually elected. The prosecution is being led by Patrick J. Fitzgerald, the United States Attorney (an appointed, federal Department of Justice postition) for the Northern District of Illinois. The United States Senate confirmed his nomination by President Bush by unanimous consent in 2001.
Mr Fitzgerald has no need to seek votes by prosecuting Lord Black.
Mr Fitzgerald is also Special Counsel to investigate the alleged disclosure of the identity of a purported employee of the Central Intelligence Agency.
http://www.usdoj.gov/usao/iln/aboutus/patrickjfizgerald.html
Mark
Ottawa
Posted by: Mark Collins | 2005-11-18 6:47:49 AM
Am I paranoid? Does the prosecution of Conrad Black have any Liberals behind it?
Remember, that Black and Chretien are basic enemies, and Chretien never, ever, ever, lets go of those he's out to destroy.
Black tried to destroy Chretien via the National Post which essentially emerged as a campaign against Chretien. This was just after the 1995 referendum. Chretien's response to the referendum was, as usual, a complete narcissistic response - he was only interested in his own power. So, he laundered taxpayer money to Quebec Liberal ridings, to maintain his majority in parliament. That was in Quebec. In Ontario, Black was trying to get rid of Chretien via the Post. It didn't work - because of the Quebec ridings that, corruptly, went Liberal.
Now- Chretien has been turfed out. He's busy working now to see that Martin is turfed out. And, to see that his friends (Pelletier)who was fingered by Gomery as a key agent in the money laundering, gets off. And- Chretien is after Gomery.
Black? - Chretien has lots of corrupt corporate buddies.
So- is does he have any fingers in the pie with regard to Black's troubles?
Just a few Friday night conspiracy thoughts...and some thoughts on Chretien's vicious and malicious nature.
Posted by: ET | 2005-11-18 3:16:40 PM
That's right ET, old Jean controlls the US DoJ. Yup, I'm sure Fox news will love that spin
Posted by: Zorpheous | 2005-11-18 3:38:20 PM
Black isn’t paranoid, he’s got real enemies.
So, ET your comments have occurred to me too.
But lately, in my opinion, the reality is that Black has given the socialists something to enjoy and both Black and David Radler have given capitalism a bad name … unless ..
…we look at from the standpoint that taking all these cases like Enron, Tyco, and Worldcom; that they in fact prove capitalism works in the sense that it roots out the bad, deals with it, punishes it and moves on.
Whereas when we have government excesses, they are treated like entitlements. In other words, the corporate scandals only hurt investors who should always be in “buyer beware” mode. Whereas taxpayers are confiscated of their money by Adscam, and “this Mint’s for you” attitude of Dingwall. Not only does Dingwall abuse taxpayers, he then has the gall to want a $500,000 top up after dismissal. In short, that’s why all Crown Corporations should be sold. Privatization won’t guarantee there will never be abuses but it will provide greater assurance that the abuses will get outed and dealt with expeditiously.
Posted by: nomdenet | 2005-11-18 3:43:51 PM
nomdenet: "taking all these cases like Enron, Tyco, and Worldcom;... they in fact prove capitalism works in the sense that it roots out the bad, deals with it, punishes it and moves on."
Not quite. It's the US justice system working fairly well. The justice system in Canada would never achieve these results, for a variety of reasons (investigations run by police rather than attorneys, lack of political will, establishment self-protection, etc.).
Mark
Ottawa
Posted by: Mark Collins | 2005-11-18 6:00:25 PM
Good point Mark. Plus maybe because 60% of the US population is now investing directly and/or thru their 401K's , they have an interest in seeing justice done.
Posted by: nomdenet | 2005-11-18 10:06:52 PM
I agree that the US is better at prosecuting stock frauds than we are. However, part of that has to do with the fact that it’s not as big a problem here,
First, we just don’t have that many fortune 500’s in Canada. There’s simply less capital floating around the market to pilfer. Our frauds tend to be regional 8.1 million affairs compared to Blacks 81 mill international ditty.
Second, being the land of peace order and...we’ve historically been more anal about the good governance thing. That along with the fact -as pointed out by nomdenet - Cnd’s tend to invest through institutional investors ( Banks, Pension Plans, ) where as stateside there’s more unsophisticated individual investors in the market. Things are watched a little closer here by auditors and institutional shareholders so its a little harder to pull something off .
Indeed, it is alleged that when the CanWest sale went down Black skimmed his take from the US corp. and not from the Cnd. limited partnership because he was afraid the Cnd company would discover what he was up to. ( Which is why he hasn’t been charged here for stock fraud)
Third, Stock frauds have a bigger impact down south. Not that loosing your life savings up here is no big deal but in the US for many it’’s a triple whammy.
There’s more use of employee stock options as a form of compensation down there ( e.g. rather than pay you the 40,000 you’ld get on the open market we’ll pay you 30,000 but you get an annual option to purchase 15,000 in stock to hold in your 401K for only $ 100. ) So when the company goes belly up the employee is out a job, out his retirement savings and has worked at a discount for the past how ever many years.
What makes the US superior in prosecutions is not that the investigation is run by an attorney- in both countries the investigation is done by the police. The difference is what happens after the police feel they have reasonable and probable grounds. The next step, in both countries, is that it’s turned over to a prosecutor, who must prove the sufficiency of the case before taking it to trial. In Canada that is done with a preliminary Inquiry after the charges have been laid - in the US it goes before a grand jury, in secret, before the charges are laid.
So. although the grand jury was intended to give some protection to an accused by making the state prove the sufficiency of the charges, it has evolved into a handy conspiracy busting tool we do not have in Canada. It introduces an element of “ game theory” into the process -
If you’re called you can:
a) take the 5th - but if your co-crooks all take the 5th you all but confirm the conspiracy and if one spills the beans and you take the 5th you’ve just added credibility to the stool pigeon's evidence and implicated yourself.
b) stick to the story - but if one of your co-crooks cracks then you’ll face perjury charges (often worse time than the original crime)
c) be the first to cut a deal and avoid the risk of one of the others selling you out.
Added into the mix is the fact that the prosecutor can pick out one or two of your co-crooks and unilaterally grant them immunity such that they loose the right to invoke the 5th and have to either sing or risk perjury charges. So there’s a fair bit of leverage that we don’t have up here.
All of which is to say- in a long winded fashion- we’d do well to follow the US and import the grand jury concept into our law. It would not only help in stock frauds but also in some of the large drug and organized crime conspiracies where we’ve spent alot of money with not much success.
Posted by: Nbob | 2005-11-19 4:32:08 AM
Nbob, I didn’t mean to imply the US investor was less sophisticated. Some are, some aren’t. I was trying to say that because 60% of them are in the market, that, as Martha Stewart says “ is a good thing”. It is because the American middle class investor has a better appreciation of the need for corporate earnings; their headlines don’t shriek – “X corporation makes Billion dollars while unwed mother of 6 and delinquent dad have trouble paying for their iPod.” Rather the US headlines read that making a billion dollars is “a good thing” because corporate growth creates jobs and makes shareholders wealthy and getting wealthy is “a good thing” because it creates investors.
So I do agree with you that we have fewer investors but that’s not because of our fine pension plans and sophisticated savings methods, it’s because Librano$$ take our money away from us to fund Adscam and Crown Corporations for Dingwall patronage appointees to expense their gum. It’s deplorable the degree to which government intrusion has pushed aside entrepreneurial investment. Canada’s stock market is now dominated by Banks (which Librano$$ won’t let merge because the Desmarais cabal doesn’t like it) and resources where our captains of industry can’t figure out how to sell our softwood lumber to anyone but the Americans who rightly claim we’re subsidizing because the land is owned by the government and has no market value discipline attached to it. All of this is why we don’t have something akin to the Fortune 500 that you’ve mentioned. In theory we should have the Fortune 50 but we don’t even have 5 truly global multi-nationals.
Nbob it would seem that we agree on the need to do more to empower our courts and regulators to make Canadians feel more secure about their investments. But the bigger problem you’ve raised is that Canada needs more wealthy investors and less government involvement in our economy if we’re going to get ready for what even Lucien Bouchard’s Manifesto recognizes has to happen if we are to compete globally.
Posted by: nomdenet | 2005-11-19 8:01:43 AM
Nbob: I'm afraid you're wrong. In the US the actual investigation in many complex cases is run by the prosecuting attorneys (never the case in Canada--crown counsel do no actual investigating) who may use the police and/or their own investigators as well. The Black case is a classic example. See this:
"Fitzgerald was joined by representatives of the FBI and the Internal Revenue Service criminal investigation division.
The U.S. Attorney's Office has been investigating fraud allegations at Hollinger International Inc. for months and has already charged two former company executives, including Black's long-time business partner David Radler."
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20051117/conrad_black_051117/20051117?hub=TopStories
In other words the U.S. Attorney's Office ran the investigation, with the FBI and IRS doing leg-work.
In Canada the Crown Counsel only comes in after the police gather the evidence; in the US the attorneys in these sort of cases run the gathering of evidence.
Our police, RCMP or otherwise, simply are not up to running such complex white-collar investigations. They don't have the knowledge, backround, or experience of lawyers.
Mark
Ottawa
Posted by: Mark Collins | 2005-11-19 8:22:15 AM
A clarification of my 60% stat. Larry Kudlow says …
“The investor class continues to expand, according a recent survey, with nearly 57 million U.S. families now invested in stocks. This is an incredibly powerful force for capital formation, economic growth, and pro-capitalism politics. Twenty years ago only one-fifth of families owned shares. Now it's three-fifths.”
Posted by: nomdenet | 2005-11-19 9:20:05 AM
Terence Corcoran, National Post, reports charges/allegations against Lord Black are melting/shrinking faster than the ice cubes at Hy's Tavern. Corcoran estimates costs of lawsuits, & etc, are up as far as $300 US millions.
The greed/laziness of the left liberals is evident in their manic glee of "bringing down a capitalist".
Try bringing down Mugabe of Zimbabwe, the socialist tyrant; why is the left silent on this?
Posted by: maz2 | 2005-11-19 9:53:44 AM
Only a hopeless idealogue would defend Conrad Black's fraud again shareholders.
Black has a history of frivolous litigation and irresponsible behaviour. He is a not a boon to the conservative movement.
You lessen your credibility significantly by defending a criminal like Black.
Posted by: Mark Cabal | 2005-11-19 9:13:02 PM
The National Post under Conrad Black was the finest newspaper ever printed in Canada in recent memory. The National Post today is a a mere shadow of what Black built. Cloaked in a conservative shroud it is more often than not a cheerleader for large L liberal establishment.
I am disappointed that Conrad Black got his tit caught in the proverbial ringer. However I, while enjoying the product he brought to market, did not lose a single cent.
Those who did invest in Black empire earned a return on their investment. Unless you were unfortunate enough to have bought shares just prior to the corporate and character assassination that has taken place.
If Black had produced a newspaper that was viewed in a more favorable light by the reigning political establishment, I have my doubts that he would be facing the trouble he faces now regardless of the crimes he did or did not commit.
The ferocity which with he is being pursued is astonishing. This "scandal" is being compared to major US fraud cases like Sprint and Enron.
But the nature of this case is not similar to those. Black never misreported earnings which would have lead shareholders to buy shares in a company with artificially inflated earnings.
Did Black skirt the rules of good corporate governance and reward himself with more than he deserved?
That is a pretty subjective question and one that looks like shareholders would have been far better off without.
Black built an empire from the ground up. Nobody had to buy anything he sold, either papers or shares in the company. He build tremendous value for himself and his shareholders.
If his crime was not to return full value to them because he unfairly compenstated himself,and he is to be punished for that if found guilty, then what punishment should those serve who instigated these proceedings?
The results of their actions have been many times more costy to shareholders than that of Black.
Black built his fortune and legacy pushing against the Liberal establishment. That is a pretty tough row to hoe.
A man with Blacks stamina and intellectual capacity would have run roughshod through the Liberal Party had he chosen to have prostituted himself to the altar of power that it promised.
Instead he chose to stand against it and for that he is paying a dear price.
Black is not perfect by any means but he is a far more honorable man than Paul Martin or Jean Chretien.
Posted by: ward | 2005-11-20 3:34:57 AM
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