Never have so many directors of a single publicly traded company been convicted on criminal charges in connection with their duties as board members.
With the formal sentencing yesterday of F. David Radler today on one count of fraud following the prison terms set last week for Conrad Black, Peter Atkinson and Jack Boultbee, a formal record was set in the annals of modern corporate history. Never have so many directors of a single publicly traded company been convicted on criminal charges as were these four one-time directors of Hollinger Inc. Black, Radler, Atkinson, Boultbee and Mark Kipnis were also either directors or officers of Hollinger International, the Chicago-based subsidiary which has since changed its name to Sun-Times Media Group. Together, they will serve a total of 158 months in federal prison. Mr. Kipnis was sentenced to six months in home detention with electronic monitoring and another 275 hours of community service on his conviction for mail fraud. He is considered the lucky one of what I have dubbed Hollinger’s Chicago Five.
Some legal observers have suggested that the crimes for which these men have been tried, convicted and now sentenced are small brew in comparison to Enron, WorldCom and other frauds. They miss the fact that it was a substantial chunk of the Hollinger boardroom in both companies that plotted these crimes and will eventually serve time in prison. They also fail to note that Black, Atkinson and Kipnis were trained in the law. One could add that there has never been a more vocal opponent of modern corporate governance practices or those who advocate that standard than Conrad Black -or at least no one who carried on that role with such relish while they were headed to prison for their misdeeds in the boardroom. We have spent a lot of time on these pages reviewing the corporate governance shortcomings of Hollinger International and its Toronto-based parent, Hollinger Inc., which we described as a train wreck just waiting to happen.
Finally, there is the significant detail, which seems lost in the analysis of some commentators, that Conrad Black was born to wealth, privilege and opportunity, unlike Ken Lay, Jeff Skilling, Bernie Ebbers or Dennis Kozlowski. He was awarded title and honors. He counted presidents, prime ministers and royalty among his friends. He was, shall we say, a few notches above America’s recently dethroned tycoons in the intelligence department. A great deal was expected of one whom so many regarded as a great man and thus the magnitude of Mr. Black’s crimes seem proportionally larger in scale, like the man who committed them. It is difficult to imagine that he really needed a few million more or that he would risk losing his freedom and reputation for that tainted addition to his already hefty bank account. The actions of people cannot always be fully explained or predicted, however, whether among the masses or the high born. The case of the United States of America v. Conrad M. Black is just one more exhibit in that immutable law of human nature.
As we have commented before, Hollinger International was also distinguished through the testimony of former members of its audit committee, who showed themselves to be so totally clueless in that role that they gave new meaning to our term the disengaged director.
Hollinger was never among the biggest companies in the United States or Canada. But it will be remembered for the infamous records it has set, which place it in a class that hopefully will never be rivaled.