It's been a month since the Conrad Black trial started, and the media reports have slowed down for another weekend, when nothing is new:
1. From the Pictou County News, an article wondering out loud why there's so much coverage of the trial.
2. The Toronto Star's Rick Westhead notes that the recent testimony by Darryl Sukonick isn't likely to impact Torys LLC's position as a market leader in the Canadian corporate-legal industry. (Excerpted by LawFuel.com.)
3. Also from the Star, a column by Jim Coyle that uses the Bora Bora trip as a springboard for complaints about reaching old age. It contains relevant quotes from a few modern American authors. (Cameron Smith mentions the trial in passing, in a column discussing a recent plan by Ontario premier Dalton McGuinty to allow fast-tracked building of incinerators.)
4. The Toronto Sun has webbed Peter Worthington's assessment of the prosecution's performance so far, which ends with: "At this stage, it's hard to envy the prosecutors' role."
5. Theresa Tedesco of the National Post has a feature-length article that re-caps the entire month of the trial, under the title "No suspense, but plenty of comedy." It even works in Elmer Fudd...
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CBC News has thoughtfully posted a guide to the documentation that the prosecution has introduced into evidence. They don't mention any "smoking gun" in it, though; if you want to try your hand at finding one yourself, the direct link to the prosecution's "Trial Documents" is here. (I got the last link from the guide itself.)
Saturday, April 14, 2007
Friday, April 13, 2007
A Brief Look At Delaware Law - Limitation Of Director's Liability
Since there's no episode of The Verdict on tonight, I have instead a brief write-up on the provisions of Delaware corporate law (found in Title 8, Chapter 1 of the Delaware Code) that apply to limitation of directors' liability at the time of incorporation. If you're interested, section 102, subsection (b), (3) has a provision for pre-emptive rights to subscribe for additional shares, provided that all shares of the same class have that right, to be included in the certificate of incorporation. In other words, it has a provision that allows for a poison pill to be put into the certificate of incorporation, provided that all shares of the same class have the same right to the "one-time-only-bargain" issuance and sale of new shares.
The part of sect. 102 that's relevant to limitation of directors' liability is found in subsection (b), (7): the corporation, upon incorporating, can limit the liability of its directors for their actions as directors, except for: “any breach of the director's duty of loyalty to the corporation or its stockholders”; or, for “acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;" or “under [section] 174 of this title”; or, “for any transaction from which the director derived an improper personal benefit.”
Section 174 deals with the board improperly declaring a dividend (s. 173) or directors violating section 160. The latter section governs the right of a Delaware corporation to sell and buy its own shares. Subsection (c) of it requires that any corporation that owns a majority of its own stock, or a holding company that itself is owned by that same corporation, be forbidden from voting those shares or for using them for “quorum purposes.” No loop-de-loop, where corp. B holds a majority of shares in corp. A and corp. A holds majority control in corp. B. (or a circular chain with more than two links in it,) is allowed to get around this provision.
(Interestingly enough, this part of subsec. (c) does not apply to "pyramids of control." The snake has to bite its own tail for this part to nullify the voting rights.)
Subsec. (c) ends with: “Nothing in this section shall be construed as limiting the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.” In other words, even if there is a control loop as described in the paragraph two above this one, the nullification of directors' liability does not kick in if corp. B., or whichever, holds the shares of corp A., or vice-versa and if the holder corporation in question uses the associated rights in conformance with the standard of fiduciary duty. If the latter condition applies, then directors' liability provisions aren't nullified by Delaware law, even though a circular-control set-up exists.
Section 102, subsection (b), (7) (ii) is broken up into three separate conditions; violation of any one of them gets rid of the directors' liability limitation with respect to any act that breaches any of those three conditions. To quote verbatim, they are: "for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law."
It's nice to see the logical "or" in there, as well as the separation of those three conditions into independent clauses. Otherwise, a gang of bank robbers could set up a Delaware corporation and include a provision that limits directors' liability for "any violation of law committed by any director strictly in the capacity of directorial duties, and for which the obligation of directors' duty of loyalty and duty of fairness are strictly adhered to." Once set up, the robbers could then: make each of themselves directors, as well as employees of said corporation; bring along a counter of the proceeds of each "score" they make; build up a paper trail that certifies that they didn't spend any of the proceeds of any robbery on the way to deposting it in the corporation's bank account; and, show that they only collected, for each of their personal benefits, the salaries and directors' fees to which their positions in the corporation entitle them.
This is why you will never see a gang of that sort showing up in the Delaware Court of Chancery asking for an injunction preventing them from being arrested for bank robbery. You'll never hear, "But, Yer Honor, Louie was around to make sure that we took care of the dough by depositing all of it in the corporation's bank account, and we only spent what we was entitled to draw from the account as directors, as well as employees, and we collected the funds due the corporation as directors, too, as well as finding the funds due to the corporation as directors; it says so in this paperwork here. Hence, the directors' liability is guaranteed us because of our duty of care and duty of loyalty were fulfilled all rightly and properly, Yer Honor. So, we deserve an injuction against being arrested in so capricious and ignorant a fashion as these officers of the law want to do to us." The logical independence of each of these three clauses means that such a criminal gang cannot use limitation of directors' liability as an injunctive shield against any criminal conviction, under any circumstances.
(Even if they somehow could, I doubt very much if the Delaware Chancery Court has the scope to influence the exercise of the criminal law anyway. If any gang of crooks tried something like that, I suspect that the resultant Chancery Court opinion would be a very short one: "Beyond our jurisdiction. Now gitouttahere, and Louie's going with you".)
If you're interested, the firm of Morrison and Forester, LLP, has a Web sheet that defines the terms "duty of loyalty," "duty of care," and other basic terms relating to corporate law, including to Delaware corporate law. Footnote 2 cites a 2003 decision by the Delaware Chancery Court. No "Louieisms," though.
The part of sect. 102 that's relevant to limitation of directors' liability is found in subsection (b), (7): the corporation, upon incorporating, can limit the liability of its directors for their actions as directors, except for: “any breach of the director's duty of loyalty to the corporation or its stockholders”; or, for “acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;" or “under [section] 174 of this title”; or, “for any transaction from which the director derived an improper personal benefit.”
Section 174 deals with the board improperly declaring a dividend (s. 173) or directors violating section 160. The latter section governs the right of a Delaware corporation to sell and buy its own shares. Subsection (c) of it requires that any corporation that owns a majority of its own stock, or a holding company that itself is owned by that same corporation, be forbidden from voting those shares or for using them for “quorum purposes.” No loop-de-loop, where corp. B holds a majority of shares in corp. A and corp. A holds majority control in corp. B. (or a circular chain with more than two links in it,) is allowed to get around this provision.
(Interestingly enough, this part of subsec. (c) does not apply to "pyramids of control." The snake has to bite its own tail for this part to nullify the voting rights.)
Subsec. (c) ends with: “Nothing in this section shall be construed as limiting the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.” In other words, even if there is a control loop as described in the paragraph two above this one, the nullification of directors' liability does not kick in if corp. B., or whichever, holds the shares of corp A., or vice-versa and if the holder corporation in question uses the associated rights in conformance with the standard of fiduciary duty. If the latter condition applies, then directors' liability provisions aren't nullified by Delaware law, even though a circular-control set-up exists.
Section 102, subsection (b), (7) (ii) is broken up into three separate conditions; violation of any one of them gets rid of the directors' liability limitation with respect to any act that breaches any of those three conditions. To quote verbatim, they are: "for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law."
It's nice to see the logical "or" in there, as well as the separation of those three conditions into independent clauses. Otherwise, a gang of bank robbers could set up a Delaware corporation and include a provision that limits directors' liability for "any violation of law committed by any director strictly in the capacity of directorial duties, and for which the obligation of directors' duty of loyalty and duty of fairness are strictly adhered to." Once set up, the robbers could then: make each of themselves directors, as well as employees of said corporation; bring along a counter of the proceeds of each "score" they make; build up a paper trail that certifies that they didn't spend any of the proceeds of any robbery on the way to deposting it in the corporation's bank account; and, show that they only collected, for each of their personal benefits, the salaries and directors' fees to which their positions in the corporation entitle them.
This is why you will never see a gang of that sort showing up in the Delaware Court of Chancery asking for an injunction preventing them from being arrested for bank robbery. You'll never hear, "But, Yer Honor, Louie was around to make sure that we took care of the dough by depositing all of it in the corporation's bank account, and we only spent what we was entitled to draw from the account as directors, as well as employees, and we collected the funds due the corporation as directors, too, as well as finding the funds due to the corporation as directors; it says so in this paperwork here. Hence, the directors' liability is guaranteed us because of our duty of care and duty of loyalty were fulfilled all rightly and properly, Yer Honor. So, we deserve an injuction against being arrested in so capricious and ignorant a fashion as these officers of the law want to do to us." The logical independence of each of these three clauses means that such a criminal gang cannot use limitation of directors' liability as an injunctive shield against any criminal conviction, under any circumstances.
(Even if they somehow could, I doubt very much if the Delaware Chancery Court has the scope to influence the exercise of the criminal law anyway. If any gang of crooks tried something like that, I suspect that the resultant Chancery Court opinion would be a very short one: "Beyond our jurisdiction. Now gitouttahere, and Louie's going with you".)
If you're interested, the firm of Morrison and Forester, LLP, has a Web sheet that defines the terms "duty of loyalty," "duty of care," and other basic terms relating to corporate law, including to Delaware corporate law. Footnote 2 cites a 2003 decision by the Delaware Chancery Court. No "Louieisms," though.
Media Roundup: Rub Your Filmy Eyes
Week 4 of the Conrad Black trial is over, for the jury at least. Here are the reports from overnight:
1. The Chicago Tribune has a brief write-up, entitled "Lawyer says Thompson aware of payments."
2. The Belleville News-Democrat has webbed the latest AP report, which ends with the disclosure that it was Jack Boultbee and Peter Atkinson who declined to take Darren Sukonick's advice to not send the CanWest non-compete payments through Hollinger International's accounts. It's also been webbed by Editor and Publisher.
3. The New York Times has a webbing of the latest Reuters report, and the New Zealand Herald has an abridged version of it - the first five paragraphs.
4. From CANOE Money, a CP report forecasting next week's testimony, which will start with the rest of the Darren Sukonick tape and should include live testimony from William Rogers and Paul Saunders, Henry Kissinger's ex-lawyer. The tape of Beth DeMerchant is expected to be shown next week too.
5. The Winnipeg Sun has a webbing of Sun Media columnist Peter Worthington's latest write-up on the trial, in which he complains about the boredom...the boredom...the boredom....
6. The Globe and Mail's Paul Waldie's report deals with the frailites of human memory - specifically, Csr. Sukonick's memory, when compared with the E-mails he wrote at the time of the CanWest deal.
7. The Montreal Gazette has webbed Peter Brieger's latest write-up, which also recaps the cross-examination of Csr. Sukonick. It includes his recommendation, from an October 2000 E-mail, to bundle the non-compete payment into one cheque, sent to Ravelston.
8. Linwood Barclay of the Toronto Star has a comedy column based on the price tag of the Bora Bora trip. It includes the identity of the recipient of that E-mail in which Mr. Black complained about the time he had: Seth Lipsky, now the editor-in-chief of the New York Sun.
9. Another column, by the Chicago Sun-Times' Neil Steinberg, relates a poem by recently-deceased novelist Kurt Vonnegut, reprinted in his column, to Conrad Black's lifestyle.
10. A brief write-up by Mary Wisniewski, also of the Sun-Times, has a recounting of conflicting disclosure advice Mark Kipnis received in 2001 as its opener.
11. A detailed CP write-up on yesterday's testimony has made the Halifax Daily News. It ends with an update on expected witness Barry Tyner, a Vancouver accountant, who "may" testify.
12. A second article by the Globe's Mr. Waldie reports that Guilliame Hecketsweiler will not testify after all. As noted above, though, the prosecution is trying its luck with two live lawyers next week.
13. An expanded version of the latest Reuters report has been webbed by the Age of Melbourne, Australia. It recounts that former governor James Thompson allayed Csr. Sukonick's fears about the non-compete payments, as structured, weren't approved by the board.
Also, from CANOE Money: the Ontario Court of Appeal has denied an appeal by Conrad Black to block the receiver of Ravelston from releasing Mr. Black's, and other defendants', compensation from that company. "The... decision, whose reasoning was released Friday, found that Black's argument 'has no realistic possibility of success if leave to appeal were granted as it raises no apparent error in law or palpable and overriding factual error' in the Superior Court ruling [that the appeal was denied for, by the OCA today.]"
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Both Peter Brieger and Mark Steyn recount the "Chester Blair" comedy break: Mr. Brieger in a "Black Board" entry, and Mr. Steyn on his Maclean's blog.
1. The Chicago Tribune has a brief write-up, entitled "Lawyer says Thompson aware of payments."
2. The Belleville News-Democrat has webbed the latest AP report, which ends with the disclosure that it was Jack Boultbee and Peter Atkinson who declined to take Darren Sukonick's advice to not send the CanWest non-compete payments through Hollinger International's accounts. It's also been webbed by Editor and Publisher.
3. The New York Times has a webbing of the latest Reuters report, and the New Zealand Herald has an abridged version of it - the first five paragraphs.
4. From CANOE Money, a CP report forecasting next week's testimony, which will start with the rest of the Darren Sukonick tape and should include live testimony from William Rogers and Paul Saunders, Henry Kissinger's ex-lawyer. The tape of Beth DeMerchant is expected to be shown next week too.
5. The Winnipeg Sun has a webbing of Sun Media columnist Peter Worthington's latest write-up on the trial, in which he complains about the boredom...the boredom...the boredom....
6. The Globe and Mail's Paul Waldie's report deals with the frailites of human memory - specifically, Csr. Sukonick's memory, when compared with the E-mails he wrote at the time of the CanWest deal.
7. The Montreal Gazette has webbed Peter Brieger's latest write-up, which also recaps the cross-examination of Csr. Sukonick. It includes his recommendation, from an October 2000 E-mail, to bundle the non-compete payment into one cheque, sent to Ravelston.
8. Linwood Barclay of the Toronto Star has a comedy column based on the price tag of the Bora Bora trip. It includes the identity of the recipient of that E-mail in which Mr. Black complained about the time he had: Seth Lipsky, now the editor-in-chief of the New York Sun.
9. Another column, by the Chicago Sun-Times' Neil Steinberg, relates a poem by recently-deceased novelist Kurt Vonnegut, reprinted in his column, to Conrad Black's lifestyle.
10. A brief write-up by Mary Wisniewski, also of the Sun-Times, has a recounting of conflicting disclosure advice Mark Kipnis received in 2001 as its opener.
11. A detailed CP write-up on yesterday's testimony has made the Halifax Daily News. It ends with an update on expected witness Barry Tyner, a Vancouver accountant, who "may" testify.
12. A second article by the Globe's Mr. Waldie reports that Guilliame Hecketsweiler will not testify after all. As noted above, though, the prosecution is trying its luck with two live lawyers next week.
13. An expanded version of the latest Reuters report has been webbed by the Age of Melbourne, Australia. It recounts that former governor James Thompson allayed Csr. Sukonick's fears about the non-compete payments, as structured, weren't approved by the board.
Also, from CANOE Money: the Ontario Court of Appeal has denied an appeal by Conrad Black to block the receiver of Ravelston from releasing Mr. Black's, and other defendants', compensation from that company. "The... decision, whose reasoning was released Friday, found that Black's argument 'has no realistic possibility of success if leave to appeal were granted as it raises no apparent error in law or palpable and overriding factual error' in the Superior Court ruling [that the appeal was denied for, by the OCA today.]"
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Both Peter Brieger and Mark Steyn recount the "Chester Blair" comedy break: Mr. Brieger in a "Black Board" entry, and Mr. Steyn on his Maclean's blog.
Thursday, April 12, 2007
Nothing On The Trial On The Verdict Tonight, Yet Again
Since the latest episode of The Verdict had nothing on the Conrad Black trial, I've prepared a substitute, a quick look at the Delaware Court of Chancery. This is the court where Conrad Black got his action, as controlling shareholder, to change the Hollinger International corporate by-laws shot down in 2004.
The Chancery Court of Delaware is a court whose jurisdiction is "matters and cases in equity" in the state. Back in colonial days, it was intended to be Delaware's answer to the more august and established Court of Chancery in the U.K.; so, "equity" is interpreted in a similar manner in the former as it was in the latter, which decided issues on the spirit of the law rather than by the law's letter. Once American independence was implemented, it became a court hearing a variety of civil, typically commercial, cases. According to Wikipedia, the jurisdiction of the Delaware Court of Chancery is a catch-all, for cases that are not within the purview of any other Delaware court of law. (The relevant section in Wikipedia cites Title 10, Section 342 of the Delaware Code as the enabling statute for this jurisdiction.) Also, the Delaware Chancery Court has the authority to remand cases that require trial by jury to the Delaware Superior Court, according to Title 10, Section 369 of the Delaware Code as cited in the same Wikipedia article on it. This latter provision implements the declaration that the Chancery court is on an equal footing with any other Delaware court, as does equal enforcement of decisions made by it.
The Delaware Chancery Court's Website has been good enough to put all of its decisions online, in PDF form, from 2000 to the present. If you poke around the 2004 decisions, you'll find the "Memorandum Opinion " in the "Hollinger International v. Black, Et. Al" case, written by Vice-Chancellor Leo E. Strine, Jr.
The Chancery Court of Delaware is a court whose jurisdiction is "matters and cases in equity" in the state. Back in colonial days, it was intended to be Delaware's answer to the more august and established Court of Chancery in the U.K.; so, "equity" is interpreted in a similar manner in the former as it was in the latter, which decided issues on the spirit of the law rather than by the law's letter. Once American independence was implemented, it became a court hearing a variety of civil, typically commercial, cases. According to Wikipedia, the jurisdiction of the Delaware Court of Chancery is a catch-all, for cases that are not within the purview of any other Delaware court of law. (The relevant section in Wikipedia cites Title 10, Section 342 of the Delaware Code as the enabling statute for this jurisdiction.) Also, the Delaware Chancery Court has the authority to remand cases that require trial by jury to the Delaware Superior Court, according to Title 10, Section 369 of the Delaware Code as cited in the same Wikipedia article on it. This latter provision implements the declaration that the Chancery court is on an equal footing with any other Delaware court, as does equal enforcement of decisions made by it.
The Delaware Chancery Court's Website has been good enough to put all of its decisions online, in PDF form, from 2000 to the present. If you poke around the 2004 decisions, you'll find the "Memorandum Opinion " in the "Hollinger International v. Black, Et. Al" case, written by Vice-Chancellor Leo E. Strine, Jr.
Thursday's trial has marred the mo'
According to Reuters' James B. Kelleher, another prosecution witness has hit the mar point for his credibility. The counsel for Mark Kipnis, Ron Safer, jumped on prosecution witness Darren Sukonick with a transcript of a voicemail message Csr. Sukonick had left on Mr. Kipnis' phone, and made him admit that there was "nothing unlawful or improper from keeping those payments from CanWest, correct?"
Bloomberg also has a report on Csr. Safer's cross-examination, written by Thom Weidlich and Andrew Harris. It starts off with: "Former Hollinger International Inc. Chairman Conrad Black and his codefendants acted on legal advice when they routed through a holding company noncompete payments prosecutors claim they sought to hide, a lawyer testified." Near its end, the report mentions Csr. Sukonick pulling a technical demur about the flow of CanWest non-compete funds after being asked by Csr. Safer if his 2001 voicemail message describing it was accurate. So, it is arguable that Darren Sukonick's credibility as a prosecution witness, though marred during cross-examination, wasn't excoriated like Fred Creasey's was.
The latest Bloomberg update mentions the redirect, in which he stated that he had not intended to counsel tax evasion, and the latest Reuters update mentions that another law firm's concerns about board approval of those non-compete payments were allayed by James Thompson, chair of the audit committee.
The CBC has a complete wrap-up of Csr. Sukonick's testimony, courtesy of Romina Maurino. So does the Associated Press, as webbed by ABC7 Chicago, which ends with the note that Sukonick advised to send the individual payments directly to the individuals; it was Jack Boultbee and Peter Atkinson who decided to run the money through Hollinger Int'l.
An updated version of Ms. Maurino's write-up has been webbed by 680 News. It mentions that the only sparks that flew between Edward Genson and Darren Sukonick was their disagreement over what paper could be considered "the" national newspaper of Canada. It ends with a preview of what is expected to be revealed from the testimony, under direct examination, of Barry Tyner, an accountant from Vancouver who was asked by David Radler to check on the tax status of noncompete payments. (Mr. Tyner was profiled earlier today in this article.)
As of yet, there has been no word about whether or not Gulliaume Hecketsweiler testified today.
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Mark Steyn mentioned the false alarm, previously blogged about by Peter Brieger, as an opener to wondering if the right guy is on trial.
Also: George Tombs, over at the Guardian's "Comment Is Free" subdomain, has a go at comparing the trial to an Alfred Hitchcock movie. He ends his piece with his own wondering, about why Conrad Black would criticize the then-new Sarbanes-Oxley Act so bluntly to him back in 2003.
Bloomberg also has a report on Csr. Safer's cross-examination, written by Thom Weidlich and Andrew Harris. It starts off with: "Former Hollinger International Inc. Chairman Conrad Black and his codefendants acted on legal advice when they routed through a holding company noncompete payments prosecutors claim they sought to hide, a lawyer testified." Near its end, the report mentions Csr. Sukonick pulling a technical demur about the flow of CanWest non-compete funds after being asked by Csr. Safer if his 2001 voicemail message describing it was accurate. So, it is arguable that Darren Sukonick's credibility as a prosecution witness, though marred during cross-examination, wasn't excoriated like Fred Creasey's was.
The latest Bloomberg update mentions the redirect, in which he stated that he had not intended to counsel tax evasion, and the latest Reuters update mentions that another law firm's concerns about board approval of those non-compete payments were allayed by James Thompson, chair of the audit committee.
The CBC has a complete wrap-up of Csr. Sukonick's testimony, courtesy of Romina Maurino. So does the Associated Press, as webbed by ABC7 Chicago, which ends with the note that Sukonick advised to send the individual payments directly to the individuals; it was Jack Boultbee and Peter Atkinson who decided to run the money through Hollinger Int'l.
An updated version of Ms. Maurino's write-up has been webbed by 680 News. It mentions that the only sparks that flew between Edward Genson and Darren Sukonick was their disagreement over what paper could be considered "the" national newspaper of Canada. It ends with a preview of what is expected to be revealed from the testimony, under direct examination, of Barry Tyner, an accountant from Vancouver who was asked by David Radler to check on the tax status of noncompete payments. (Mr. Tyner was profiled earlier today in this article.)
As of yet, there has been no word about whether or not Gulliaume Hecketsweiler testified today.
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Mark Steyn mentioned the false alarm, previously blogged about by Peter Brieger, as an opener to wondering if the right guy is on trial.
Also: George Tombs, over at the Guardian's "Comment Is Free" subdomain, has a go at comparing the trial to an Alfred Hitchcock movie. He ends his piece with his own wondering, about why Conrad Black would criticize the then-new Sarbanes-Oxley Act so bluntly to him back in 2003.
Media Roundup: She Said He Said
As the last day of week 4 of the Conrad Black trial commences, the reports about the videotaped deposition, shown yesterday, have details on the cross-examination of Darren Sukonick:
1. From an AP report webbed by the Belleville News-Democrat, an admission from Csr. Sukonick that he suggested non-compete payments for individuals in sales of newspaper properties subsequent to the Can-West deal.
2. Theresa Tedesco of the National Post reports on the "bad day" Csr. Sukonick had, in which defense counsel for Peter Atkinson, Michael Schachter, got Csr. Sukonick to admit not only to that suggestion he made, but also that he "acknowledged that Torys advised Hollinger International that it was not necessary for the company to publicly disclose the controversial $50-million in non-competes from the CanWest deal in its regulatory filings to shareholders." Ms. Tedesco mentions in passing that Csr. Schachter was one of the prosecutors of Martha Stewart, for insider trading. [An excerpt from this article has been posted by LawFuel.com.]
3. The New York Times has a report on the testimony Csr. Sukonick gave to the prosecution before the cross-examination began.
4. From CANOE Money, a note that testimony from lawyer Gulliaume Hecketsweiler is expected today.
5. A report from the Boston Globe also recounts Csr. Sukonick's testimony under direct examination.
6. The Globe and Mail has Paul Waldie's latest, which sums up both the testimony given under direct and Csr. Schachter's part of the cross-examination. Mr. Waldie notes that Csr. Schachter claimed that Csr. Sukonick had not been truthful, and that Csr. Sukonick denied that claim; he also notes that there are several hours to go before the taped testimony ends.
7. Peter Worthington is back on the Conrad Black trial beat, with the observation that the trial has turned into quite the "snoozer." Now that the "lust for Conrad's blood" has abated from Fleet Street, there are actually seats in the courtroom available, and the trial's atmosphere is more, well, businesslike.
8. From the New York Post, Janet Whitman has a brief report on Csr. Sukonick's testimony that was elicited by Julie Ruder, comparing it to the earlier Bora Bora testimony.
9. The Calgary Sun has a quick re-cap of the testimony given under direct examination.
10. Rick Westhead of the Toronto Star solicited the advice of an outside expert for assessing Conrad Black's character...a graphologist. This kind of expert may soon have a day in the sun in Human Resources departments, according to Mr. Westhead.
11. From Peter Brieger, as webbed by the Montreal Gazette, a report that focuses upon a "bombshell" elicited by Csr. Schachter's cross-examination. It begins with: "A lawyer at one of Canada's top law firms advised client Hollinger International to make the controversial payments that may have landed Conrad Black and his former colleagues in a Chicago courtroom, the media baron's fraud trial heard yesterday."
12. The Chicago Sun-Times' Mary Wisniewski re-caps Csr. Sukonick's testimony delivered under both direct and cross so far, and notes that "one white female juror" has been dismissed, leaving 17 jurors and alternates.
13. Another report from the Globe and Mail brings up the possibility, feared by another defense counsel, Gus Newman, as well as by Csr. Schachter, that juror boredom is turning into juror confusion, with the risk that their clients may be convicted on the wrong charges; "they cited several instances in which prosecutors have questioned witnesses about information that was not disclosed in documents sent to shareholders. The lawyers noted that the defendants have not been charged with issuing false reports but they are worried the jury might convict their clients on that basis." [There's already four comments on it.]
14. A third Globe report, also by Paul Waldie, has a profile on a minor but pivotal prosecution witness, Vancouver accountant Barry Tyner.
15. The Sydney Morning Herald has webbed a Reuters report, covering both the direct-and cross-examination (so far) of Csr. Sukonick.
16. From the Chicago Tribune, a recap of Wednesday's testimony by Rudolph Bush.
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Two comments from media blogs today: Peter Brieger, on the "Black Board," reports upon an alarming false alarm in the Dirkson building, and Mark Steyn publicly answers an E-mail from a critic who is convinced that David Radler has seen the light and turned a new leaf.
1. From an AP report webbed by the Belleville News-Democrat, an admission from Csr. Sukonick that he suggested non-compete payments for individuals in sales of newspaper properties subsequent to the Can-West deal.
2. Theresa Tedesco of the National Post reports on the "bad day" Csr. Sukonick had, in which defense counsel for Peter Atkinson, Michael Schachter, got Csr. Sukonick to admit not only to that suggestion he made, but also that he "acknowledged that Torys advised Hollinger International that it was not necessary for the company to publicly disclose the controversial $50-million in non-competes from the CanWest deal in its regulatory filings to shareholders." Ms. Tedesco mentions in passing that Csr. Schachter was one of the prosecutors of Martha Stewart, for insider trading. [An excerpt from this article has been posted by LawFuel.com.]
3. The New York Times has a report on the testimony Csr. Sukonick gave to the prosecution before the cross-examination began.
4. From CANOE Money, a note that testimony from lawyer Gulliaume Hecketsweiler is expected today.
5. A report from the Boston Globe also recounts Csr. Sukonick's testimony under direct examination.
6. The Globe and Mail has Paul Waldie's latest, which sums up both the testimony given under direct and Csr. Schachter's part of the cross-examination. Mr. Waldie notes that Csr. Schachter claimed that Csr. Sukonick had not been truthful, and that Csr. Sukonick denied that claim; he also notes that there are several hours to go before the taped testimony ends.
7. Peter Worthington is back on the Conrad Black trial beat, with the observation that the trial has turned into quite the "snoozer." Now that the "lust for Conrad's blood" has abated from Fleet Street, there are actually seats in the courtroom available, and the trial's atmosphere is more, well, businesslike.
8. From the New York Post, Janet Whitman has a brief report on Csr. Sukonick's testimony that was elicited by Julie Ruder, comparing it to the earlier Bora Bora testimony.
9. The Calgary Sun has a quick re-cap of the testimony given under direct examination.
10. Rick Westhead of the Toronto Star solicited the advice of an outside expert for assessing Conrad Black's character...a graphologist. This kind of expert may soon have a day in the sun in Human Resources departments, according to Mr. Westhead.
11. From Peter Brieger, as webbed by the Montreal Gazette, a report that focuses upon a "bombshell" elicited by Csr. Schachter's cross-examination. It begins with: "A lawyer at one of Canada's top law firms advised client Hollinger International to make the controversial payments that may have landed Conrad Black and his former colleagues in a Chicago courtroom, the media baron's fraud trial heard yesterday."
12. The Chicago Sun-Times' Mary Wisniewski re-caps Csr. Sukonick's testimony delivered under both direct and cross so far, and notes that "one white female juror" has been dismissed, leaving 17 jurors and alternates.
13. Another report from the Globe and Mail brings up the possibility, feared by another defense counsel, Gus Newman, as well as by Csr. Schachter, that juror boredom is turning into juror confusion, with the risk that their clients may be convicted on the wrong charges; "they cited several instances in which prosecutors have questioned witnesses about information that was not disclosed in documents sent to shareholders. The lawyers noted that the defendants have not been charged with issuing false reports but they are worried the jury might convict their clients on that basis." [There's already four comments on it.]
14. A third Globe report, also by Paul Waldie, has a profile on a minor but pivotal prosecution witness, Vancouver accountant Barry Tyner.
15. The Sydney Morning Herald has webbed a Reuters report, covering both the direct-and cross-examination (so far) of Csr. Sukonick.
16. From the Chicago Tribune, a recap of Wednesday's testimony by Rudolph Bush.
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Two comments from media blogs today: Peter Brieger, on the "Black Board," reports upon an alarming false alarm in the Dirkson building, and Mark Steyn publicly answers an E-mail from a critic who is convinced that David Radler has seen the light and turned a new leaf.
Dead Men Give No Depositions
This late-night special was prompted by Paul Waldie noting, in an earlier version of his report on Darren Sukonick's testimony, that the prosecution "appear[ed] to have accepted the argument by Lord Black's lawyers that Izzy Asper, CanWest's founder, wanted Lord Black to sign a non-compete agreement as part of the newspaper transaction." (This quote is now gone from it.)
What made this clipping interesting is the fact that Izzy Asper bought some assets from Conrad Black a long time ago. As part of his maneuvering for the Argus Corp. takeover back in 1978, Conrad Black had bought a 24.8% interest in Crown Trust from the heirs of John McMartin (one of the co-founders of Hollinger Mines) from April 20 to May 4, 1978. (The Establishment Man, p. 126. Yes, it did take that long to find them back then.) Mr. Black later realized that he had little use for the trust company once he had won control of Argus, so he put out the word that he wanted to get rid of his shares. He had originally planned to unload his Crown Trust block to the holder of the largest Crown block (32% as of the beginning of 1979,) Reuben Cohen. It was David Radler, though, who had gotten hold of a competing bidder for that block of shares, a Manitoba businessman and former head of the Liberal party of that province by the name of Israel Harold Asper. Izzy Asper had bid $44 a share; Mr. Cohen had bid $41.50, which he later refused to increase. So, in the summer of 1979, Izzy Asper got the Mr. Black's 24.8% holdings. (Ibid, p. 233.) Peter Newman, the author of The Establishment Man, discloses on the same page that Mr. Radler had contacted Mr. Asper in order to get a higher bid for the shares.
So, Mr. Asper first bought assets from Mr. Black a little more than a year after the latter's swift takeover of Argus. He thus had indirect experience of how rapidly Conrad Black could shuffle an asset. Whatever the real answer is to the "who asked whom" question surrounding the CanWest non-competes, the reason for the lack of an obvious one dates from the wild days of 1978-9. Izzy Asper is now dead, and dead men give no testimony.
The Argus takeover has been brought up in more recent biographies of Conrad Black because it has been claimed that he took advantage of the three widows, one being the widow of former Argus head Bud McDougald. Their written consent, signing over the right to buy out any shareholder of the holding company that controlled Argus (Ravelston,) was crucial in Mr. Black's takeover of it. Those inclined to the comeuppance side take this criticism at face value, while those on the vindication side tend to chalk it up to the three widows falling under the spell of a mysterious, heel-clicking foreigner by the name of John Prusac, then a real-estate developer with ambition. There is, however, a simpler explanation for those three turning on the young man they had earlier agreed to help: it can be found in the way that Conrad, and Monte, Black got their agreement in the first place.
It was done through the good offices of Dixon Chant, the executor of Mr. McDougald's estate. He himself was not impressed with the successor to Bud McDougald, Max Meighen. It was his support of the Black brothers, as well as the support of Massey-Ferguson's then-CEO, Al Thornbrough, that got the three widows signing the transfer agreement, on May 15th, 1978. (Ibid, pp. 129-30.)
It was at a tea party at the Black house, held twelve days later with then-Black-ally Nelson Davis "in attendance," at which the three widows were guests. All three of them - Doris Phillips, Cecil Hedstrom, and Maude ("Jim") McDougald - decided that the by-then-ousted president of Argus, Max Meighen, was a bad man. The evidence proffered by the three was his lack of gentility, as expressed in his taste in clothes and his choice of a gold Mercedes for his car. Conrad Black himself added that Mr. Meighen became "'boisterous after a couple of drinks,'" which brought forth the decision from Ms. Phillips: "'Well, then...we can dispense with him.'"(Ibid, p. 132.)
That's what served as their retrospective consent for Mr. Meighen's ouster. (It was a simpler time in Toronto back then.)
More close to the real reason was that Max Meighen had taken the widows, and Mr. McDougald's memorialization, for granted while gaining the chairmanship of Argus. I offer the guess that the reason why the widows began complaining later about Conrad Black's supposed opportunism was that, after he had gotten their authorization and approval, he took them for granted too, which was what Mr. Prusac rubbed into their ears behind closed doors. I note that Mr. Chant, the executor, stuck with both Conrad and Monte Black during the later controversy.
What made this clipping interesting is the fact that Izzy Asper bought some assets from Conrad Black a long time ago. As part of his maneuvering for the Argus Corp. takeover back in 1978, Conrad Black had bought a 24.8% interest in Crown Trust from the heirs of John McMartin (one of the co-founders of Hollinger Mines) from April 20 to May 4, 1978. (The Establishment Man, p. 126. Yes, it did take that long to find them back then.) Mr. Black later realized that he had little use for the trust company once he had won control of Argus, so he put out the word that he wanted to get rid of his shares. He had originally planned to unload his Crown Trust block to the holder of the largest Crown block (32% as of the beginning of 1979,) Reuben Cohen. It was David Radler, though, who had gotten hold of a competing bidder for that block of shares, a Manitoba businessman and former head of the Liberal party of that province by the name of Israel Harold Asper. Izzy Asper had bid $44 a share; Mr. Cohen had bid $41.50, which he later refused to increase. So, in the summer of 1979, Izzy Asper got the Mr. Black's 24.8% holdings. (Ibid, p. 233.) Peter Newman, the author of The Establishment Man, discloses on the same page that Mr. Radler had contacted Mr. Asper in order to get a higher bid for the shares.
So, Mr. Asper first bought assets from Mr. Black a little more than a year after the latter's swift takeover of Argus. He thus had indirect experience of how rapidly Conrad Black could shuffle an asset. Whatever the real answer is to the "who asked whom" question surrounding the CanWest non-competes, the reason for the lack of an obvious one dates from the wild days of 1978-9. Izzy Asper is now dead, and dead men give no testimony.
The Argus takeover has been brought up in more recent biographies of Conrad Black because it has been claimed that he took advantage of the three widows, one being the widow of former Argus head Bud McDougald. Their written consent, signing over the right to buy out any shareholder of the holding company that controlled Argus (Ravelston,) was crucial in Mr. Black's takeover of it. Those inclined to the comeuppance side take this criticism at face value, while those on the vindication side tend to chalk it up to the three widows falling under the spell of a mysterious, heel-clicking foreigner by the name of John Prusac, then a real-estate developer with ambition. There is, however, a simpler explanation for those three turning on the young man they had earlier agreed to help: it can be found in the way that Conrad, and Monte, Black got their agreement in the first place.
It was done through the good offices of Dixon Chant, the executor of Mr. McDougald's estate. He himself was not impressed with the successor to Bud McDougald, Max Meighen. It was his support of the Black brothers, as well as the support of Massey-Ferguson's then-CEO, Al Thornbrough, that got the three widows signing the transfer agreement, on May 15th, 1978. (Ibid, pp. 129-30.)
It was at a tea party at the Black house, held twelve days later with then-Black-ally Nelson Davis "in attendance," at which the three widows were guests. All three of them - Doris Phillips, Cecil Hedstrom, and Maude ("Jim") McDougald - decided that the by-then-ousted president of Argus, Max Meighen, was a bad man. The evidence proffered by the three was his lack of gentility, as expressed in his taste in clothes and his choice of a gold Mercedes for his car. Conrad Black himself added that Mr. Meighen became "'boisterous after a couple of drinks,'" which brought forth the decision from Ms. Phillips: "'Well, then...we can dispense with him.'"(Ibid, p. 132.)
That's what served as their retrospective consent for Mr. Meighen's ouster. (It was a simpler time in Toronto back then.)
More close to the real reason was that Max Meighen had taken the widows, and Mr. McDougald's memorialization, for granted while gaining the chairmanship of Argus. I offer the guess that the reason why the widows began complaining later about Conrad Black's supposed opportunism was that, after he had gotten their authorization and approval, he took them for granted too, which was what Mr. Prusac rubbed into their ears behind closed doors. I note that Mr. Chant, the executor, stuck with both Conrad and Monte Black during the later controversy.
Wednesday, April 11, 2007
The Verdict: High Lifestyle And Contempt
This episode of The Verdict had one segment on the Conrad Black trial, in which there were three guests: Margaret Wente, columnist for the Globe and Mail; Pat Woodward, a former U.S. prosecutor [cited in this article]; and, Steve Skurka, the regular trial analyist for the show. The topic under discussion was the relevance of Mr. Black's lavish lifestyle to the charges, but it drifted to speculating on the possibility of Conrad Black also being charged with contempt of court for speaking about the trial to the media.
Ms. Wente began by noting that the timing of the introduction of the Bora Bora evidence was a little surprising; she described it as "comic relief." Csr. Skurka then noted that comedic moments in a criminal trial are not very good for the prosecution, as the charges are quite serious. (It does tend to humanize the defendant[s].) Csr. Woodward said that evidence documenting and relating to the Bora Bora trip was not introduced for show; it had to be introduced because of the “jaw-dropping” cost of the trip. That cost makes it look like Mr. Black was scamming the company. With regard to Mr. Black's alleged abuse of corporate perks, Ms. Wente reported that the prosecution was “hammering in” the concept that Black treated company property as if it were his own, which forms the heart of count 10 of the indictment.
An approach that broaches luridity can backfire on the prosecution, Csr. Skurka commented. He believes that prosecution has a different agenda: they want to encourage Conrad Black to get on the stand, to try to refute their allegations of perk abuse.
Csr. Woodward did stipulate that the timing of the Bora Bora evidence was decided on, in part, to keep the jury from being bored, but any timing decisions were subordinate to the overall purpose of its entry, to attempt to prove the relevant allegation. According to him, American law with regard to executive-perk abuse, in and of itself, is not that strict, but when the dollar amount involved is serious, and when perk abuse is combined with alleged tax fraud and allegedly draining money from an American company that's entitled to it, then it is treated seriously by the Department of Justice. Csr. Skurka noted, though, that the perk-abuse is a side issue, as the non-compete payments are at the heart of the charges.
Ms. Wente disclosed that Conrad Black is using the media in general (not just her as a plantee) to “disparage” the evidence, to get his side across, and to “minimize” the seriousness of the charges. Csr. Woodward expressed surprise at Mr. Black’s lawyers, as he does risk a citation for contempt of court, and his statements can be used in court because Mr. Black is speaking in public. Csr. Skurka ventured the opinion that the reason why Mr. Black's lawyers haven't restrained him from from 'media management' is that they simply can’t control him. Csr. Woodward then expanded on the possibility of a contempt charge, observing, at the end of his brief discourse, that to “lock [Black] up” might give him “laryngitis.” The prosecutors hasn't bothered to do anything about it because they want Mr. Black to hang himself, Csr. Skurka himself observed, and Csr. Woodward agreed with him. Margaret Wente had the last comment in this part of the show, in which she observed that she's only a journalist, and not any kind of insider.
This segment formed the basis for Ms. Todd's "Closing Argument." She started by wondering if Conrad Black looked like a sympathetic character through his Bora Bora E-mail, which she earlier read excerpts of on the air, or condescending. The underlying point, though, is that E-mails, text messages, and other forms of saved electronic communication can all provide evidence against oneself, at the expense of a now-dwindling privacy. What about the person who mixes personal and business communications in their E-mails? How would you like to see a letter of that sort, which you wrote, winding up in a court transcript, as has happened to at least one person in the trial?
(This issue has actually come up long ago, though not at the level of a trial. About twenty-five years in the past, at least one Toronto brokerage firm began recording stockbrokers' calls, in large part to provide records to be used in later disputes, but that experiment was called off because of brokers' protests.)
Ms. Wente began by noting that the timing of the introduction of the Bora Bora evidence was a little surprising; she described it as "comic relief." Csr. Skurka then noted that comedic moments in a criminal trial are not very good for the prosecution, as the charges are quite serious. (It does tend to humanize the defendant[s].) Csr. Woodward said that evidence documenting and relating to the Bora Bora trip was not introduced for show; it had to be introduced because of the “jaw-dropping” cost of the trip. That cost makes it look like Mr. Black was scamming the company. With regard to Mr. Black's alleged abuse of corporate perks, Ms. Wente reported that the prosecution was “hammering in” the concept that Black treated company property as if it were his own, which forms the heart of count 10 of the indictment.
An approach that broaches luridity can backfire on the prosecution, Csr. Skurka commented. He believes that prosecution has a different agenda: they want to encourage Conrad Black to get on the stand, to try to refute their allegations of perk abuse.
Csr. Woodward did stipulate that the timing of the Bora Bora evidence was decided on, in part, to keep the jury from being bored, but any timing decisions were subordinate to the overall purpose of its entry, to attempt to prove the relevant allegation. According to him, American law with regard to executive-perk abuse, in and of itself, is not that strict, but when the dollar amount involved is serious, and when perk abuse is combined with alleged tax fraud and allegedly draining money from an American company that's entitled to it, then it is treated seriously by the Department of Justice. Csr. Skurka noted, though, that the perk-abuse is a side issue, as the non-compete payments are at the heart of the charges.
Ms. Wente disclosed that Conrad Black is using the media in general (not just her as a plantee) to “disparage” the evidence, to get his side across, and to “minimize” the seriousness of the charges. Csr. Woodward expressed surprise at Mr. Black’s lawyers, as he does risk a citation for contempt of court, and his statements can be used in court because Mr. Black is speaking in public. Csr. Skurka ventured the opinion that the reason why Mr. Black's lawyers haven't restrained him from from 'media management' is that they simply can’t control him. Csr. Woodward then expanded on the possibility of a contempt charge, observing, at the end of his brief discourse, that to “lock [Black] up” might give him “laryngitis.” The prosecutors hasn't bothered to do anything about it because they want Mr. Black to hang himself, Csr. Skurka himself observed, and Csr. Woodward agreed with him. Margaret Wente had the last comment in this part of the show, in which she observed that she's only a journalist, and not any kind of insider.
This segment formed the basis for Ms. Todd's "Closing Argument." She started by wondering if Conrad Black looked like a sympathetic character through his Bora Bora E-mail, which she earlier read excerpts of on the air, or condescending. The underlying point, though, is that E-mails, text messages, and other forms of saved electronic communication can all provide evidence against oneself, at the expense of a now-dwindling privacy. What about the person who mixes personal and business communications in their E-mails? How would you like to see a letter of that sort, which you wrote, winding up in a court transcript, as has happened to at least one person in the trial?
(This issue has actually come up long ago, though not at the level of a trial. About twenty-five years in the past, at least one Toronto brokerage firm began recording stockbrokers' calls, in large part to provide records to be used in later disputes, but that experiment was called off because of brokers' protests.)
Conning Value Investors: A Cautionary Note
This post is irrelevant to the outcome of the Conrad Black trial; its content wouldn't change at all depending on the verdict for any of the four defendants. It's a sketchy look at how a crooked hypothetical CEO, of a supposedly stodgy company such as one in a mature industry, would con value investors.
Such a topic is hardly brought up nowadays, because it's actually quite antiquated. The last time in American stock-market history that value-investing measures such as shareholders' equity (book value) have been tampered with, to make a company's stock look better than it is, was during the 1920s. There hasn't been any widespread corporate scamming in the value-investing arena since then.
This lack of crookery is in large part due to the skepticism (not to mention cynicism) of Benjamin Graham, who actually saw the collapse of the 1920s stock market bubble. He and his kindred spirits, as a result, grounded value investing in the valuation of a stream of dividend cheques that don't bounce. Even this simple criterion requires a thorough analysis of a company's financial statements, to make sure that the dividend stream won't dry up in the future.
Growth investing requires a different mentality; growth analysts have to be boosters at heart. The saturnine perspective required for successful value investing has little place in growth investing - and the two attitudes are very difficult to combine without getting into the neither-fish-nor-fowl trap. Warren Buffett of Berkshire Hathaway is one of the few who have mastered that balancing act, seemingly by reserving the booster mentality for revenue growth (tending to focus on the growth of a product's popularity) and reserving the skeptical mentality for valuation of the companies who enjoy such growth. With the notable exception of investors in Mr. Buffett's class, though, it's either "fish or fowl," or "decay or collapse."
The skeptical life is sometimes a lonely life, and con men always play with others' emotions. In Alexander Tadich's phrase, they're "malignant narcissists," who aim to keep the marks placid, if not enthusiastic, so as to staunch their criticality. Growth and speculative stocks are an easy field for this kind of manipulation, because the skeptic often isn't wanted around at all. Thus, it's easy for a crook at the head of a growth or speculative company to turn the "mob" against the nay-sayer.
In the value field, though, nay-saying is the norm, and boosterism is looked down upon. The only psychological "opener" for a con man consists of latching on to any hidden loneliness in value investors - a sort of "who's your only friend?" approach. As long as the traditions of value investing are held to strongly, though, there will be little chance of widespread chicanery amongst value-stock companies, because any kind of palling around is, normally, easy to see though.
If these traditions be breached, however, then depredations may very well become blended in with the consequent new way. The relevant tradition that may be bent out of shape in the near future is accounting's "principle of conservatism." If it becomes stylish to mark assets (up) to market value at the expense of maintaining fidelity to accounting conventions, then a fertile entry point for opportunists, including crooks, will be created. Market values, after all, are oftentimes fickle, and there's no better camoflauge for a crook than a field where a measured opportunism is re-defined as a kind of probity.
This post was in part inspired by Roger Martin's warning about potential corporate-governance scam artists, and it builds on an earlier, prefatory post about chicanerous asset inflating.
Such a topic is hardly brought up nowadays, because it's actually quite antiquated. The last time in American stock-market history that value-investing measures such as shareholders' equity (book value) have been tampered with, to make a company's stock look better than it is, was during the 1920s. There hasn't been any widespread corporate scamming in the value-investing arena since then.
This lack of crookery is in large part due to the skepticism (not to mention cynicism) of Benjamin Graham, who actually saw the collapse of the 1920s stock market bubble. He and his kindred spirits, as a result, grounded value investing in the valuation of a stream of dividend cheques that don't bounce. Even this simple criterion requires a thorough analysis of a company's financial statements, to make sure that the dividend stream won't dry up in the future.
Growth investing requires a different mentality; growth analysts have to be boosters at heart. The saturnine perspective required for successful value investing has little place in growth investing - and the two attitudes are very difficult to combine without getting into the neither-fish-nor-fowl trap. Warren Buffett of Berkshire Hathaway is one of the few who have mastered that balancing act, seemingly by reserving the booster mentality for revenue growth (tending to focus on the growth of a product's popularity) and reserving the skeptical mentality for valuation of the companies who enjoy such growth. With the notable exception of investors in Mr. Buffett's class, though, it's either "fish or fowl," or "decay or collapse."
The skeptical life is sometimes a lonely life, and con men always play with others' emotions. In Alexander Tadich's phrase, they're "malignant narcissists," who aim to keep the marks placid, if not enthusiastic, so as to staunch their criticality. Growth and speculative stocks are an easy field for this kind of manipulation, because the skeptic often isn't wanted around at all. Thus, it's easy for a crook at the head of a growth or speculative company to turn the "mob" against the nay-sayer.
In the value field, though, nay-saying is the norm, and boosterism is looked down upon. The only psychological "opener" for a con man consists of latching on to any hidden loneliness in value investors - a sort of "who's your only friend?" approach. As long as the traditions of value investing are held to strongly, though, there will be little chance of widespread chicanery amongst value-stock companies, because any kind of palling around is, normally, easy to see though.
If these traditions be breached, however, then depredations may very well become blended in with the consequent new way. The relevant tradition that may be bent out of shape in the near future is accounting's "principle of conservatism." If it becomes stylish to mark assets (up) to market value at the expense of maintaining fidelity to accounting conventions, then a fertile entry point for opportunists, including crooks, will be created. Market values, after all, are oftentimes fickle, and there's no better camoflauge for a crook than a field where a measured opportunism is re-defined as a kind of probity.
This post was in part inspired by Roger Martin's warning about potential corporate-governance scam artists, and it builds on an earlier, prefatory post about chicanerous asset inflating.
Wednesday's Trial Show
The Globe and Mail's Paul Waldie has a report on the early bits of today's videotaped testimony from Darren Sukonick. Csr. Sukonick testified that "$23-million was added to non-compete payments just days before the deal was signed." Csr. Sukonick also testified under direct examination that, in a 2003 review, he couldn't find any documentation for director approval of the CanWest non-compete payments. In cross-examination, by Michael Schachter, Csr. Sukonick denied being advised by his firm, Torys LLP, to arrange the payments in the way they ended up.
On a BNN interview (2:05 PM ET), Mr. Waldie added these details: Csr. Schachter "took...Sukonick to task," claiming through his questions that Torys had offered tax-avoidance advice, and claimed, through a question, that counselor Sukonick was not being truthful. Sukonick was deposed in Canada, because he couldn't be subpoenaed in the United States. Only Csr. Schachter, lawyer for Peter Atkinson, has been heard from yet; there are three more cross-examinations on the tape.
Thom Weidlich and Andrew Harris of Bloomberg have a report that concentrates on testimony elicited by prosecutor Julie Ruder; it has nothing from the cross-examination.
Reuters' report, written by James B. Kelleher, also recounts the prosecution's questioning. From it (page 2): "Asked by Ruder about the sale of U.S. newspapers around the same time by Hollinger International Inc., Sukonick said he was 'surprised and curious' that non-compete payments to the four executives were not being disclosed in sales agreements." Romina Maurino's latest report, webbed by 570 News, also describes Csr. Sukonick's testimony under direct examination.
The Reuters report has now been updated, with details on the cross-examination added. It mentions Csr. Sukonick's denial, referred to above, and a retraction under that cross-examination, mentioned on p. 2 of the update: "Sukonick said he misspoke in 2003 when asked during Hollinger International's internal probe of the deals when he said he was not aware that non-compete payments were not taxed in Canada."
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Mark Steyn, deciding to dabble in arts criticism, has offered his opinion on the "Darren Sukonick Show" in "Der Ring des Noncompeten." His Wednesday post contains a critique of Fred Creasey as a comedy figure, and finds Mr. Creasey's buffoonery to be more than adequate for the purposes of a comedic performance. (It's entitled "The last round-up.")
[An entry by Roger Martin, in Toronto Life's trial blog, also deals with Mr. Creasey's testimony, but is quite serious regarding the implications of it falling apart under cross-examination. From Mr. Martin's entry: "The real fraud artists are the governance theorists who have spent decades trying to convince gullible shareholders that, in combination, boards, lawyers, accountants and security regulators can and will protect them from badly behaved executives. This is, plain and simply, a myth." Despite recent blandishments, in other words, it's still shareholder-save-thyself in the equity markets. Mr. Martin elaborates upon this point with needed candour.]
On a BNN interview (2:05 PM ET), Mr. Waldie added these details: Csr. Schachter "took...Sukonick to task," claiming through his questions that Torys had offered tax-avoidance advice, and claimed, through a question, that counselor Sukonick was not being truthful. Sukonick was deposed in Canada, because he couldn't be subpoenaed in the United States. Only Csr. Schachter, lawyer for Peter Atkinson, has been heard from yet; there are three more cross-examinations on the tape.
Thom Weidlich and Andrew Harris of Bloomberg have a report that concentrates on testimony elicited by prosecutor Julie Ruder; it has nothing from the cross-examination.
Reuters' report, written by James B. Kelleher, also recounts the prosecution's questioning. From it (page 2): "Asked by Ruder about the sale of U.S. newspapers around the same time by Hollinger International Inc., Sukonick said he was 'surprised and curious' that non-compete payments to the four executives were not being disclosed in sales agreements." Romina Maurino's latest report, webbed by 570 News, also describes Csr. Sukonick's testimony under direct examination.
The Reuters report has now been updated, with details on the cross-examination added. It mentions Csr. Sukonick's denial, referred to above, and a retraction under that cross-examination, mentioned on p. 2 of the update: "Sukonick said he misspoke in 2003 when asked during Hollinger International's internal probe of the deals when he said he was not aware that non-compete payments were not taxed in Canada."
----------
Mark Steyn, deciding to dabble in arts criticism, has offered his opinion on the "Darren Sukonick Show" in "Der Ring des Noncompeten." His Wednesday post contains a critique of Fred Creasey as a comedy figure, and finds Mr. Creasey's buffoonery to be more than adequate for the purposes of a comedic performance. (It's entitled "The last round-up.")
[An entry by Roger Martin, in Toronto Life's trial blog, also deals with Mr. Creasey's testimony, but is quite serious regarding the implications of it falling apart under cross-examination. From Mr. Martin's entry: "The real fraud artists are the governance theorists who have spent decades trying to convince gullible shareholders that, in combination, boards, lawyers, accountants and security regulators can and will protect them from badly behaved executives. This is, plain and simply, a myth." Despite recent blandishments, in other words, it's still shareholder-save-thyself in the equity markets. Mr. Martin elaborates upon this point with needed candour.]
Media Roundup: It Wasn't A Good Time
More details of the Bora Bora trip were in the overnight reports on the Conrad Black trial, along with some items from Darren Sukonick's initial direct destimony:
1. From the Chicago Tribune's Rudolph Bush, an article that contains an excerpt from an E-mail describing the Bora Bora trip, in which Mr. Black "wrote a friend that he and his wife, Barbara Amiel Black, felt like 'geriatric freaks' surrounded by honeymooners, and that he nearly drowned while snorkeling because of a case of bronchitis." Another E-mail that was read in the trial stated that Mr. Black wanted to reach "'a degree of accommodation with contemporary norms'" with regard to executive perks. The article also notes that the videotaped testimony of Csr. Sukonick has begun, and describes the first excerpted E-mail to be "light-hearted."
2. The Hamilton Spectator's "Business Briefs" contains a brief summary of the end of Fred Creasey's testimony, in the "Justice" section.
3. From 680 News, a brief summary of Darren Sukonick's testimony of what he saw in the CanWest deal, with the note that "[p]rosecutors expect Sukonick's video testimony to last for the rest of the week and be mixed with that of other witnesses." It also contains two sentences on the testimony about the trip.
4. The Globe and Mail's Paul Waldie's report on the Bora Bora flight starts off with this sentence: "For a trip that reportedly cost nearly $600,000, Conrad Black sure had a lousy time when he visited Bora Bora in 2001." It also contains more details from Mr. Black's E-mail about the trip, along with a paper trail associated with a half-week at the opera, and Peter Atkinson's worries about Mr. Black's perks, as expressed in his E-mails. (It may have been those same E-mails quoted in the prosecution's evidentiary proffer.) Mr. Waldie's article also notes that Mr. Black was assessed the entire cost of the trip as a taxable benefit, but does not say that this assessment was what "paying half" meant. (Canada's income tax rate at Mr. Black's level is about 50%, if both federal and provincial income tax rates are included.)
5. The second half of an updated Bloomberg report, by Andrew Harris and Thom Weidlich, is devoted to a report on Csr. Sukonick's testimony. It contains a discussion in which Mr. Atkinson described the personal non-compete payments as bonuses, structured in the former way to avoid Canadian income taxes.
6. The Kansas City Star has an AP-Wire summary of Mr. Creasey's final day of testimony.
7. The same write-up has been webbed by both Accountancy Age and Financial Director. It contains an item from Mr. Creasey's redirect, in which he confirmed that no documentation existed to justify Jack Boultbee receiving a non-compete payment.
8. From the Montreal Gazette, a report by Peter Brieger which states that Mr. Black initially had no intention of paying any of the cost of the trip. It start with: "When Conrad Black heard he might have to pay for a controversial flight to Bora Bora, the media baron was not impressed." [The National Post has a more detailed write-up from the same author.]
9. The Ottawa Sun has an uncredited abridgement of Romina Maurino's report on Mr. Creasey's final testimony.
10. Rick Westhead of the Toronto Star has the most detailed report on the Bora Bora mess. Along with copious quotes from Mr. Black's E-mails relating to the trip and how it was to be accounted for, it also details David Radler's concerns about the whole matter. In addition, it notes a question asked by Eddie Greenspan asking why the entire cost of the trip was declared as a taxable benefit when it was orally agreed that Mr. Black would "pay half." Mr. Creasey replied, "'I don't recall what I thought'" at the time.
11. The report on the trip testimony by the Chicago Sun-Times' Mary Wisniewski notes that the plane stopped off at Honolulu, where Hollinger International did have business interests.
12. Another report by Mr. Waldie relays Csr. Sukonick's testimony about his arrangement of the CanWest non-compete payments.
13. The Times Online also has a report, with lots of details on the trip too. At the end, it mentions the 13 boxes that the prosecutors expect to comb through soon; they're related to an obstruction-of-justice charge.
1. From the Chicago Tribune's Rudolph Bush, an article that contains an excerpt from an E-mail describing the Bora Bora trip, in which Mr. Black "wrote a friend that he and his wife, Barbara Amiel Black, felt like 'geriatric freaks' surrounded by honeymooners, and that he nearly drowned while snorkeling because of a case of bronchitis." Another E-mail that was read in the trial stated that Mr. Black wanted to reach "'a degree of accommodation with contemporary norms'" with regard to executive perks. The article also notes that the videotaped testimony of Csr. Sukonick has begun, and describes the first excerpted E-mail to be "light-hearted."
2. The Hamilton Spectator's "Business Briefs" contains a brief summary of the end of Fred Creasey's testimony, in the "Justice" section.
3. From 680 News, a brief summary of Darren Sukonick's testimony of what he saw in the CanWest deal, with the note that "[p]rosecutors expect Sukonick's video testimony to last for the rest of the week and be mixed with that of other witnesses." It also contains two sentences on the testimony about the trip.
4. The Globe and Mail's Paul Waldie's report on the Bora Bora flight starts off with this sentence: "For a trip that reportedly cost nearly $600,000, Conrad Black sure had a lousy time when he visited Bora Bora in 2001." It also contains more details from Mr. Black's E-mail about the trip, along with a paper trail associated with a half-week at the opera, and Peter Atkinson's worries about Mr. Black's perks, as expressed in his E-mails. (It may have been those same E-mails quoted in the prosecution's evidentiary proffer.) Mr. Waldie's article also notes that Mr. Black was assessed the entire cost of the trip as a taxable benefit, but does not say that this assessment was what "paying half" meant. (Canada's income tax rate at Mr. Black's level is about 50%, if both federal and provincial income tax rates are included.)
5. The second half of an updated Bloomberg report, by Andrew Harris and Thom Weidlich, is devoted to a report on Csr. Sukonick's testimony. It contains a discussion in which Mr. Atkinson described the personal non-compete payments as bonuses, structured in the former way to avoid Canadian income taxes.
6. The Kansas City Star has an AP-Wire summary of Mr. Creasey's final day of testimony.
7. The same write-up has been webbed by both Accountancy Age and Financial Director. It contains an item from Mr. Creasey's redirect, in which he confirmed that no documentation existed to justify Jack Boultbee receiving a non-compete payment.
8. From the Montreal Gazette, a report by Peter Brieger which states that Mr. Black initially had no intention of paying any of the cost of the trip. It start with: "When Conrad Black heard he might have to pay for a controversial flight to Bora Bora, the media baron was not impressed." [The National Post has a more detailed write-up from the same author.]
9. The Ottawa Sun has an uncredited abridgement of Romina Maurino's report on Mr. Creasey's final testimony.
10. Rick Westhead of the Toronto Star has the most detailed report on the Bora Bora mess. Along with copious quotes from Mr. Black's E-mails relating to the trip and how it was to be accounted for, it also details David Radler's concerns about the whole matter. In addition, it notes a question asked by Eddie Greenspan asking why the entire cost of the trip was declared as a taxable benefit when it was orally agreed that Mr. Black would "pay half." Mr. Creasey replied, "'I don't recall what I thought'" at the time.
11. The report on the trip testimony by the Chicago Sun-Times' Mary Wisniewski notes that the plane stopped off at Honolulu, where Hollinger International did have business interests.
12. Another report by Mr. Waldie relays Csr. Sukonick's testimony about his arrangement of the CanWest non-compete payments.
13. The Times Online also has a report, with lots of details on the trip too. At the end, it mentions the 13 boxes that the prosecutors expect to comb through soon; they're related to an obstruction-of-justice charge.
Tuesday, April 10, 2007
The Verdict: Special Pre-emption
Tonight's episode of The Verdict had a segment planned on a discussion of the 13 boxes removed by Conrad Black back in May 2005, but it was pre-empted, and should be shown tomorrow. Instead, two of today's trial events were briefly mentioned: the release of those boxes and Csr. Genson's mistrial motion.
Here's a CBC News report, last updated on May 26, 2005, which describes the legal and publicity consequences of Mr. Black's removal of the boxes from 10 Toronto Street after an Ontario court had found out about it. According to that report, Hollinger Inc. wanted Mr. Black cited for contempt of court for removing them, even though he insisted (and still insists) that the items in them were personal. The Globe and Mail has a much more recent background report, written by Jacquie McNish and Paul Waldie, that details the legal hoops the U.S. Department of Justice had to go through to get their impoundment-authorized hands on the boxes, including having to re-submit a bounced Mutual Legal Assistance Treaty application. In the initial application that the prosecutors had submitted, they had asked for five boxes instead of thirteen.
Ms. McNish and Mr. Waldie also note that, as of about a month ago, the contempt-of-court matter had yet to be adjudicated.
Here's a CBC News report, last updated on May 26, 2005, which describes the legal and publicity consequences of Mr. Black's removal of the boxes from 10 Toronto Street after an Ontario court had found out about it. According to that report, Hollinger Inc. wanted Mr. Black cited for contempt of court for removing them, even though he insisted (and still insists) that the items in them were personal. The Globe and Mail has a much more recent background report, written by Jacquie McNish and Paul Waldie, that details the legal hoops the U.S. Department of Justice had to go through to get their impoundment-authorized hands on the boxes, including having to re-submit a bounced Mutual Legal Assistance Treaty application. In the initial application that the prosecutors had submitted, they had asked for five boxes instead of thirteen.
Ms. McNish and Mr. Waldie also note that, as of about a month ago, the contempt-of-court matter had yet to be adjudicated.
Review of a Conrad Black Speech at "Idea City '06"
Thanks to an anonymous post in the comments section of this entry, I've viewed a recent speech by Conrad Black, given at the Toronto seminar "Idea City '06." The speech has been broken into three parts and webbed at Youtube: Part 1 is here, Part 2 is here and Part 3 is here. The following is a review of it; all quotes are from what Mr. Black said during it.
What was most noticeable about this speech is a change from Mr. Black's delivery, from a chair he sat on: he used gestures that, generally, are appropriate for a political speech. The first part of his speech broached his current troubles with the law; he massaged the palm part of his hand with the other when referring to the Hollinger International special-committee investigation. The context in which he referred to it was a declaration that his thirty-year career as a businessman-proprietor is effectively over. He also reaffirmed his innocence, flatly, when describing the trial as an "inexorable" event. He then described his, to he largely new, experience as a genuine underdog, when he has had to remain silent despite continual media "villification;" the latter is also new to him. What he has gained from this experience is cultivating a sense of perspective, and realizing that it is "fulfilling" to fight to restore his reputation. This battle is not a "noble" cause, but a "just cause," and one more absorbing than "mere commerce." (He used the word "fulfilling" to describe it five times in this part.) The last phrase he softened, by saying that he meant neither offense nor disrespect by it, as he was (of course) a "fairly unambiguous capitalist" until recently. The first part ends with a disparaging reference to the Ontario securities regulators, which he cast as camp-followers of their American equivalent. In Canada, especially as of the last few years, this disparagement is a potent one.
In the second part, he characterized America, to Canadians, as a quick-fix culture, which at times leads to "anomalous" political or legal outcomes; he described this facet as a consequence of American optimism as based in the U.S. becoming "unprecedentedly successful" as a nation. The three examples he cited were Prohibition, American isolationism just prior to World War 2, and McCarthyism. (He credited President Roosevelt for putting an end to isolationism and, later in his speech, for ending Prohibition.) Presently, he ascribes his own legal troubles to "overreaction" to corporate earnings-manipulation scandals, as well as to a habit, not confined to American democracy, of "deferring things that are unpleasant - in this case, politically unpleasant." The ultimate source of the stigmatizing he's endured is the largely all-American redistribution-of-wealth question; he was singled out for "being rich," even though he's not that wealthy compared to the habituants of the Fortune 500. This point is actually an interesting one, because it suggests that looking, or acting, rich - being "easy to caricature" as rich - is more of a dynamite pile, which sets off the redistribution crowd, than actually being rich is. (The fuse, he noted, is lit when someone who makes a plausible "totem" of this sort gets investigated by the relevant authorities.) He ended this part by affirming that this totemization will come to an end relatively soon, as did the other anomalies in American culturo-politics.
The third part concentrates upon Canada. He said that his recent troubles have bestowed a special kind of homecoming for him. He also stated that Canada is at the cusp of vaulting above its status as a middle power, where the Canadian government has been "tugging at the trouser leg of the United States," though for "incredible" causes. Times are now quite good for a country that's long been pegged as populated by "hewers of wood and drawers of water," as the price of resources are high and Canada's "treasure chest" can't be outsourced. In addition, Canada's population is quite educated. Canada is now one of the most ten important countries in the world, although Canadians (and foreigners) are not quite used to this newly won status. In addition, Quebec "independence," as a viable political force, is through; also, federally, Canada now has a full two-party system. He closes the entire speech by saying that his struggle has led to a real "re-acquaintance" with his country.
Peter C. Newman closed his 1982 biography of Conrad Black, which I have reviewed in this entry, with relayed forecasts that Conrad Black would eventually seek the Prime Ministership of Canada. At the end of my review, I judged this to be unintentionally (a quarter century's worth of retrospect had seemingly made it) inane, but that recent speech of his has left me feeling somewhat silly for thinking that this side of him had vanished. I note that, despite his long-term residence in London U.K., Conrad Black still has the Torontonian accent he was born and raised with.
Also of note: the transplanted American science-fiction writer Spider Robinson was another speaker at the conference; he spoke previous to Mr. Black. In his write-up on his experiences as a presenter there, Mr. Robinson refers to Conrad Black as both "notorious" and a "most gracious gentleman."
----------
FYI: Richard Breeden was appointed SEC commissioner by President Bush - Senior. He served in that slot from 1989 to 1993.
What was most noticeable about this speech is a change from Mr. Black's delivery, from a chair he sat on: he used gestures that, generally, are appropriate for a political speech. The first part of his speech broached his current troubles with the law; he massaged the palm part of his hand with the other when referring to the Hollinger International special-committee investigation. The context in which he referred to it was a declaration that his thirty-year career as a businessman-proprietor is effectively over. He also reaffirmed his innocence, flatly, when describing the trial as an "inexorable" event. He then described his, to he largely new, experience as a genuine underdog, when he has had to remain silent despite continual media "villification;" the latter is also new to him. What he has gained from this experience is cultivating a sense of perspective, and realizing that it is "fulfilling" to fight to restore his reputation. This battle is not a "noble" cause, but a "just cause," and one more absorbing than "mere commerce." (He used the word "fulfilling" to describe it five times in this part.) The last phrase he softened, by saying that he meant neither offense nor disrespect by it, as he was (of course) a "fairly unambiguous capitalist" until recently. The first part ends with a disparaging reference to the Ontario securities regulators, which he cast as camp-followers of their American equivalent. In Canada, especially as of the last few years, this disparagement is a potent one.
In the second part, he characterized America, to Canadians, as a quick-fix culture, which at times leads to "anomalous" political or legal outcomes; he described this facet as a consequence of American optimism as based in the U.S. becoming "unprecedentedly successful" as a nation. The three examples he cited were Prohibition, American isolationism just prior to World War 2, and McCarthyism. (He credited President Roosevelt for putting an end to isolationism and, later in his speech, for ending Prohibition.) Presently, he ascribes his own legal troubles to "overreaction" to corporate earnings-manipulation scandals, as well as to a habit, not confined to American democracy, of "deferring things that are unpleasant - in this case, politically unpleasant." The ultimate source of the stigmatizing he's endured is the largely all-American redistribution-of-wealth question; he was singled out for "being rich," even though he's not that wealthy compared to the habituants of the Fortune 500. This point is actually an interesting one, because it suggests that looking, or acting, rich - being "easy to caricature" as rich - is more of a dynamite pile, which sets off the redistribution crowd, than actually being rich is. (The fuse, he noted, is lit when someone who makes a plausible "totem" of this sort gets investigated by the relevant authorities.) He ended this part by affirming that this totemization will come to an end relatively soon, as did the other anomalies in American culturo-politics.
The third part concentrates upon Canada. He said that his recent troubles have bestowed a special kind of homecoming for him. He also stated that Canada is at the cusp of vaulting above its status as a middle power, where the Canadian government has been "tugging at the trouser leg of the United States," though for "incredible" causes. Times are now quite good for a country that's long been pegged as populated by "hewers of wood and drawers of water," as the price of resources are high and Canada's "treasure chest" can't be outsourced. In addition, Canada's population is quite educated. Canada is now one of the most ten important countries in the world, although Canadians (and foreigners) are not quite used to this newly won status. In addition, Quebec "independence," as a viable political force, is through; also, federally, Canada now has a full two-party system. He closes the entire speech by saying that his struggle has led to a real "re-acquaintance" with his country.
Peter C. Newman closed his 1982 biography of Conrad Black, which I have reviewed in this entry, with relayed forecasts that Conrad Black would eventually seek the Prime Ministership of Canada. At the end of my review, I judged this to be unintentionally (a quarter century's worth of retrospect had seemingly made it) inane, but that recent speech of his has left me feeling somewhat silly for thinking that this side of him had vanished. I note that, despite his long-term residence in London U.K., Conrad Black still has the Torontonian accent he was born and raised with.
Also of note: the transplanted American science-fiction writer Spider Robinson was another speaker at the conference; he spoke previous to Mr. Black. In his write-up on his experiences as a presenter there, Mr. Robinson refers to Conrad Black as both "notorious" and a "most gracious gentleman."
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FYI: Richard Breeden was appointed SEC commissioner by President Bush - Senior. He served in that slot from 1989 to 1993.
Tuesday's trial action
A new article, by the Globe and Mail's Paul Waldie, starts off with prosecutor Julie Ruder asking Fred Creasey to clarify his cost calculations of the Bora Bora trip, and got him to disclose that Conrad Black didn't object to the original costing at the time that he agreed to pay half of the calculated cost. Mr. Creasey also said that there was no corporate policy that required Mr. Black to use the corporate plane.
The article also mentions a motion made by Edward Genson for a mistrial early today, which was "quickly denied" by Judge St. Eve. The 12 PM BNN headline report noted that the question which triggered that mistrial motion referred to a report that Judge St. Eve earlier ruled to be inadmissible.
Another article from Reuters covers the motion for a mistrial, including the subject of the question Csr. Ruder asked that triggered it, but doesn't refer to any inadmissible report.
A more recent article, by Romina Maurino and webbed by 680 News, elaborates upon the line of questioning that Csr. Ruder used in her redirect examination of Mr. Creasey about the Bora Bora trip. Csr. Ruder tried to debunk the basis of the 50/50 split of the cost by mentioning a trip to Disneyland. She also asked if there "'[w]as...anything that prevented him (Black) from looking online for a better' price or calling United Airlines to ask if that was the right price,...[which drew] laughter from the court before St. Eve" sustained an objection to the question.
Mr. Waldie appeared on a later interview with BNN, aired at about 1:50 PM ET, in which both he and co-host Lisa Oake mentioned lawyers' "gamesmanship" in the trial. He disclosed that the Breeden Report was the inadmissible one that prompted the mistrial motion. (A copy of it, courtesy of the Chicago Tribune.) When asked by Pat Bolland when the taped testimony by Torys LLP partner Darren Sukonick was to be played, Mr. Waldie answered "this afternoon." He added that Torys has already settled with Hollinger Int'l for $30 million. Csr. Sukonick should disclose details on what happened to prompt the Hollinger Int'l lawsuit against his law firm.
[Immediately after the interview ended, Mr. Bolland announced that the directors-and-insiders trading ban on Hollinger Inc. stock has now been lifted; a report on this lifting has been webbed by Bloomberg. Those Hollinger worthies, found at the bottom of the original ban order, can now buy and sell shares in Inc.]
The Associated Press has its report out now, webbed by the Belleville News-Democrat. It also mentions Csr. Genson's mistrial motion and Csr. Ruder's Disneyland-and-United-Airlines pair of questions, and has a reminder that only two of the defendants, John Boultbee and Conrad Black, are indicted for the charge relating to the Bora Bora trip. (This charge is count 10 of the indictment; thanks to the Financial Post for the name correction.) The same report has also been webbed by the Chicago Sun-Times, and WQAD.com of Moline, Illinois has an abridged summary of it.
Bloomberg has one out also, written by Andrew Harris and Thom Weidlich. From its opener: "Peter Atkinson, a codefendant at the fraud trial of ex-Hollinger International...Chairman Conrad Black, knew fees he received were under investigation when he sought to have them publicly disclosed, a witness said." That witness was Mr. Creasey, and he presumably disclosed it on redirect.
An unusual item from the re-cross examination opens the Telegraph's webbed report, written by David Litterick. "Conrad Black was urged by the board of his newspaper empire to use the company plane at all times because he was considered at risk from terrorist attacks, his fraud trial has heard." The defense justified this claim by bringing up Mr. Black's long-time support for Israel.
[This claim is also covered in the latest report from Romina Maurino, as webbed by 680 News, along with an identification of who deployed it. "As far as the Bora Bora trip to the South Pacific island was concerned, Hollinger International's policy did not differentiate between personal and business travel and the company decided in 2003 to pay for its executives' trips, Eddie Greenspan, Black's Canadian lawyer, told a Chicago court." Her report also quotes a long-time observer of the trial, Steve Skurka, who offered the assessment that Csr. Greenspan's cross-examination technique really clicked in today.
[There's also an update from Reuter's James B. Kelleher, which adds details on the Bora Bora matter, including an E-mail by Mr. Atkinson expressing concern about it. Also, "[o]n Black's U.S. customs declaration, which was introduced as evidence, he reported the purpose of the trip as 'personal.' Three friends who accompanied him declared the trip was for 'business'...Whatever its purpose, the trip was later described by Black as a 'shambles' in a note to friend Seth Lipsky, a journalist." A quote from Conrad Black himself ends it.
[In addition, the updated AP report has other details on the re-cross, which relays the emphasis Csr. Greenspan had put on the audit committee taking seriously "'security and terrorism concerns.'"]
An even more unusual development has been picked up by the Toronto Star's Rick Westhead: a juror has been excused. "The female juror was dismissed after citing extenuating personal reasons, said several people familiar with the matter." There are now twelve jurors and five alternates; the latter have not been identified.
----------
There are two media blog entries, posted today, that discuss aspects of courtroom procedure: Mark Steyn complains about the number of permissible objections in the trial, which he claims gives the prosecution a relative advantage, and Peter Brieger, on the "Black Board," comments upon Judge St. Eve's Blackberry and cellphone policies; the latter policy got Dominick Dunne landed on.
Finally, here's a trivia item, also courtesy of BNN's Paul Bagnell, mentioned while reporting on an unrelated item: the difference between the well-known Form 13-D and the lesser-known Form 13-G. The latter form is sent to the Securities and Exchange Commission when the filler-outer has no intention of influencing the management of the company. In an earlier legal tussle, which aborted a takeover of Hanna Inc., Conrad Black sent the SEC a 13-D, but not a 13-G, on behalf of Norcen, a company he controlled. That 13-D disclosed Norcen's 8.8% interest in Hanna "for investment purposes," and it became pivotal to Mr. Black losing an injunction case, in Delaware Chancery Court, where Hanna management received a block of the takeover. Lesson administered: if you intend to "ultimately" take over a company, but not as of yet, you refraining from filing a 13-G while putting "investment purposes" in a 13-D won't suffice as disclosure. (For details on the "Hanna Brawl," see Shades of Black, Chapter Seven, pp. 73-98.)
The article also mentions a motion made by Edward Genson for a mistrial early today, which was "quickly denied" by Judge St. Eve. The 12 PM BNN headline report noted that the question which triggered that mistrial motion referred to a report that Judge St. Eve earlier ruled to be inadmissible.
Another article from Reuters covers the motion for a mistrial, including the subject of the question Csr. Ruder asked that triggered it, but doesn't refer to any inadmissible report.
A more recent article, by Romina Maurino and webbed by 680 News, elaborates upon the line of questioning that Csr. Ruder used in her redirect examination of Mr. Creasey about the Bora Bora trip. Csr. Ruder tried to debunk the basis of the 50/50 split of the cost by mentioning a trip to Disneyland. She also asked if there "'[w]as...anything that prevented him (Black) from looking online for a better' price or calling United Airlines to ask if that was the right price,...[which drew] laughter from the court before St. Eve" sustained an objection to the question.
Mr. Waldie appeared on a later interview with BNN, aired at about 1:50 PM ET, in which both he and co-host Lisa Oake mentioned lawyers' "gamesmanship" in the trial. He disclosed that the Breeden Report was the inadmissible one that prompted the mistrial motion. (A copy of it, courtesy of the Chicago Tribune.) When asked by Pat Bolland when the taped testimony by Torys LLP partner Darren Sukonick was to be played, Mr. Waldie answered "this afternoon." He added that Torys has already settled with Hollinger Int'l for $30 million. Csr. Sukonick should disclose details on what happened to prompt the Hollinger Int'l lawsuit against his law firm.
[Immediately after the interview ended, Mr. Bolland announced that the directors-and-insiders trading ban on Hollinger Inc. stock has now been lifted; a report on this lifting has been webbed by Bloomberg. Those Hollinger worthies, found at the bottom of the original ban order, can now buy and sell shares in Inc.]
The Associated Press has its report out now, webbed by the Belleville News-Democrat. It also mentions Csr. Genson's mistrial motion and Csr. Ruder's Disneyland-and-United-Airlines pair of questions, and has a reminder that only two of the defendants, John Boultbee and Conrad Black, are indicted for the charge relating to the Bora Bora trip. (This charge is count 10 of the indictment; thanks to the Financial Post for the name correction.) The same report has also been webbed by the Chicago Sun-Times, and WQAD.com of Moline, Illinois has an abridged summary of it.
Bloomberg has one out also, written by Andrew Harris and Thom Weidlich. From its opener: "Peter Atkinson, a codefendant at the fraud trial of ex-Hollinger International...Chairman Conrad Black, knew fees he received were under investigation when he sought to have them publicly disclosed, a witness said." That witness was Mr. Creasey, and he presumably disclosed it on redirect.
An unusual item from the re-cross examination opens the Telegraph's webbed report, written by David Litterick. "Conrad Black was urged by the board of his newspaper empire to use the company plane at all times because he was considered at risk from terrorist attacks, his fraud trial has heard." The defense justified this claim by bringing up Mr. Black's long-time support for Israel.
[This claim is also covered in the latest report from Romina Maurino, as webbed by 680 News, along with an identification of who deployed it. "As far as the Bora Bora trip to the South Pacific island was concerned, Hollinger International's policy did not differentiate between personal and business travel and the company decided in 2003 to pay for its executives' trips, Eddie Greenspan, Black's Canadian lawyer, told a Chicago court." Her report also quotes a long-time observer of the trial, Steve Skurka, who offered the assessment that Csr. Greenspan's cross-examination technique really clicked in today.
[There's also an update from Reuter's James B. Kelleher, which adds details on the Bora Bora matter, including an E-mail by Mr. Atkinson expressing concern about it. Also, "[o]n Black's U.S. customs declaration, which was introduced as evidence, he reported the purpose of the trip as 'personal.' Three friends who accompanied him declared the trip was for 'business'...Whatever its purpose, the trip was later described by Black as a 'shambles' in a note to friend Seth Lipsky, a journalist." A quote from Conrad Black himself ends it.
[In addition, the updated AP report has other details on the re-cross, which relays the emphasis Csr. Greenspan had put on the audit committee taking seriously "'security and terrorism concerns.'"]
An even more unusual development has been picked up by the Toronto Star's Rick Westhead: a juror has been excused. "The female juror was dismissed after citing extenuating personal reasons, said several people familiar with the matter." There are now twelve jurors and five alternates; the latter have not been identified.
----------
There are two media blog entries, posted today, that discuss aspects of courtroom procedure: Mark Steyn complains about the number of permissible objections in the trial, which he claims gives the prosecution a relative advantage, and Peter Brieger, on the "Black Board," comments upon Judge St. Eve's Blackberry and cellphone policies; the latter policy got Dominick Dunne landed on.
Finally, here's a trivia item, also courtesy of BNN's Paul Bagnell, mentioned while reporting on an unrelated item: the difference between the well-known Form 13-D and the lesser-known Form 13-G. The latter form is sent to the Securities and Exchange Commission when the filler-outer has no intention of influencing the management of the company. In an earlier legal tussle, which aborted a takeover of Hanna Inc., Conrad Black sent the SEC a 13-D, but not a 13-G, on behalf of Norcen, a company he controlled. That 13-D disclosed Norcen's 8.8% interest in Hanna "for investment purposes," and it became pivotal to Mr. Black losing an injunction case, in Delaware Chancery Court, where Hanna management received a block of the takeover. Lesson administered: if you intend to "ultimately" take over a company, but not as of yet, you refraining from filing a 13-G while putting "investment purposes" in a 13-D won't suffice as disclosure. (For details on the "Hanna Brawl," see Shades of Black, Chapter Seven, pp. 73-98.)
Media Roundup: Pushed Back
Here are the overnight reports on the Conrad Black trial:
1. The latest report by Romina Maurino, webbed by the Ottawa Citizen, recounts the cross-examination of Fred Creasey by Peter Atkinson's counsel Michael Schachter, which got so vigorous that counsel for Jack Boultbee registered an 'objection' to it by petitioning for a mistrial. It ends with a brief description of the redirect examination by prosecutor Judie Ruder.
2. Peter Brieger, writing for CanWest News, relates that the defense theory regarding the non-compete payments is that they were disclosed in a timely fashion, while Csr. Ruder entered the claim that there wasn't sufficient detail in the disclosure, through her redirect.
3. The Jurist has a brief note, centred on the mistrial motion.
4. Another brief write-up comes courtesy of Accountancy Age, which compresses all of Mr. Creasey's testimony into four paragraphs.
5. CanoeMoney has a preview of what the taped testimony of Darren Sukonick will reveal.
6. Paul Waldie of the Globe and Mail goes into detail about Csr. Ruder's "theatrics" in her redirect.
7. The National Post's Shinan Govani mentions the arrival of Dominick Dunne at the trial as the second item in his latest piece. "When [Mr.] Dunne finally showed up at the Conrad Black trial last week, there was a huge sigh of relief among all the other journos. Finally! Validation!" It's item 2 in "Putting Clout Into Out."
8. Mr. Waldie also has a report on the Department of Justice's now-successful impoundment of those 13 boxes from 10 Toronto Street, which includes the hoops that the prosecutors had to go through in order to get them. There's a hint that revealing the contents of them may prove to be anticlimactic. This item was mentioned on BNN's 9 AM ET headline report, which noted that the boxes have not been released quite yet.
Also: a South African editorial in Fin24.co.za, written by a former employee of one of Conrad Black's companies, compares the South African government to the prosecution's picture of Mr. Black.
1. The latest report by Romina Maurino, webbed by the Ottawa Citizen, recounts the cross-examination of Fred Creasey by Peter Atkinson's counsel Michael Schachter, which got so vigorous that counsel for Jack Boultbee registered an 'objection' to it by petitioning for a mistrial. It ends with a brief description of the redirect examination by prosecutor Judie Ruder.
2. Peter Brieger, writing for CanWest News, relates that the defense theory regarding the non-compete payments is that they were disclosed in a timely fashion, while Csr. Ruder entered the claim that there wasn't sufficient detail in the disclosure, through her redirect.
3. The Jurist has a brief note, centred on the mistrial motion.
4. Another brief write-up comes courtesy of Accountancy Age, which compresses all of Mr. Creasey's testimony into four paragraphs.
5. CanoeMoney has a preview of what the taped testimony of Darren Sukonick will reveal.
6. Paul Waldie of the Globe and Mail goes into detail about Csr. Ruder's "theatrics" in her redirect.
7. The National Post's Shinan Govani mentions the arrival of Dominick Dunne at the trial as the second item in his latest piece. "When [Mr.] Dunne finally showed up at the Conrad Black trial last week, there was a huge sigh of relief among all the other journos. Finally! Validation!" It's item 2 in "Putting Clout Into Out."
8. Mr. Waldie also has a report on the Department of Justice's now-successful impoundment of those 13 boxes from 10 Toronto Street, which includes the hoops that the prosecutors had to go through in order to get them. There's a hint that revealing the contents of them may prove to be anticlimactic. This item was mentioned on BNN's 9 AM ET headline report, which noted that the boxes have not been released quite yet.
Also: a South African editorial in Fin24.co.za, written by a former employee of one of Conrad Black's companies, compares the South African government to the prosecution's picture of Mr. Black.
Monday, April 9, 2007
Easter special on value investing
Since it's Easter Monday up here in Canada, a statutory holiday for us Canadians, The Verdict wasn't shown tonight. So, I've prepared a brief intro to "value investing," the investment philosophy followed by the typical institution that invested in Hollinger International back in the days when Conrad Black was its CEO. (The same company, now named Sun-Times Media Group, is now a turnaround stock.)
Many institutional investors follow an investment model called "Modern Portfolio Theory" (MPT.) The Wikipedia explanation of it will probably seem like gobbledygook to anyone without a background in statistics, but its conceptual underpinnings are fairly straightforward. The two theories that underpin MPT are: the Random Walk hypothesis, which claims that stock prices do not move according to any predictable pattern because changes in those prices are random; and, the Efficient Market Hypothesis, which claims that the present price of a stock accurately reflects all that is presently known about its value. Put the two together, and you come up with the conclusion that it's impossible to predict a stock's future value by simply plowing through its, or perhaps the underlying company's, performance in the past. All that can be done is to rate a stock by the extent of a downturn (or upturn) in its price over a given time period, or its price-volatility over time, as compared with the price-volatility of the market in general. (This is called "the beta coefficient."). Before investing, the investor has to decide how much risk he or she is willing to put up with by investing in stocks at all, in exchange for a return higher than that offered by a risk-free investment like Treasury bills. The beta coefficient is then used to find stocks that are less risky, as risky, or riskier than the general stock market, with a corresponding damping, tracking or amplification of the expected gain when the stock in question increases in price. Once again, the investor's own risk tolerance determines what "beta-weighting" a portfolio will have, just as the investor's tolerance for overall "market risk" will determine how much of his or her portfolio is in stocks at all. An investor can also use diversification, or putting money in more than one stock, to ease the risk that has to be faced. This is MPT in a nutshell; the complexification largely involves specification of risk level and implementation of its principles, including the diversification principle. An MPT investor follows this three-stage procedure: first of all, deciding what percentage of funds should be in the equity market at all; secondly, deciding how much stock-specific risk to take on with the equity part of the portfolio; and finally, deciding how much diversification is desired - how many individual stocks with the appropriate beta coefficient should be bought or kept.
Value investing is explicitly at odds with MPT, or any strategy that uses an MPT-like investment philosophy. Value investors believe that equity markets are not efficient, because some companies are below security analysts' radar and/or because of analysts' biases that are psychological in origin. One famous value investor, David Dreman, rebutted Modern Portfolio Theory in Appendix A (pp. 399-404, hc.) of his 1998 book, Contrarian Investment Strategies: The Next Generation.
Like all forms of investing, value investing carries risk with it - specifically, the risk that an ostensibly undervalued company has something subtly wrong with its prospects. Thus, value investors consider it sensible to diversify; the recommended number of stocks to hold in a value portfolio typically varies from 10 to 20. A value fund often holds the shares of more than twenty different undervalued companies in its portfolio.
In the criminal trial of Conrad Black, Peter Atkinson, Jack Boultbee and Mark Kipnis, the aggrieved shareholders in question, such as Christopher Browne of Tweedy, Browne, believe that the reason why the regular common stock of Hollinger International sold at a discount to its net asset value, and stayed at a discount for an unreasonably long time, was because Conrad Black and the other three defendants swindled Hollinger Int'l, and thus swindled its shareholders. The defendants, of course, deny this allegation.
Many institutional investors follow an investment model called "Modern Portfolio Theory" (MPT.) The Wikipedia explanation of it will probably seem like gobbledygook to anyone without a background in statistics, but its conceptual underpinnings are fairly straightforward. The two theories that underpin MPT are: the Random Walk hypothesis, which claims that stock prices do not move according to any predictable pattern because changes in those prices are random; and, the Efficient Market Hypothesis, which claims that the present price of a stock accurately reflects all that is presently known about its value. Put the two together, and you come up with the conclusion that it's impossible to predict a stock's future value by simply plowing through its, or perhaps the underlying company's, performance in the past. All that can be done is to rate a stock by the extent of a downturn (or upturn) in its price over a given time period, or its price-volatility over time, as compared with the price-volatility of the market in general. (This is called "the beta coefficient."). Before investing, the investor has to decide how much risk he or she is willing to put up with by investing in stocks at all, in exchange for a return higher than that offered by a risk-free investment like Treasury bills. The beta coefficient is then used to find stocks that are less risky, as risky, or riskier than the general stock market, with a corresponding damping, tracking or amplification of the expected gain when the stock in question increases in price. Once again, the investor's own risk tolerance determines what "beta-weighting" a portfolio will have, just as the investor's tolerance for overall "market risk" will determine how much of his or her portfolio is in stocks at all. An investor can also use diversification, or putting money in more than one stock, to ease the risk that has to be faced. This is MPT in a nutshell; the complexification largely involves specification of risk level and implementation of its principles, including the diversification principle. An MPT investor follows this three-stage procedure: first of all, deciding what percentage of funds should be in the equity market at all; secondly, deciding how much stock-specific risk to take on with the equity part of the portfolio; and finally, deciding how much diversification is desired - how many individual stocks with the appropriate beta coefficient should be bought or kept.
Value investing is explicitly at odds with MPT, or any strategy that uses an MPT-like investment philosophy. Value investors believe that equity markets are not efficient, because some companies are below security analysts' radar and/or because of analysts' biases that are psychological in origin. One famous value investor, David Dreman, rebutted Modern Portfolio Theory in Appendix A (pp. 399-404, hc.) of his 1998 book, Contrarian Investment Strategies: The Next Generation.
Like all forms of investing, value investing carries risk with it - specifically, the risk that an ostensibly undervalued company has something subtly wrong with its prospects. Thus, value investors consider it sensible to diversify; the recommended number of stocks to hold in a value portfolio typically varies from 10 to 20. A value fund often holds the shares of more than twenty different undervalued companies in its portfolio.
In the criminal trial of Conrad Black, Peter Atkinson, Jack Boultbee and Mark Kipnis, the aggrieved shareholders in question, such as Christopher Browne of Tweedy, Browne, believe that the reason why the regular common stock of Hollinger International sold at a discount to its net asset value, and stayed at a discount for an unreasonably long time, was because Conrad Black and the other three defendants swindled Hollinger Int'l, and thus swindled its shareholders. The defendants, of course, deny this allegation.
The indictment and the evidentiary proffer: second iteration
I've already read through these documents once; this time, I've extracted a trivia item that relates to Peter Atkinson. On pages 46-7 of the PDF copy of the evidentiary proffer, numbered pp. 43-4 in the document itself, Mr. Atkinson is quoted as using the term "T5" in a 2002 E-mail. A T5 is a statement of investment income for Canadian income tax forms; it's different from a T4, which is a statement of employment income. It seems that Mr. Atkinson had made a bit of a slip-up between his 4s and his 5s. (I note that this was Mr. Atkinson's mistake, not a mistake of the proffer's author. The defendant was quoted verbatim in it.)
One question about the indictment itself has occurred to me lately, though. Given that CEO swindles of the shareholders often involve inflating earnings and revenue, why wasn't this item included by making it grounds for a charge? It was dealt with at the civil level long before the final indictment was drawn up. I suppose that the circulation scandal linked to just above was one of those miscreancies that violated civil law, but not criminal law; that would explain why it wasn't included in the charges.
[An alternate explanation is that the scandal that erupted back in '04 had nothing to do with the four defendants.]
(The proffer and the indictment can be downloaded from this webpage; look for "US v. Black, et al." The latter document is labeled "Superseding Information.)
One question about the indictment itself has occurred to me lately, though. Given that CEO swindles of the shareholders often involve inflating earnings and revenue, why wasn't this item included by making it grounds for a charge? It was dealt with at the civil level long before the final indictment was drawn up. I suppose that the circulation scandal linked to just above was one of those miscreancies that violated civil law, but not criminal law; that would explain why it wasn't included in the charges.
[An alternate explanation is that the scandal that erupted back in '04 had nothing to do with the four defendants.]
(The proffer and the indictment can be downloaded from this webpage; look for "US v. Black, et al." The latter document is labeled "Superseding Information.)
Today's court events, starting with a rejected motion for mistrial
The Globe and Mail's Paul Waldie has just reported that Gus Newman, head counsel representing defendant Jack Boultbee, filed a motion asking for a mistrial, which was denied by Amy St. Eve. Csr. Newman objected to a line of questioning by another defense counsel, Michael Schachter, in his cross-examination of Fred Creasey. Csr. Schacter is representing Peter Atkinson. There's also a report from the Canadian Press, which seems to have been written by Romina Maurino and was webbed by the Toronto Star, which discloses that the motion was rejected "swiftly" by Judge St. Eve.
[An updated report by Ms. Maurino has been webbed by CBC.ca. It contains excerpts of a 2003 E-mail, written by Peter Atkinson, that was read in court today by Csr. Schachter. It notes that the videotaped testimony of Torys lawyer Darren Sukonick has yet to be played in court.
[A second update, also written by Ms. Maurino, mentions that Mr. Creasey was questioned under redirect by Julie Ruder: "Creasey said he asked former Hollinger International top legal executive Mark Kipnis for documents detailing the basis of the non-compete agreements for one of the deals, but didn't receive any documentation showing the audit committee had approved the payments." It also mentions that the Csr. Sukonick videotape should be played tomorrow.]
Mr. Waldie was also interviewed on BNN at about 1:50 PM ET. He said that Csr. Newman had asked for a separate trial while making the mistrial motion. Judge St. Eve promised to rein in Csr. Schachter's questions if any had the tendency to make Mr. Atkinson look guilty in such a way that would necessitate Mr. Atkinson taking the stand to refute. The trial is still revolving around the non-compete agreements, a "fundamental" part of the prosecution's allegations, according to Mr. Waldie. He speculated that Peter Atkinson's lawyer might try to distance his client from the others "in order to make him look less guilty" over the next few weeks.
Mark Steyn has weighed in by noting that the defense team isn't the only assertive objector in the room. He detects a certain pattern, of the prosecutors protecting the Hollinger Int'l audit committee that was headed up by former Gov. James R. Thompson, in the prosecution's objections. (It is a further part of a committee that...)
Reuters has posted a write-up, by James B. Kelleher, on the cross-examination of Mr. Creasey today, entitled "Witness In Black Trial Hammered On Disclosures." It reports that Mr. Creasey admitted, while being cross-examined by Csr. Schachter, that the shareholders were informed of the payments "'to individual officers" and were "'told what was paid to Conrad Black (and other executives)...'" It does specify, though, that the issue at hand was$600,000 worth of payments to "Black and three associates," not all of the non-compete payments that form the core of the allegations against the defendants. This report has also been webbed by Chicago Business.
There's a report from Bloomberg out too, by Andrew Harris and Thom Weidlich, which opens with some perspective on that 2003 E-mail written by Peter Atkinson: "An e-mail from Atkinson, a former vice president, to a company lawyer may support defense claims that he tried to avoid wrongdoing. It also helps prosecutors, showing he suspected the so-called noncompete payments were wrong." The report also mentions that the videotaped testimony of Csr. Sukonick has been pushed back, to tomorrow at the earliest. [The most recent update, of the same report, includes redirect pertaining to delayed disclosure of the non-compete payments, which were not put in until the 2001 Hollinger Int'l annual report; it was published in May 2002.]
You may be amused to know that the AP report on today's events in the trial has been webbed by Pravda; it's also been webbed by the Houston Chronicle. A different write-up has been put on Stuff.co.nz.
----------
From the New Zealand Herald, an old story, with at least two new paragraphs at the end of it, about how Canadians in the media are beginning to warm to Conrad Black.
And finally, although the timing of this item is probably coincidental, a Reuters story about CEO compensation, which is still a'rising as of 2006. Gordon Paris actually wasn't one of those CEOs; in 2006, he had to take a pay cut, to 900 thousand a year from 2 million/year. (Pay data gotten from this mock-ridden post from "Minor Tweaks.") He left the job as of November 15th, about a month before the Sun-Times Media Group (SVN - NYSE) suspended its dividend.
[An updated report by Ms. Maurino has been webbed by CBC.ca. It contains excerpts of a 2003 E-mail, written by Peter Atkinson, that was read in court today by Csr. Schachter. It notes that the videotaped testimony of Torys lawyer Darren Sukonick has yet to be played in court.
[A second update, also written by Ms. Maurino, mentions that Mr. Creasey was questioned under redirect by Julie Ruder: "Creasey said he asked former Hollinger International top legal executive Mark Kipnis for documents detailing the basis of the non-compete agreements for one of the deals, but didn't receive any documentation showing the audit committee had approved the payments." It also mentions that the Csr. Sukonick videotape should be played tomorrow.]
Mr. Waldie was also interviewed on BNN at about 1:50 PM ET. He said that Csr. Newman had asked for a separate trial while making the mistrial motion. Judge St. Eve promised to rein in Csr. Schachter's questions if any had the tendency to make Mr. Atkinson look guilty in such a way that would necessitate Mr. Atkinson taking the stand to refute. The trial is still revolving around the non-compete agreements, a "fundamental" part of the prosecution's allegations, according to Mr. Waldie. He speculated that Peter Atkinson's lawyer might try to distance his client from the others "in order to make him look less guilty" over the next few weeks.
Mark Steyn has weighed in by noting that the defense team isn't the only assertive objector in the room. He detects a certain pattern, of the prosecutors protecting the Hollinger Int'l audit committee that was headed up by former Gov. James R. Thompson, in the prosecution's objections. (It is a further part of a committee that...)
Reuters has posted a write-up, by James B. Kelleher, on the cross-examination of Mr. Creasey today, entitled "Witness In Black Trial Hammered On Disclosures." It reports that Mr. Creasey admitted, while being cross-examined by Csr. Schachter, that the shareholders were informed of the payments "'to individual officers" and were "'told what was paid to Conrad Black (and other executives)...'" It does specify, though, that the issue at hand was$600,000 worth of payments to "Black and three associates," not all of the non-compete payments that form the core of the allegations against the defendants. This report has also been webbed by Chicago Business.
There's a report from Bloomberg out too, by Andrew Harris and Thom Weidlich, which opens with some perspective on that 2003 E-mail written by Peter Atkinson: "An e-mail from Atkinson, a former vice president, to a company lawyer may support defense claims that he tried to avoid wrongdoing. It also helps prosecutors, showing he suspected the so-called noncompete payments were wrong." The report also mentions that the videotaped testimony of Csr. Sukonick has been pushed back, to tomorrow at the earliest. [The most recent update, of the same report, includes redirect pertaining to delayed disclosure of the non-compete payments, which were not put in until the 2001 Hollinger Int'l annual report; it was published in May 2002.]
You may be amused to know that the AP report on today's events in the trial has been webbed by Pravda; it's also been webbed by the Houston Chronicle. A different write-up has been put on Stuff.co.nz.
----------
From the New Zealand Herald, an old story, with at least two new paragraphs at the end of it, about how Canadians in the media are beginning to warm to Conrad Black.
And finally, although the timing of this item is probably coincidental, a Reuters story about CEO compensation, which is still a'rising as of 2006. Gordon Paris actually wasn't one of those CEOs; in 2006, he had to take a pay cut, to 900 thousand a year from 2 million/year. (Pay data gotten from this mock-ridden post from "Minor Tweaks.") He left the job as of November 15th, about a month before the Sun-Times Media Group (SVN - NYSE) suspended its dividend.
Media Roundup: Bring Out The Lawyers
There are two pieces webbed overnight, both of them by reporters who've been covering the case practically from day 1, plus a television report (with later update) aired this morning.
1. An abbreviated report by Romina Maurino of the Canadian Press, based on one released yesterday afternoon (also by her.)
[NOTE: According to this "Morning Business File" report, Beth DeMerchant's videotaped testimony is not going to be aired this week. See item #3, "Black trial resumes," in it.]
2. Paul Waldie of the Globe and Mail outlines what the two lawyers on videotape, Darren Sukonick and Elizabeth DeMerchant, are expected to reveal under videotaped direct and cross-examination, after editing. He ends by noting that Paul Creasey will have the benefit of redirect examination this morning, before the tape machine gets rolling.
3. On BNN, there was a discussion of the case with Lou Schizas, in which he raised the possibility that the personal non-competes were to protect the buyers from Conrad Black, and the other signers, competing with them through quitting Hollinger International and setting up a new operation. (It was noted on the segment that Mr. Schizas was bringing up an issue not brought up in the trial, as of yet.) Also, the trial was linked to the question of whether or not the Ontario Securities Commission is a toothless watchdog, as discussed in today's issue of the Globe and Mail. (That discussion started at about 8:10 AM ET; it doesn't seem to have been broadbanded at BBN's Website.)
[UPDATE: There was another discussion with Mr. Schizas at 9:45 AM ET, which built on the above point by questioning the claim, made by at least one of the Torys LLP lawyers in videotaped testimony, that the legal team was 'forced' to sign off on it. (Presumably, the lawyer, if only one made that claim, was Darren Sukonick.) Mr. Schizas noted that there's a lot of clients' barking in the normal course of business.]
From the media blog world, two stabs at humour. The "Black Board" has an entry on another comedy moment in the trial, and Mark Steyn devotes an entry to making fun of an accountant, but with a different schtick than the usual, one more fitting for poking fun at a government official.
1. An abbreviated report by Romina Maurino of the Canadian Press, based on one released yesterday afternoon (also by her.)
[NOTE: According to this "Morning Business File" report, Beth DeMerchant's videotaped testimony is not going to be aired this week. See item #3, "Black trial resumes," in it.]
2. Paul Waldie of the Globe and Mail outlines what the two lawyers on videotape, Darren Sukonick and Elizabeth DeMerchant, are expected to reveal under videotaped direct and cross-examination, after editing. He ends by noting that Paul Creasey will have the benefit of redirect examination this morning, before the tape machine gets rolling.
3. On BNN, there was a discussion of the case with Lou Schizas, in which he raised the possibility that the personal non-competes were to protect the buyers from Conrad Black, and the other signers, competing with them through quitting Hollinger International and setting up a new operation. (It was noted on the segment that Mr. Schizas was bringing up an issue not brought up in the trial, as of yet.) Also, the trial was linked to the question of whether or not the Ontario Securities Commission is a toothless watchdog, as discussed in today's issue of the Globe and Mail. (That discussion started at about 8:10 AM ET; it doesn't seem to have been broadbanded at BBN's Website.)
[UPDATE: There was another discussion with Mr. Schizas at 9:45 AM ET, which built on the above point by questioning the claim, made by at least one of the Torys LLP lawyers in videotaped testimony, that the legal team was 'forced' to sign off on it. (Presumably, the lawyer, if only one made that claim, was Darren Sukonick.) Mr. Schizas noted that there's a lot of clients' barking in the normal course of business.]
From the media blog world, two stabs at humour. The "Black Board" has an entry on another comedy moment in the trial, and Mark Steyn devotes an entry to making fun of an accountant, but with a different schtick than the usual, one more fitting for poking fun at a government official.
A Point About Short Selling
First of all, a personal disclosure. I short-sold once, in the mid 1980s, and actually scored a small profit on the short. Since I shorted a stock that I had bought and sold previously, I'd rather not name it. I'll confine myself to saying that it was a holding company. I also remember anticipating, back in 1989 in conversation with my father, that Campeau Corp. would implode, which it did.
So, those questions I raised yesterday, with the naming of two books as the source of them, drew on background reads whose points went into an already-primed mind.
A recent "Daily Article" at Mises.org, posted three days ago, has a defense of short sellers, which raises a question with regard to Hollinger International: what was the short interest on it from 1998 to the end of 2003, when Conrad Black was ousted? As author Gary Galles pointed out, short sellers "often uncover what regulators miss, as they did at Worldcom, Enron, Tyco, etc., showing themselves as more effective market policemen."
Where were they when Conrad Black was still with Hollinger Int'l? Is the short-interest pattern similar to the one for "Worldcom, Enron, Tyco, etc."?
So, those questions I raised yesterday, with the naming of two books as the source of them, drew on background reads whose points went into an already-primed mind.
A recent "Daily Article" at Mises.org, posted three days ago, has a defense of short sellers, which raises a question with regard to Hollinger International: what was the short interest on it from 1998 to the end of 2003, when Conrad Black was ousted? As author Gary Galles pointed out, short sellers "often uncover what regulators miss, as they did at Worldcom, Enron, Tyco, etc., showing themselves as more effective market policemen."
Where were they when Conrad Black was still with Hollinger Int'l? Is the short-interest pattern similar to the one for "Worldcom, Enron, Tyco, etc."?
Sunday, April 8, 2007
Nothing On The Trial On The Verdict Tonight, Once Again
The weekly recycle episode of The Verdict had nothing on the Conrad Black trial for tonight's. There also won't be a new episode until Tuesday, because of the Easter holiday in Canada.
So, instead of a write-up, I'd like to mention a general omission in media coverage of the trial that I've recently thought of, thanks to re-watching the CTV docudrama Shades of Black (mentioned here) and remembering the sources behind the post that's three below this one.
Those sources were two books I had read more than a decade ago: Fleecing The Lamb by David Cruise and Rampaging Bulls by Alexander Tadich. Both of them stress that the typical behavior pattern of a stock-market con artist is to inflate the value of earnings (and sometimes assets) of an "exciting" company, up to the point of fixing the books to make such inflation seem genuine, at which point they either off-load or gouge. I noted in the post, which I linked to at the end of the above paragraph, that the behavior of Black, et. al. was closer to the opposite of that pattern.
I don't know if either of the two authors of the books mentioned above had interviewed an experienced police officer, one who has specialized in white-collar, public-company commercial crime. I do know, however, that there has yet to be an interview or article that I've come across that did talk to that kind of (perhaps retired) police officer about the Conrad Black trial. The RCMP may be of help in this regard, as they've been involved in going after stock-market crooks for decades, and are probably familiar with the proper American law-enforcement counterpart(s) to talk to.
It was actually the CTV docudrama the proved to be the tipping point. It includes (forgive the spoiler) a fictional character that's an FBI officer.
So, instead of a write-up, I'd like to mention a general omission in media coverage of the trial that I've recently thought of, thanks to re-watching the CTV docudrama Shades of Black (mentioned here) and remembering the sources behind the post that's three below this one.
Those sources were two books I had read more than a decade ago: Fleecing The Lamb by David Cruise and Rampaging Bulls by Alexander Tadich. Both of them stress that the typical behavior pattern of a stock-market con artist is to inflate the value of earnings (and sometimes assets) of an "exciting" company, up to the point of fixing the books to make such inflation seem genuine, at which point they either off-load or gouge. I noted in the post, which I linked to at the end of the above paragraph, that the behavior of Black, et. al. was closer to the opposite of that pattern.
I don't know if either of the two authors of the books mentioned above had interviewed an experienced police officer, one who has specialized in white-collar, public-company commercial crime. I do know, however, that there has yet to be an interview or article that I've come across that did talk to that kind of (perhaps retired) police officer about the Conrad Black trial. The RCMP may be of help in this regard, as they've been involved in going after stock-market crooks for decades, and are probably familiar with the proper American law-enforcement counterpart(s) to talk to.
It was actually the CTV docudrama the proved to be the tipping point. It includes (forgive the spoiler) a fictional character that's an FBI officer.
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