Toronto Life: The Trial of Conrad Black

The Trial of Conrad Black Toronto Life

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Posts with category ‘Business Brief’

End Game

Posted on June 20, 2007 by Roger Martin

Almost all of my friends are convinced that Black is going to the big house. This is interesting to me. They pretty much think the jury is going to nail him for taking money that should have gone to the shareholders. The way I see it—perhaps because I spend so much time watching and writing about CEO compensation—vast sums of money flowing to CEOs whether or not they deserve it is a pretty standard occurrence. And, as in the case of Black, it is all revealed in the regulatory filings and approved by everyone with a vote.

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The Prosecution Rests

Posted on June 7, 2007 by Roger Martin

So the prosecution finished its case last week at the Black trial. I am glad: it was running out of steam. It finished on the same theme: Conrad Black spends lavishly and treats shareholders with profound disrespect. There were e-mails from Black to various folks sniping at and snipping about dissident shareholders. Then the prosecution wound up the week by dropping its charge of money laundering.

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Frequent Liar Points

Posted on May 24, 2007 by Roger Martin

For the second week, I was left disappointed as star prosecution witness David Radler came and went with nothing interesting to show for the days on the stand. All we had was one senior executive saying that his partner was a bad man who was intimately involved with bad behaviours. However, the accuser admitted freely to self-described bad behaviours, including lying about such behaviours, so it was really hard to figure out what to make of his testimony. It was the kind of a “yup I was bad, but he was worse” stance one expects of a plea bargain witness.

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The Big Snore

Posted on May 17, 2007 by Roger Martin

It was amusing to watch the hotshot audit committee members competing with one another to see who could look more foolish on the stand. But in the end, it got to be as pathetic as the first round of American Idol, where utter humiliation is the order of the day (even if the thought of Randy Jackson, Paula Abdul and Simon Cowell judging the performances of Richard Burt, Marie-Josée Kravis and Big Jim Thompson has some appeal). So, I was looking forward to last week’s testimony by David Radler.

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Skim Jim

Posted on May 9, 2007 by Roger Martin

Last week’s testimony of former Illinois governor Jim Thompson stunned even me, though I was already jaded by the previous week’s testimonies of Richard Burt and Marie-Josée Kravis. The implication of the Thompson testimony is nothing less than that we should throw out, trash, absolutely abandon the central premise of modern governance of public corporations.

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The Burt and Kravis Show

Posted on May 2, 2007 by Roger Martin

The timing is rarely this good, so I might as well take advantage of it. In my last two pieces, I argued, among other things, that shareholders are delusional if they think that their board will protect them from a wily and greedy CEO. Conveniently, last week’s testimony by two independent directors of Hollinger International proved my point beyond, as they say in the legal business, a reasonable doubt.

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The Best Defence

Posted on April 26, 2007 by Roger Martin

Last week, I argued that shareholders are deluded if they think that boards, company auditors, company lawyers and regulators can collectively stop ill-intentioned executives from getting unjustifiably high compensation. There are no laws or audit rules against greed, even naked greed. Boards could in theory curtail greed, but any wily CEO who puts his or her mind to it can make sure that the board doesn’t resist the value extraction. And clever, greedy executives can come up with all sorts of clever value-extraction mechanisms, like personal non-compete payments, to facilitate their wealth accumulation.

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Business Brief: Survival of the Fattest

Posted on April 18, 2007 by Roger Martin

It wasn’t a great week for Darren Sukonick, the Toronto securities lawyer whose taped deposition has lately been the main event at the Black trial. He was beat up pretty soundly by the defence lawyers and reporters for refusing to testify in person in Chicago, among a litany of other things. I know Sukonick because he did a securities deal for a company of which I am chairman. The press descriptions of him are pretty much accurate: he is smart, hard-working, intense and ambitious. Having worked with him, I can’t help but feel considerable sympathy for him.

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Business Brief: The Big Lie

Posted on April 11, 2007 by Roger Martin

Who should be on trial in Chicago for perpetrating fraud? That’s the question last week’s shenanigans at the Black trial raised for me. There is a better answer than Conrad Black: it’s the governance theorists.

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Business Brief: Oh, Geez… More Non-Competes

Posted on April 3, 2007 by Roger Martin

The last time Fargo appeared prominently in the national press was a decade ago, when the brilliant Coen brothers movie won two Academy Awards. The North Dakota city was back in the news last week as the prosecution trotted out Lloyd Case, President of Fargo-based Forum Communications. To recap, Forum bought a Hollinger paper for $14 million, a price that included non-compete payments directly to Black and his associates. Probably chosen by the prosecution because of his folksy, accessible home state and the modest size of the transaction, Case opined that he wasn’t actually afraid of Black competing with him after the sale of the paper but was perfectly happy to include the personal non-compete agreements in the contract because they didn’t change the overall price he was going to pay. Good for the prosecution to establish that the non-compete agreements were unnecessary and came directly and solely out of the hide of the Hollinger shareholders.

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Business Brief: Execs Gone Wild

Posted on March 27, 2007 by Roger Martin

On first glance, the prosecution’s strategy—blowing up private e-mails that demonstrate Conrad Black at his most arrogant—seems effective. What jury would sympathize with a man who’s capable of such comments as “We don’t want a large institutional shareholder like Tweedy, Browne flapping about in such an agitated and indiscreet state” and “I will take on the task of hosing down shareholders in need of it as a matter of some priority.” But the flaw in taking the trial in that direction is that it plays right into the defence’s best line of argumentation—i.e., that the context was to blame, not the man.

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Business Brief: Who’s the Boss?

Posted on March 23, 2007 by Roger Martin

In Chicago, the trial of Conrad Black will turn on whether the jurors blame the context or the man. The numbers are, of course, mind-boggling: $25 to $40 million a year in management fees to Ravelston year after year to pay for a mere four-person management team of Black, David Radler, Jack Boultbee and Peter Atkinson, and, because evidently that wasn’t enough to make ends meet, an additional $64 million for personal non-compete agreements in connection with the sale of the Southam chain in 2001 and other miscellaneous bonus payments, some allegedly purloined.

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