LAWFUEL – The Legal Newswire – OPINION – Janine Beach – As is sometimes the case, Canadians were a bit slow to the draw. America has had Enron, WorldCom and Tyco – a succession of cases that turned securities regulation upside down, and sent companies running for the hills, fearing that some horrible SEC Cyclops was going to devour them and their high-flying executives.
In Canada, the land of smaller companies, higher taxes and social democracy – corporate rogues are few and far between. Conrad Black with his upper class background (a British peerage and homes in many swanky neighbourhoods), poncy vocabulary (he was notorious, even among writer friends for his arcane word choices) and tendency toward the untoward (he was expelled from prep-school for selling stolen exams) has been an obsession for Canadians long before he decided to play fast and loose with non-compete payments.
Now that the verdict is in, we Canadians can proudly proclaim that we have our own version of Bernie Ebbers. Well, maybe not proudly, but at least we can proclaim it.
As a Canadian, albeit one who has been an ex-pat for several years, I have lamented the lack of media coverage about Canada States-side. Or really media coverage about anything outside of America States-side. Ahem. When the Black trial began I was excited: At last, some vindication! A story worthy of coverage on CNN, maybe even on Fox! My hope quickly turned to despair. While my family at home was wading in Black coverage (think something akin to Enron meets OJ, but more tasteful), I have been thirsty for even a three-minute discussion among the talking heads. Even the 24-hour news channels have made nothing more than cursory mention of the trial of the century. I had to fulfill my appetite for all things Conrad with BBC coverage. Don’t the Americans understand how big this guy is?
Americans may not know who Conrad Black is, but they definitely read his newspapers. At its height, Conrad Black’s company, Hollinger International, was the owner of the Chicago Sun-Times, and many other newspapers in Chicagoland, as well as the Telegraph Newspaper group in the UK, Canada’s National Post and the Jerusalem Post. His newspaper empire was one of the largest in the world.
In his spare time, if we could call it that, he wrote dense biographies of political figures and surrounded himself with a who’s who of the international social scene. Royalty, business leaders, politicians, film stars – anyone who was anyone was welcome to party with Conrad Black. Opulent parties, lavish trips and his wife Barbara’s proclamation of boundless extravagance made the Blacks’ celebrities within the complex network of trans-Atlantic elites. All of that schmoozing definitely paid off. In 2000, Black exchanged his Canadian citizenship for British citizenship and the title of Lord Black of Crossharbour. He had more than arrived.
We all know how this story ends. First they build you up, then they chop you down; that is, if you don’t beat them to the punch and come toppling down of your own accord.
Shareholders started to smell a rat when they suspected that Black was receiving unauthorized payments of Hollinger funds. After a SEC investigation, the Attorney General brought the case of United States v. Black et al. to a federal district court in Chicago.
Black was charged with counts of mail fraud, tax fraud, wire fraud, racketeering and obstruction of justice. The crux of his case were non-compete payments that buyers of Hollinger newspapers paid to Hollinger in exchange for a promise that the company would not compete with them post-sale. Every lawyer who has read a purchase agreement knows that non-compete clauses are common in this type of deal. And so, Black supporters thought that this was a typical case of the white-collar crime game called “get the rich guy.” The Chicago jury clearly thought otherwise.