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You'll still be able to post comments with the same ease as in this location. The proprietor also will keep this web site alive if you wish to review old posts.

Monday, May 14, 2007

Papers were victim, not his lordship

By Dennis Byrne
Chicago Tribune

Now, if that don't beat all -- Conrad Black's attorney playing the class-warfare gambit in the former newspaper baron's criminal trial.

The irony is: Who in the world, besides Queen Elizabeth II, lives and breathes class consciousness more than Lord Black of CrossHarbour? Here's someone who so coveted the privileges and recognitions attached to the upper classes and royalty that he renounced his Canadian citizenship in exchange for a lifelong peerage in the British House of Lords. But now that Black finds himself on trial in a backwater known as Chicago for allegedly illegally snatching some $80 million from the shareholders of his media empire, his lawyer, Edward Genson, suddenly wants everyone to believe that his lordship is just one of the boys. When the jurors were about to hear Black's estimate of his elevated self-worth -- in his own words -- Genson futilely protested:

"This ... appeals to class prejudice and I move for a mistrial." This is rich.

In question were Black's written thoughts to other executives about those pesky shareholders who dared question his proprietorship of their money. Their "agitations," as Black called them, should not "force us into a hair shirt." Everyone knew about our taste for the high life, Black wrote (much more elegantly than I have written here), and we need not "revolutionize" our style with a "Damascene conversion to vows of poverty."

A Chicago jury might convict him of being a popinjay, but here jurors -- commoners and vulgar class they might be -- are practiced enough to know that their duty is to weigh the case on its legal merits.

But we can ask if what he did, as described by the evidence and witnesses, was right. Let me explain. When I labored for the liege lord several years ago at the Chicago Sun-Times, Black's leadership talked reverentially about "proprietorship." I gathered it was a British notion, unfamiliar to us colonists, involving the exercise of certain responsibilities that come with ownership. For example, a proprietor is obliged not to turn the institution over to the serfs, err, employees. Turned loose, they, of course, would destroy the institution. Proprietorship requires that workers be underpaid and overworked. For the good of the institution.

For Black, the requirements of proprietorship apparently included selling off parts of the institution's assets -- a collection of smaller newspapers -- and pocketing the money himself. He built the institution with his own hands and he, by God, was not going to allow others, or the institution itself, to benefit from his perspiration. How did he do this? The buyers of the newspaper coughed up millions of dollars, in addition to the purchase price, to pay Black and his minions to stay away. For the millions of dollars, he signed "non-compete" agreements, promising not to return and set up competing newspapers. Never mind that some of the buyers didn't ask for such a guarantee. Black justifies these non-compete agreements with the premise that he was such a splendid newspaper proprietor, the buyers were scared out of their wits to engage in a head-to-head battle with him. This is a thought that some of us who labored for him find to be incredible. But then, we only saw what he was doing to the institution from the inside, and what do we know?

Black would have us believe that his prosecution is an example of how the "corporate governance" fad has run amok. In truth, he has touched on larger issues at the heart of the corporate governance debate:

On one hand is the view that the marketplace, if left alone, would correct the inefficiencies, mistakes or unethical acts committed by whoever is running a company, because a more competent or honest entrepreneur would gobble up the company to reap its unrealized potential. But, according to this view, the market has been stymied by excessive regulation, allowing executives -- freed from marketplace restrictions -- to get away with their excesses.

The other view is there's not enough government regulation.

Then there's the Black model: What works best is a proprietor who grabs as much as he can, and nuts to everyone else. For all his clever moves, the companies under his proprietorship -- as well as their shareholders, employees, suppliers and ultimately their customers -- are not the better for it. This is something that only a person totally consumed by class consciousness would fail to see.


Anonymous said...

Shareholders without Black are the victims.

I think most of Hollinger, Inc.'s shareholders would have appreciated Black's premium offer to purchase the shares he did not already control in early 2005 at $7.60. This offer was shut down by the OSC et al.

With Black gone, the shares at $.70 and the Company spending more money on legals than Black was alleged to have taken, shareholders would most certainly take putting up with a jet-set CEO over a penny stock.

Good work OSC and Special Committee, you really saved shareholders from big bad Conrad.

Anonymous said...

The shareholders are indeed the victims of this outrageous action brought against Mr Black. Seems to me there is much gnashing of pointy teeth, over actions being proved time again in Mr Radler's realm. No paper trail, links Black to fraud. Non complete are legal and tax free in Canada. Everything is disclosed and signed off. A better series of questions will be when this is all done, how can anyone , except a person of means, Defend themselves against a government financed prosecution team hell bent on one's destruction.