At times, I’ve seen comments on the Conrad Black trial that suggest the defense should have to prove its own case. There has usually followed a rejoinder comment reminding the first commenter that the onus is on the prosecution to prove its case beyond a reasonable doubt.
This august standard in criminal law sound imposing when first read, but in the typical criminal trial, it’s actually easy to meet. That’s because all prosecutors know it, and tend to refuse to proceed with charges if that onus cannot be met. As a result of this filtering, a large majority of criminal cases are ones where the onus is met.
At least, this is the way it used to be. There’s a controversy over whether or not plea bargains, with government pressure on the would-be plea bargainer, have distorted the old system. The most likely cause would be prosecutors trying to get their conviction rate up without picking their spots more carefully. If this criticism were true, then the offices of the prosecutors are being filled up with yes-men. That’s the type who would agree to push a dubious case, and exert pressure on a chargee out of the fear of losing the case.
The reasonable-doubt standard comes into play when there is a dubious case. Like all words, the words specifying what a crime is have a little ambiguity in them, and like all people, prosecutors can make conclusions that could change if relevant facts unknown to them were known. This is one of the reasons behind the adversary system: by affording the defense an opportunity to defend, the party that has the most incentive to find contrary facts is allowed to do so. A prosecutor, or a judge, can only be so much of a gentleperson, after all, and even the most sterling character can’t surmount the ignorance barrier. A lot of factors that the defense would consider vital are unlikely to occur to the prosecutor, even one with a heart of gold. The factors that aren't relevant are caught by the "reasonable doubt" standard. Some doubts aren't.
Given the latitude for the defense to mount a case of its own, though, it is tempting to draw from that independence the notion that the defense has a burden of proof all its own. Admittedly, this notion is roughly accurate in a civil trial, where the standard that has to be met is the “balance of probabilities,” and all that’s required from the plaintiff is to show that the defendant(s) caused him/her/them damage as the result of a wrong - a “tort.”
The underlying reason nowadays is a different one, though: it comes from a philosophical position known as “moral equivalencing.”
Put simply, moral equivalencing is based on the insight that there’s more than one standard of right and wrong. It builds on this insight by claiming that different moral standards are incomparable, and thus there’s no way to judge which ‘right’ is right and which ‘wrong’ is wrong. Talk about morals makes no sense unless it’s nestled in a specific context, labeled in advance.
Extending this theory to the criminal law yields the claim that the minds of the prosecutors and defendant cannot meet. They’re in two different worlds. So, the case has to be decided on the grounds of which side backs up their theory, or explanation, more thoroughly.
Moral equivalencing is controversial even in moral theory. Despite the ease of reasoning in the above paragraph, its introduction to criminal law is actually fraught with peril. It implies that the government and the defendant are on an equal footing, which they are not. The government always has the right, even if restricted, to initiate force. A citizen rarely does, and any exceptions are only allowed when a citizen does so as an ad hoc police officer. Plus, the government has the advantages of obedience and trust on its side, whereas the typical defendant doesn’t. We’re always taught to talk to strangers when they’re from the government.
In these times, it’s easy to substitute “equal” for “different.” (In fact, a technical case can be made for doing so in the state of total ignorance.) Some differences, though, are unequal. Ignoring them sometimes invites in the peril.
Saturday, June 16, 2007
Media Roundup: Tangents
There being no news on the Conrad Black trial since yesterday, the media reports on it that have been webbed overnight and today are mostly features that use the trial of Conrad Black as a takeoff point:
1. From CBC News, a review of last week's trial events by Susan Berger.
2. The Globe and Mail has a feature column entitled "Lady Black's guide to survival."
3. From the Providence (Rhode Island) Business News, a report on the takeover of two papers, the Times of Pawtucket and the Call of Woonsocket, by a company called RISN Operations Inc. and the subsequent slashing of each paper's staff. RISN is owned by David Radler's daughter, Melanie.
4. The Boston Globe has an abridged version of Bloomberg's earlier report on the allowance of the "ostrich instruction" by Judge St. Eve.
5. Also from the Globe, a list of some of the guests at Gore Vidal's "Grano Speaker Series" speech, in which he took some potshots at both Conrad and Barbara Black, divided up by prior sympathy or dislike of either.
6. The Globe has a third feature, this one much longer than the others: Ian Brown, asking "Are we losing our lexicon?" Taking the reader through the world of words, Mr. Brown notes that Canadians tend to prefer taciturnity and straightforwardness, relative to both the U.K. and the U.S.
7. An article by Mary Vallis, webbed by the National Post, reports on Judge St. Eve's refusal to grant two motions made by Mark Kipnis' defense counsel Ron Safer. The first one wanted to bar the prosecution from mentioning a $50,000 bonus received by Mr. Kipnis; the second wanted to strike all mention of that particular bonus from the trial record. Near the end of the article, the suggested wording for an amendment of the ostrich instruction, made by Marc Martin after Judge St. Eve had granted a prosecution motion allowing said instruction, is reprinted verbatim.
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Mark Steyn has selected what he considers to be the best reader advice for the defense in his latest entry for the Maclean's Conrad Black trial blog. It recommends a kind of "Johnny Cochrane" approach: to repeatedly say that there was no crime, and to back that argument right up to the hilt.
(Interestingly, I haven't come across any such advice directed at the prosecution from any pundit. All of the advice of that sort that I've encountered has come from amateurs, in the form of insisting that there was indeed a crime. A good sample can be found in the comments section of this Toronto Life Conrad Black trial blog entry, and more can be found by poking through the comments of other entries in that blog. I might as well let you know in advance if it's your first time there: the ones that tend to dispense such advice to the prosecution tend also to express open dislike towards Mr. Steyn.)
1. From CBC News, a review of last week's trial events by Susan Berger.
2. The Globe and Mail has a feature column entitled "Lady Black's guide to survival."
3. From the Providence (Rhode Island) Business News, a report on the takeover of two papers, the Times of Pawtucket and the Call of Woonsocket, by a company called RISN Operations Inc. and the subsequent slashing of each paper's staff. RISN is owned by David Radler's daughter, Melanie.
4. The Boston Globe has an abridged version of Bloomberg's earlier report on the allowance of the "ostrich instruction" by Judge St. Eve.
5. Also from the Globe, a list of some of the guests at Gore Vidal's "Grano Speaker Series" speech, in which he took some potshots at both Conrad and Barbara Black, divided up by prior sympathy or dislike of either.
6. The Globe has a third feature, this one much longer than the others: Ian Brown, asking "Are we losing our lexicon?" Taking the reader through the world of words, Mr. Brown notes that Canadians tend to prefer taciturnity and straightforwardness, relative to both the U.K. and the U.S.
7. An article by Mary Vallis, webbed by the National Post, reports on Judge St. Eve's refusal to grant two motions made by Mark Kipnis' defense counsel Ron Safer. The first one wanted to bar the prosecution from mentioning a $50,000 bonus received by Mr. Kipnis; the second wanted to strike all mention of that particular bonus from the trial record. Near the end of the article, the suggested wording for an amendment of the ostrich instruction, made by Marc Martin after Judge St. Eve had granted a prosecution motion allowing said instruction, is reprinted verbatim.
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Mark Steyn has selected what he considers to be the best reader advice for the defense in his latest entry for the Maclean's Conrad Black trial blog. It recommends a kind of "Johnny Cochrane" approach: to repeatedly say that there was no crime, and to back that argument right up to the hilt.
(Interestingly, I haven't come across any such advice directed at the prosecution from any pundit. All of the advice of that sort that I've encountered has come from amateurs, in the form of insisting that there was indeed a crime. A good sample can be found in the comments section of this Toronto Life Conrad Black trial blog entry, and more can be found by poking through the comments of other entries in that blog. I might as well let you know in advance if it's your first time there: the ones that tend to dispense such advice to the prosecution tend also to express open dislike towards Mr. Steyn.)
Friday, June 15, 2007
Friday rejection
Details of a rejected defense motion have been provided by a Bloomberg report, written by Andrew Harris. The motion was made by Ron Safer, counsel for Mark Kipnis; it petitioned for the exclusion of any mention, in closing arguments, of a $50,000 bonus paid to Mr. Kipnis. The grounds for it, that the only referral-in-testimony to that bonus was David Radler identifying it as a bonus for hard work, was deemed to be insufficient by Judge St. Eve. "'It was awarded by individuals participating in the scheme,' St. Eve told Safer at a hearing today. Her ruling allows prosecutors to mention the bonus, along with a second payment, when they summarize the case for the jury on June 18."
Media Roundup: Out Of The Sand
The media reports, webbed yesterday and today, on the Conrad Black trial have concentrated on Judge St. Eve's allowance of the "ostrich instruction:"
1. From the Chicago Tribune, the same paper that broke the story, Ameet Sachdev (the same reporter that broke the story) has a profile of the instruction, including recent cases in which it is used and analysis from a legal expert on its significance (as do most of the others.) This feature report also includes the hazard of its use: "Defense lawyers said there is a danger that the jury will misunderstand the judge's instruction and lower the burden of proof even further to a fuzzier 'should have known' standard, known in legal parlance as 'negligence.' This standard is distinguished from the ostrich instruction in that negligence apportions responsibility but doesn't suggest the defendant had any knowledge an act was wrong." The report suggests that the defense left itself open to its inclusion by arguing that there were no illegal transactions, thus rendering any obligation to make inquiries moot. The end of this report quotes an excerpt from the filing of Marc Martin objecting to the instruction's inclusion, just before quoting the instruction verbatim.
2. A report on the same subject by Mary Vallis, as webbed by the Ottawa Citizen, contains a definition of the ostrich instruction. "The instruction allows the jury to consider whether Black and his co-defendants deliberately avoided knowledge about the alleged crimes at Hollinger International Inc., like an ostrich does by hiding its head in the sand." It also notes that this instruction is also known as "deliberate ignorance or wilful blindness," and how the prosecutors want it applied in this case: refraining to inquire about a supposed reversal of the buyers of the newspaper properties, regarding the inclusion of the non-compete agreements that went into the sales contracts. [An abridged version of this report has been webbed by the Vancouver Province.]
3. Paul Waldie's report on the decision, webbed by the Globe and Mail, ends by calling attention to the defense motion, yet to be ruled on by Judge St. Eve, asking her to amend the instruction so as to explicitly exclude negligence as a reason for a conviction.
4. The Toronto Star's Rick Westhead's report has more detail on the defense's denied motion to exclude the ostrich instruction.
5. Moving to a completely different subject, the Chicago Sun-Times has a report about Hollinger Inc. making suggestions to the board of directors of the Sun-Times Media Group, to get the latter party doing something to get the stock price up. No comment has been forthcoming from the office of the CEO of STMG.
6. News of this turn has made the Daily Mail.
7. There's a one-paragraph mention of the trial in the Dow-Jones item roundup as webbed by CNN Money.com: item #10, "Closing Arguments Begin [Monday] In Black Trial."
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I have a side comment of my own regarding this instruction. If a stockbroker gets dinged with the ostrich instruction because (s)he kept his/her mouth clamped shut about a client's financial activities as a matter of principle, then (s)he may stand a good chance of becoming the next G. Gordon Liddy once his/her jail term is through. An extra spell in jail to protect broker-client privilege is not as glamourous as Bertrand Russell being sent to Brixton during World War 1 for the cause of peace, not is is as gut-level as Mr. Liddy's refusal to betray his friends, but some people are likely to recognize a prisoner-of-conscience aspect to it, just as some people saw Mr. Liddy as a man of honour for taking the full rap in the Watergate scandal rather than rolling.
Mark Steyn has his own, more opinionated, comment on Judge St. Eve's ruling. His line of reasoning is not inconsistent with Csr. Martin's, although it does head to parts unknown. He ends, just before the final sign-off, with an open lament: "Given that three of the four defendants are foreigners and non-residents, and thus are not being tried by 'a jury of their peers' in any meaningful sense, I think Judge Amy should have made especial effort to set the bar fairly."
The above entry is the capstone of Douglas Bell's latest, in the Toronto Life Conrad Black trial blog. Mr. Bell couldn't resist twitting Mr. Steyn about his support for the Gitmo proceedings (as well as suggest, though writing what he wrote, that there's a circuit that loves to hate Mr. Steyn.
(If such a circuit exists, then they've got new grist. A later entry by Mr. Steyn suggests that he got wind of that entry by Mr. Bell.)
Moving to a different subject, Steve Skurka's latest entry in his blog "The Crime Sheet" moves from a note of the slowdown in trial coverage to a potential case of pseudo-sex-offender defamation. The main part of it, though, recounts the case that had led to the establishement of a sex-offender registry. Csr. Skurka's gripping account of the crimes and trial of serial violent pedophile Joseph Fredericks illustrates that there's a kind of honour in lawyers' detachment. The end of the entry also hints at a kind of justice in places where law-abidingness is largely absent.
Matthew McClearn's latest entry in the Canadian Business Black trial blog recounts a whole slew of losses that have resulted from both the trial and the associated Hollinger scandal. There seem to be few gainers, except for the lawyers and consultants receiving fees (and, perhaps, some journalists, lawyer-observers and writers.) The end of his near-itemization, though, makes it plain that at least some of those fees have been for services badly needed. (This entry is less of a lament/disguised complaint than a well-put think piece. The losses are plain, but where's the overall gain for all this? Who's really going to win, net?)
1. From the Chicago Tribune, the same paper that broke the story, Ameet Sachdev (the same reporter that broke the story) has a profile of the instruction, including recent cases in which it is used and analysis from a legal expert on its significance (as do most of the others.) This feature report also includes the hazard of its use: "Defense lawyers said there is a danger that the jury will misunderstand the judge's instruction and lower the burden of proof even further to a fuzzier 'should have known' standard, known in legal parlance as 'negligence.' This standard is distinguished from the ostrich instruction in that negligence apportions responsibility but doesn't suggest the defendant had any knowledge an act was wrong." The report suggests that the defense left itself open to its inclusion by arguing that there were no illegal transactions, thus rendering any obligation to make inquiries moot. The end of this report quotes an excerpt from the filing of Marc Martin objecting to the instruction's inclusion, just before quoting the instruction verbatim.
2. A report on the same subject by Mary Vallis, as webbed by the Ottawa Citizen, contains a definition of the ostrich instruction. "The instruction allows the jury to consider whether Black and his co-defendants deliberately avoided knowledge about the alleged crimes at Hollinger International Inc., like an ostrich does by hiding its head in the sand." It also notes that this instruction is also known as "deliberate ignorance or wilful blindness," and how the prosecutors want it applied in this case: refraining to inquire about a supposed reversal of the buyers of the newspaper properties, regarding the inclusion of the non-compete agreements that went into the sales contracts. [An abridged version of this report has been webbed by the Vancouver Province.]
3. Paul Waldie's report on the decision, webbed by the Globe and Mail, ends by calling attention to the defense motion, yet to be ruled on by Judge St. Eve, asking her to amend the instruction so as to explicitly exclude negligence as a reason for a conviction.
4. The Toronto Star's Rick Westhead's report has more detail on the defense's denied motion to exclude the ostrich instruction.
5. Moving to a completely different subject, the Chicago Sun-Times has a report about Hollinger Inc. making suggestions to the board of directors of the Sun-Times Media Group, to get the latter party doing something to get the stock price up. No comment has been forthcoming from the office of the CEO of STMG.
6. News of this turn has made the Daily Mail.
7. There's a one-paragraph mention of the trial in the Dow-Jones item roundup as webbed by CNN Money.com: item #10, "Closing Arguments Begin [Monday] In Black Trial."
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I have a side comment of my own regarding this instruction. If a stockbroker gets dinged with the ostrich instruction because (s)he kept his/her mouth clamped shut about a client's financial activities as a matter of principle, then (s)he may stand a good chance of becoming the next G. Gordon Liddy once his/her jail term is through. An extra spell in jail to protect broker-client privilege is not as glamourous as Bertrand Russell being sent to Brixton during World War 1 for the cause of peace, not is is as gut-level as Mr. Liddy's refusal to betray his friends, but some people are likely to recognize a prisoner-of-conscience aspect to it, just as some people saw Mr. Liddy as a man of honour for taking the full rap in the Watergate scandal rather than rolling.
Mark Steyn has his own, more opinionated, comment on Judge St. Eve's ruling. His line of reasoning is not inconsistent with Csr. Martin's, although it does head to parts unknown. He ends, just before the final sign-off, with an open lament: "Given that three of the four defendants are foreigners and non-residents, and thus are not being tried by 'a jury of their peers' in any meaningful sense, I think Judge Amy should have made especial effort to set the bar fairly."
The above entry is the capstone of Douglas Bell's latest, in the Toronto Life Conrad Black trial blog. Mr. Bell couldn't resist twitting Mr. Steyn about his support for the Gitmo proceedings (as well as suggest, though writing what he wrote, that there's a circuit that loves to hate Mr. Steyn.
(If such a circuit exists, then they've got new grist. A later entry by Mr. Steyn suggests that he got wind of that entry by Mr. Bell.)
Moving to a different subject, Steve Skurka's latest entry in his blog "The Crime Sheet" moves from a note of the slowdown in trial coverage to a potential case of pseudo-sex-offender defamation. The main part of it, though, recounts the case that had led to the establishement of a sex-offender registry. Csr. Skurka's gripping account of the crimes and trial of serial violent pedophile Joseph Fredericks illustrates that there's a kind of honour in lawyers' detachment. The end of the entry also hints at a kind of justice in places where law-abidingness is largely absent.
Matthew McClearn's latest entry in the Canadian Business Black trial blog recounts a whole slew of losses that have resulted from both the trial and the associated Hollinger scandal. There seem to be few gainers, except for the lawyers and consultants receiving fees (and, perhaps, some journalists, lawyer-observers and writers.) The end of his near-itemization, though, makes it plain that at least some of those fees have been for services badly needed. (This entry is less of a lament/disguised complaint than a well-put think piece. The losses are plain, but where's the overall gain for all this? Who's really going to win, net?)
Thursday, June 14, 2007
One For The Prosecution
According to a report by Ameet Sachdev, webbed by the Chicago Tribune, Judge St. Eve will give the "ostrich instruction" to the jury. This instruction "allows them to consider whether Black or the other defendants intentionally avoided knowing about the crimes which allegedly occurred."
The allowance of this instruction was discussed in an interview with Paul Waldie on BNN, aired at 5:33 PM ET. The “ostrich instruction” is significant for the case. It applies if a defendant is believed to be “willfully blind” to a crime, notwithstanding whether or not mens rea is present in the mind of that defendant. (It can, of course, apply to more than one defendant in a particular criminal trial.) The defense objected quite strongly to the inclusion of this instruction, but Judge St. Eve ruled that the prosecution had presented enough evidence to rate it. Mr. Waldie also discussed the restriction of count 10 against Jack Boultbee, while noting that Mr. Boultbee still faces all 11 counts.
When asked which side has the edge by Amanda Lang, Mr. Waldie answered that it was impossible to tell. There are too many pieces of evidence that have to be tied together in the closing arguments. Thus, the arguments will be crucial to the outcome of the case.
The prosecution's closing argument will have two main themes. First of all, the buyers (except for Izzy Asper with respect to Conrad Black) didn’t want the non-competes mentioned in the indictment put in to the sales contract, and didn’t even know who the recipients of the payments were. Secondly, the defendants lied to the board of directors. The closing arguments of the defense will have two main counter-themes: every non-compete payment mentioned in the indictment was thoroughly documented; and, the buyers wanted those agreements because they voluntarily signed the purchase contracts, with the non-competes in them.
In Mr. Waldie’s opinion, the best lawyer in the trial is Ron Safer. He might, although indirectly, even win an acquittal for Conrad Black himself as well as for his client, Mark Kipnis. As far as Mr. Black's defense team is concerned, both Edward Genson and Eddie Greenspan will make parts of the closing argument for him.
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Mark Steyn, in his Maclean's Conrad Black trial blog, makes the point that the pallor that Conrad Black exhibits when in the courtroom, noted often in recent reports, has a more sensible explanation than either fear or guilt: tiredness. Conrad Black's still night-owling. Mr. Steyn has also posted a second analysis of where each defendant stands - this one focuses on Peter Atkinson.
Steve Skurka, in his blog "The Crime Sheet," has focused upon the ostrich instruction, confessing that its relevance to the trial has left him a little perplexed unless its purpose is to fill a significant hole in the prosecution's case. His entry ends with an anecdote from Iran which shows that other legal systems in the world are decidedly peremptory.
The allowance of this instruction was discussed in an interview with Paul Waldie on BNN, aired at 5:33 PM ET. The “ostrich instruction” is significant for the case. It applies if a defendant is believed to be “willfully blind” to a crime, notwithstanding whether or not mens rea is present in the mind of that defendant. (It can, of course, apply to more than one defendant in a particular criminal trial.) The defense objected quite strongly to the inclusion of this instruction, but Judge St. Eve ruled that the prosecution had presented enough evidence to rate it. Mr. Waldie also discussed the restriction of count 10 against Jack Boultbee, while noting that Mr. Boultbee still faces all 11 counts.
When asked which side has the edge by Amanda Lang, Mr. Waldie answered that it was impossible to tell. There are too many pieces of evidence that have to be tied together in the closing arguments. Thus, the arguments will be crucial to the outcome of the case.
The prosecution's closing argument will have two main themes. First of all, the buyers (except for Izzy Asper with respect to Conrad Black) didn’t want the non-competes mentioned in the indictment put in to the sales contract, and didn’t even know who the recipients of the payments were. Secondly, the defendants lied to the board of directors. The closing arguments of the defense will have two main counter-themes: every non-compete payment mentioned in the indictment was thoroughly documented; and, the buyers wanted those agreements because they voluntarily signed the purchase contracts, with the non-competes in them.
In Mr. Waldie’s opinion, the best lawyer in the trial is Ron Safer. He might, although indirectly, even win an acquittal for Conrad Black himself as well as for his client, Mark Kipnis. As far as Mr. Black's defense team is concerned, both Edward Genson and Eddie Greenspan will make parts of the closing argument for him.
----------
Mark Steyn, in his Maclean's Conrad Black trial blog, makes the point that the pallor that Conrad Black exhibits when in the courtroom, noted often in recent reports, has a more sensible explanation than either fear or guilt: tiredness. Conrad Black's still night-owling. Mr. Steyn has also posted a second analysis of where each defendant stands - this one focuses on Peter Atkinson.
Steve Skurka, in his blog "The Crime Sheet," has focused upon the ostrich instruction, confessing that its relevance to the trial has left him a little perplexed unless its purpose is to fill a significant hole in the prosecution's case. His entry ends with an anecdote from Iran which shows that other legal systems in the world are decidedly peremptory.
Media Roundup: Geared Down
The media reports, webbed overnight and this morning, on the Conrad Black trial are dwindling now that the evidentiary part is over. The main story was the restriction of count 10 as laid on Jack Boultbee, although feature reports are beginning to make their appearance:
1. The Washington Post has a profile of Richard Breeden's current activity - that being the running of a hedge fund, Breeden Capital. This fund is new but big, managing to raise approx. $1 billion in a year. Although its activites are an extension of the corporate-governance consulting work that Mr. Breeden has already been doing, it's nevertheless a hard fund to categorize. It's basically an ethical corporate-raider fund, a kind of 'Whitebeard' fund; the article calls it an "activist" fund. Its biggest investor of the California Public Employees' Retirement System, or Calpers. "According to Calpers, Breeden's fund, which aims to outperform the Standard & Poor's 500-stock index by 10 percent over the long term, returned 16.6 percent in its first six months. It beat the broad index by 2.82 percent."
2. The Hamilton Spectator has webbed an abridgement of a report by Romina Maurino, which concludes that Conrad Black will likely not face any charges from the Canadian legal system once the trial is over, although he "could be barred from trading in securities and from being a director or officer of a publicly traded company as a result of the verdict." [A slightly different abridgement has been webbed by the Guelph Mercury.]
3. The break that Mr. Boultbee was cut made item #2 in the Boston Globe's "Business Notebook."
4. Janet Whitman's latest report, webbed by the New York Post, is entitled "Boultbee Needn't Ex-Plane: Judge." It begins with: "Prosecutors at Conrad Black's fraud trial didn't prove Hollinger International's former CFO helped the dethroned press baron scam shareholders by using the company plane to jet off to Bora Bora for a vacation, a judge ruled yesterday." It notes that Judge St. Eve has restricted the prosecution's closing argument, barring the linking of Mr. Boultbee to the Bora Bora trip.
5. Rick Westhead of the Toronto Star has written a lengthy recap of the trial, now that closing arguments are approaching.
6. A much briefer report by Mary Wisniewski on the restriction of count 10 has been webbed by the Chicago Sun-Times.
7. Paul Waldie's report has been webbed by the Globe and Mail. It starts off with a mention of the restriction, and continues by noting "The ruling could be a sign that the judge may drop more charges. When prosecutors rested their case on May 30, all defendants filed motions to have the charges against them dropped. Of all the motions, Judge St. Eve expressed an interest in Mr. Boultbee's issue and several charges against defendant Mark Kipnis. The judge has not said when she will make further rulings." It ends by noting that Judge St. Eve has disallowed the inclusion of "a so-called 'Pinkerton charge,'" which the prosecution has been asking for, on the grounds that it was inappropriate to this case. Had it been granted, it would have allowed the jury to hold "one party to a conspiracy... liable for acts committed by others in the conspiracy."
8. The Malaysia Sun also has webbed a brief item on the restriction of the charge.
1. The Washington Post has a profile of Richard Breeden's current activity - that being the running of a hedge fund, Breeden Capital. This fund is new but big, managing to raise approx. $1 billion in a year. Although its activites are an extension of the corporate-governance consulting work that Mr. Breeden has already been doing, it's nevertheless a hard fund to categorize. It's basically an ethical corporate-raider fund, a kind of 'Whitebeard' fund; the article calls it an "activist" fund. Its biggest investor of the California Public Employees' Retirement System, or Calpers. "According to Calpers, Breeden's fund, which aims to outperform the Standard & Poor's 500-stock index by 10 percent over the long term, returned 16.6 percent in its first six months. It beat the broad index by 2.82 percent."
2. The Hamilton Spectator has webbed an abridgement of a report by Romina Maurino, which concludes that Conrad Black will likely not face any charges from the Canadian legal system once the trial is over, although he "could be barred from trading in securities and from being a director or officer of a publicly traded company as a result of the verdict." [A slightly different abridgement has been webbed by the Guelph Mercury.]
3. The break that Mr. Boultbee was cut made item #2 in the Boston Globe's "Business Notebook."
4. Janet Whitman's latest report, webbed by the New York Post, is entitled "Boultbee Needn't Ex-Plane: Judge." It begins with: "Prosecutors at Conrad Black's fraud trial didn't prove Hollinger International's former CFO helped the dethroned press baron scam shareholders by using the company plane to jet off to Bora Bora for a vacation, a judge ruled yesterday." It notes that Judge St. Eve has restricted the prosecution's closing argument, barring the linking of Mr. Boultbee to the Bora Bora trip.
5. Rick Westhead of the Toronto Star has written a lengthy recap of the trial, now that closing arguments are approaching.
6. A much briefer report by Mary Wisniewski on the restriction of count 10 has been webbed by the Chicago Sun-Times.
7. Paul Waldie's report has been webbed by the Globe and Mail. It starts off with a mention of the restriction, and continues by noting "The ruling could be a sign that the judge may drop more charges. When prosecutors rested their case on May 30, all defendants filed motions to have the charges against them dropped. Of all the motions, Judge St. Eve expressed an interest in Mr. Boultbee's issue and several charges against defendant Mark Kipnis. The judge has not said when she will make further rulings." It ends by noting that Judge St. Eve has disallowed the inclusion of "a so-called 'Pinkerton charge,'" which the prosecution has been asking for, on the grounds that it was inappropriate to this case. Had it been granted, it would have allowed the jury to hold "one party to a conspiracy... liable for acts committed by others in the conspiracy."
8. The Malaysia Sun also has webbed a brief item on the restriction of the charge.
Wednesday, June 13, 2007
The Verdict: Whittled Down Indictment
Tonight's episode of The Verdict had an entire segment on the restriction of count 10, with three guests on to discuss it. The first, interviewed one-on-one by Ms. Todd, was former prosecutor Ted Chung. The next two, interviewed as a pair, were journalists Margaret Wente and James Bone, both regular trial-watchers.
Ms. Todd started off by asking Csr. Chung if the jury will know about the dropped charges. He answered that there is a chance, depending on how much the jury remembers of the original charges (or how copiously they had taken notes during those times.) Ms. Todd then asked about the effect on the jury regarding Judge St. Eve's instructions to ignore some of the indictment - specifically, will the other charges seem more substantiated by comparison? Csr. Chung said that they won’t be told why, and will be instructed not to speculate on the reasons.
Regarding Mark Kipnis, Csr. Chung said that he has a chance of being acquitted outright. The granting of a motion to acquit is normally a rarity, but it is conceivable in Mr. Kipnis’ particular case.
Ms. Todd than asked what the effect of the narrowing of the scope of the closing argument will be. Csr. Chung replied that the prosecution can minimize the damage if they handled it “skillfully.”
He continued by noting that a short defense is the best defense in cases of this sort; in fact, he believes that the defense might have even been too lengthy. But the reasons for why doesn’t apply to the closing arguments! All of them are likely to be long, because they’re the last chances to reach the jury.
Regarding the relevant law, and the interpretation of it, the judge will deal with all relevant points in her instructions to the jury. It’s up to the lawyers to make those points of law understandable.
Ms. Todd then interviewed James Bone and Margaret Wente; both of them turned out to be assertive regarding their conclusions. Ms. Wente forecast that Mr. Black will probably be convicted of 1 or 2 minor charges, or walk entirely; he'll likely receive no more than a 2 year sentence. Mr. Bone objected, but Ms. Wente said that she was relating the consensus opinion of the trial-watchers. Mr. Bone then changed his objection to: why should Conrad Black get a light sentence when David Radler got 29 months after his plea bargain?
Ms. Wente answered to this by noting that there has been no backup documentation from Radler, but Mr. Bone pointed out there’s “evidence” in Conrad Black’s bank account. He added that Joan Maida was, in his estimation, very unconvincing as a defense witness. Ms. Wente pointed out that no additional evidence supposedly missing from those boxes was ever found. Mr. Bone averred that she was still a bad witness, especially with regard to her testimony about where Conrad Black was pointing to in the photo that shows him (at least evidently) pointing at the security camera. Ms. Wente then noted that the members of the audit committee had been bad witnesses. According to Mr. Bone, though, they merely showed previous inappropriate permissiveness. Ms. Wente mentioned that the jury made careful notes when the Osgoode Hall law professor had testified that non-compete payments to individuals were both legal and tax-free in Canada, which is inconsistent with a settled belief in Mr. Black's guilt.
Mr. Bone then gave his own call: Mr. Black will be convicted on the charges that pertain to the non-compete agreement that result from self-dealing. He's likely to get off on count 10. A conviction on the obstruction of justice charge is uncertain; it depends upon the judge’s relevant instructions to the jury.
[This episode of The Verdict will be broadbanded as of 10:30 pm tonight, and will stay up until about 10:30 PM or so tomorrow.]
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A side note: The segment just previous to the one described above, and Ms. Todd's "closing argument" editorial, dealt with that $54 million lawsuit by Judge Roy Pearson over a lost pair of pants by his dry cleaner. Leaving aside the degree (if any) of frivolity in that lawsuit, I note that the murky woods of Canadian penny-stock business have come up with a legal tool to make such lawsuits, whether meritorious or not, impracticable. This legal technic is the use of "buffer corporations" to insulate principals from lawsuits. Any such effort in America is likely to be more difficult due to deep-pockets permissiveness in civil actions, but the allowance of mega-lawsuits of that sort will prompt such a countermeasure in the business world.
Ms. Todd started off by asking Csr. Chung if the jury will know about the dropped charges. He answered that there is a chance, depending on how much the jury remembers of the original charges (or how copiously they had taken notes during those times.) Ms. Todd then asked about the effect on the jury regarding Judge St. Eve's instructions to ignore some of the indictment - specifically, will the other charges seem more substantiated by comparison? Csr. Chung said that they won’t be told why, and will be instructed not to speculate on the reasons.
Regarding Mark Kipnis, Csr. Chung said that he has a chance of being acquitted outright. The granting of a motion to acquit is normally a rarity, but it is conceivable in Mr. Kipnis’ particular case.
Ms. Todd than asked what the effect of the narrowing of the scope of the closing argument will be. Csr. Chung replied that the prosecution can minimize the damage if they handled it “skillfully.”
He continued by noting that a short defense is the best defense in cases of this sort; in fact, he believes that the defense might have even been too lengthy. But the reasons for why doesn’t apply to the closing arguments! All of them are likely to be long, because they’re the last chances to reach the jury.
Regarding the relevant law, and the interpretation of it, the judge will deal with all relevant points in her instructions to the jury. It’s up to the lawyers to make those points of law understandable.
Ms. Todd then interviewed James Bone and Margaret Wente; both of them turned out to be assertive regarding their conclusions. Ms. Wente forecast that Mr. Black will probably be convicted of 1 or 2 minor charges, or walk entirely; he'll likely receive no more than a 2 year sentence. Mr. Bone objected, but Ms. Wente said that she was relating the consensus opinion of the trial-watchers. Mr. Bone then changed his objection to: why should Conrad Black get a light sentence when David Radler got 29 months after his plea bargain?
Ms. Wente answered to this by noting that there has been no backup documentation from Radler, but Mr. Bone pointed out there’s “evidence” in Conrad Black’s bank account. He added that Joan Maida was, in his estimation, very unconvincing as a defense witness. Ms. Wente pointed out that no additional evidence supposedly missing from those boxes was ever found. Mr. Bone averred that she was still a bad witness, especially with regard to her testimony about where Conrad Black was pointing to in the photo that shows him (at least evidently) pointing at the security camera. Ms. Wente then noted that the members of the audit committee had been bad witnesses. According to Mr. Bone, though, they merely showed previous inappropriate permissiveness. Ms. Wente mentioned that the jury made careful notes when the Osgoode Hall law professor had testified that non-compete payments to individuals were both legal and tax-free in Canada, which is inconsistent with a settled belief in Mr. Black's guilt.
Mr. Bone then gave his own call: Mr. Black will be convicted on the charges that pertain to the non-compete agreement that result from self-dealing. He's likely to get off on count 10. A conviction on the obstruction of justice charge is uncertain; it depends upon the judge’s relevant instructions to the jury.
[This episode of The Verdict will be broadbanded as of 10:30 pm tonight, and will stay up until about 10:30 PM or so tomorrow.]
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A side note: The segment just previous to the one described above, and Ms. Todd's "closing argument" editorial, dealt with that $54 million lawsuit by Judge Roy Pearson over a lost pair of pants by his dry cleaner. Leaving aside the degree (if any) of frivolity in that lawsuit, I note that the murky woods of Canadian penny-stock business have come up with a legal tool to make such lawsuits, whether meritorious or not, impracticable. This legal technic is the use of "buffer corporations" to insulate principals from lawsuits. Any such effort in America is likely to be more difficult due to deep-pockets permissiveness in civil actions, but the allowance of mega-lawsuits of that sort will prompt such a countermeasure in the business world.
Jack Boultbee Gets A Break
According to a report by Mary Vallis, webbed by the Financial Post, that's who's the first beneficiary of a granted drop-charge motion. The specific charge dropped for Mr. Boultbee is count 10; Judge St. Eve concluded that there wasn't sufficient evidence "for the jury to conclude a crime occurred beyond a reasonable doubt." That count was only dropped for Mr. Boultbee in that ruling.
Paul Waldie has more details on this ruling, added into an earlier article webbed by the Globe and Mail. According to Mr. Waldie, a charge wasn't dropped; what was dropped was "an aspect of one charge against Lord Black and Mr. Boultbee. The charge related to allegations they misused company benefits including a Hollinger jet. Prosecutors alleged Mr. Boultbee played a role in Lord Black's use of the company jet to go to Bora Bora in July 2001. Lord Black billed part of the trip to Hollinger.... Judge St. Eve ruled that prosecutors have not proven that Mr. Boultbee played a role in how the trip was expensed." Mr. Boultbee still faces the same number of charges; this ruling mandates a constraint on the prosecution's closing arguments.
Mr. Waldie repeated the ‘aspect’ description in a BNN interview, aired at 2:36 PM ET. Regarding the role of Mr. Boultbee in approving the trip expense, it was pretty “peripheral,” but it wasn't with respect to the other expenses mentioned in Count 10. There was a three-hour meeting regarding jury instructions; the judge even needs to find a definition of a “related-party transaction” that's acceptable for jury instructions. Mr. Waldie also mentioned another of the defense's arguments to bar the ostrich instruction: it allows convictions for mere negligence. Judge St. Eve seemingly hasn’t ruled on the other defense motions, including the motions to acquit, as of yet.
Bloomberg has a write-up, written by Andrew Harris, on the same constraint imposition. Mr. Harris describes it as a dropped charge, but he does specify that Mr. Boultbee is not off the hook for that part of count 10 which deals with the purchase of the Manhattan apartment. Mr. Harris also reports that "Randall Samborn, a spokesman for Chicago U.S. Attorney Patrick Fitzgerald, declined to comment on St. Eve's ruling." The attorney for Mr. Boultbee, Patrick Tuite, also declined to comment.
The Associated Press's report, as webbed by the International Herald-Tribune, links the mandated constraint to the earlier testimony of Fred Creasey, which was supposed to implicate Mr. Boultbee in the Bora Bora part of count 10. It makes the same point that Mr. Waldie did: Judge St. Eve did not drop a full charge against Mr. Boultbee; she only lessened the scope of one. Near its end, it recounts the substance of the allegation in count 10 about the Manhattan apartment. [The version webbed by Forbes.com credits Mike Robinson explicitly.]
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Mark Steyn has written an entry in his Maclean's Conrad Black trial blog that was devoted to Mark Kipnis. In it, he concurs with Steve Skurka regarding the oddity of a regular middle-class guy paying about $800,000 for an expert witness to go through the documentation, but reaffirms that Mr. Kipnis will be acquitted, which (in Mr. Steyn's words) "will be small consolation for a victim of malicious prosecution whose life has been ruined."
Douglas Bell, in the Toronto Life Conrad Black trial blog, has an anecdote about the kidding that Alan Funk received outside the courtroom after his testimony was over. Several monickers were applied to him while there.
Rick Westhead of the Toronto Star has a feature on how long the jury is expected to deliberate, with a few precedents that yield a rough estimate of the time. (One angle that he didn't broach: does a short deliberation mean a likely acquittal?)
Tthe Brandon Sun has webbed a story about the Canadian authorities letting the U.S. Department of Justice doing the prosecuting for them, with this line of reasoning justifying it: if Conrad Black is convicted, then a Canadian prosecution would be superfluous; if he's acquitted, then a Canadian criminal-level case would be all but unwinnable. It mentions that the RCMP has already looked into the case and declined to press charges. The only possible exception to this refrainment would be a possible charge of tax evasion by the CRA. [This same story has been credited to Romina Maurino by 680 News.]
There's a second posting from Mr. Bell: an evocative depiction of Conrad Black in the courtroom these past two days.
Paul Waldie has more details on this ruling, added into an earlier article webbed by the Globe and Mail. According to Mr. Waldie, a charge wasn't dropped; what was dropped was "an aspect of one charge against Lord Black and Mr. Boultbee. The charge related to allegations they misused company benefits including a Hollinger jet. Prosecutors alleged Mr. Boultbee played a role in Lord Black's use of the company jet to go to Bora Bora in July 2001. Lord Black billed part of the trip to Hollinger.... Judge St. Eve ruled that prosecutors have not proven that Mr. Boultbee played a role in how the trip was expensed." Mr. Boultbee still faces the same number of charges; this ruling mandates a constraint on the prosecution's closing arguments.
Mr. Waldie repeated the ‘aspect’ description in a BNN interview, aired at 2:36 PM ET. Regarding the role of Mr. Boultbee in approving the trip expense, it was pretty “peripheral,” but it wasn't with respect to the other expenses mentioned in Count 10. There was a three-hour meeting regarding jury instructions; the judge even needs to find a definition of a “related-party transaction” that's acceptable for jury instructions. Mr. Waldie also mentioned another of the defense's arguments to bar the ostrich instruction: it allows convictions for mere negligence. Judge St. Eve seemingly hasn’t ruled on the other defense motions, including the motions to acquit, as of yet.
Bloomberg has a write-up, written by Andrew Harris, on the same constraint imposition. Mr. Harris describes it as a dropped charge, but he does specify that Mr. Boultbee is not off the hook for that part of count 10 which deals with the purchase of the Manhattan apartment. Mr. Harris also reports that "Randall Samborn, a spokesman for Chicago U.S. Attorney Patrick Fitzgerald, declined to comment on St. Eve's ruling." The attorney for Mr. Boultbee, Patrick Tuite, also declined to comment.
The Associated Press's report, as webbed by the International Herald-Tribune, links the mandated constraint to the earlier testimony of Fred Creasey, which was supposed to implicate Mr. Boultbee in the Bora Bora part of count 10. It makes the same point that Mr. Waldie did: Judge St. Eve did not drop a full charge against Mr. Boultbee; she only lessened the scope of one. Near its end, it recounts the substance of the allegation in count 10 about the Manhattan apartment. [The version webbed by Forbes.com credits Mike Robinson explicitly.]
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Mark Steyn has written an entry in his Maclean's Conrad Black trial blog that was devoted to Mark Kipnis. In it, he concurs with Steve Skurka regarding the oddity of a regular middle-class guy paying about $800,000 for an expert witness to go through the documentation, but reaffirms that Mr. Kipnis will be acquitted, which (in Mr. Steyn's words) "will be small consolation for a victim of malicious prosecution whose life has been ruined."
Douglas Bell, in the Toronto Life Conrad Black trial blog, has an anecdote about the kidding that Alan Funk received outside the courtroom after his testimony was over. Several monickers were applied to him while there.
Rick Westhead of the Toronto Star has a feature on how long the jury is expected to deliberate, with a few precedents that yield a rough estimate of the time. (One angle that he didn't broach: does a short deliberation mean a likely acquittal?)
Tthe Brandon Sun has webbed a story about the Canadian authorities letting the U.S. Department of Justice doing the prosecuting for them, with this line of reasoning justifying it: if Conrad Black is convicted, then a Canadian prosecution would be superfluous; if he's acquitted, then a Canadian criminal-level case would be all but unwinnable. It mentions that the RCMP has already looked into the case and declined to press charges. The only possible exception to this refrainment would be a possible charge of tax evasion by the CRA. [This same story has been credited to Romina Maurino by 680 News.]
There's a second posting from Mr. Bell: an evocative depiction of Conrad Black in the courtroom these past two days.
Media Roundup: Wrapping It Up (Defense Exit Without Self-Testimony)
The media reports, webbed overnight and this morning, on the Conrad Black trial centre on the end of the evidentiary part of the trial:
1. WQAD.com has webbed the AP summary of yesterday's trial, which mentions the defense resting.
2. The New York Times has webbed an excerpt of the Bloomberg report, which mentions the four defendants including Conrad Black himself, waiving their right to testify. It ends with a brief summary of Alan Funk's testimony under cross-examination.
3. Similar ground is covered by an abridgement of a Canadian Press report written by Romina Maurino, as webbed by the Hamilton Spectator. It also mentions that the waival of the right to testify on one's own behalf has sometimes hurt in high-profile white-collar crime cases. A slightly different version of this report, which describes Mr. Black as standing "ramrod-straight" when waiving his right to testify, has been webbed by the Calgary Sun; a summary of it has been webbed by the Vancouver Sun.
4. The Irish Examiner has a report that mentions the defense resting, along with a summary of the charges against Mr. Black and the three other defendants.
5. There's another corporate-governance controversy brewing, this time in the U.K., which is being compared to the Hollinger Int'l controversy according to a report webbed by Business Day of South Africa. The CEO and controlling shareholder of The Independent Group, Tony O'Reilly, has been lambasted by a report written by a U.K. corporate governance expert and member of Prime Minister Blair's economic-reform committee, Stephen Davis. This report was prepared for the benefit of a sizable minority shareholder, billionaire Denis O'Brien. It charges that the Independent Group has a crony board, while the Group has officially dismissed it as a "'paid-for partisan report commissioned by a shareholder with an agenda as yet unknown.'” The article recounting the battle also mentions that Mr. O'Reilly has an already-checkered record when it comes to independent boards. [The story of O'Reilly versus O'Brien has also been webbed by AllAfrica.com.]
6. Andrew Clark of the Guardian has written a report that briefly summarizes the entire testimony of Mr. Funk.
7. The First Post has webbed a report by Paul Waldie, which begins with a recount of the defense resting. It also has a follow-up on an earlier story by Mr. Waldie, the interview with ex-juror Sandra Grubar, noting that "[p]rosecutors brushed off the comments, claiming she'd missed key evidence."
8. A report by Mary Vallis has been webbed by the Vancouver Sun. Most of it reviews the testimony of Mr. Funk, both under direct and cross-examination.
9. Janet Whitman's latest report, webbed by the New York Post, begins with Mr. Black's waival, and adds that his lawyers were probably responsible for him not taking the stand. She also mentions Ms. Grubar's conclusion that the prosecution's case is too weak to merit a guilty verdict, as well as the fact that she had "missed crucial testimony."
10. Rick Westhead of the Toronto Star has a recap of both the defense resting and Mr. Funk's testimony, with an excerpt from the cross-examination of him.
11. A quite possibly related item has been webbed by the Chicago Sun-Times: Hollinger Inc. is asking for two seats on the board of directors of the Sun-Times Media Group. The board has pulled a demur so far, on the grounds of potential conflict of interest. (There's still a lawsuit pending against Mr. Black by STMG.)
12. The Sun-Times has also webbed a detailed recapping of Mr. Funk's testimony, which shows a more self-confident side to him under cross examination. "Funk, who often wore a bemused expression while getting grilled, called using non-compete agreements as a cover for fraud 'silly.' He called another contention by the prosecution 'a stretch.'" The report does mention that he conceded that he hadn't followed the case in trial.
13. Another report by Mr. Waldie, webbed by the Globe and Mail, discusses what's expected to take place in today's proceedings with the jury absent. The procecution has asked for an "ostrich instruction" to be added to those given to the jury, which permits the jury to use circumstantial evidence to convict. "The lawyers for Lord Black and the other defendants have filed motions to exclude it. They argue prosecutors have not put forward enough evidence to show that the defendants deliberately avoided the truth." Judge St. Eve is also expected to rule today on the motions to acquit, or Rule 29 motions, as well as motions to dismiss some charges.
14. The Age of Australia has webbed the Reuters report that focuses in on the defendants declining to testify.
1. WQAD.com has webbed the AP summary of yesterday's trial, which mentions the defense resting.
2. The New York Times has webbed an excerpt of the Bloomberg report, which mentions the four defendants including Conrad Black himself, waiving their right to testify. It ends with a brief summary of Alan Funk's testimony under cross-examination.
3. Similar ground is covered by an abridgement of a Canadian Press report written by Romina Maurino, as webbed by the Hamilton Spectator. It also mentions that the waival of the right to testify on one's own behalf has sometimes hurt in high-profile white-collar crime cases. A slightly different version of this report, which describes Mr. Black as standing "ramrod-straight" when waiving his right to testify, has been webbed by the Calgary Sun; a summary of it has been webbed by the Vancouver Sun.
4. The Irish Examiner has a report that mentions the defense resting, along with a summary of the charges against Mr. Black and the three other defendants.
5. There's another corporate-governance controversy brewing, this time in the U.K., which is being compared to the Hollinger Int'l controversy according to a report webbed by Business Day of South Africa. The CEO and controlling shareholder of The Independent Group, Tony O'Reilly, has been lambasted by a report written by a U.K. corporate governance expert and member of Prime Minister Blair's economic-reform committee, Stephen Davis. This report was prepared for the benefit of a sizable minority shareholder, billionaire Denis O'Brien. It charges that the Independent Group has a crony board, while the Group has officially dismissed it as a "'paid-for partisan report commissioned by a shareholder with an agenda as yet unknown.'” The article recounting the battle also mentions that Mr. O'Reilly has an already-checkered record when it comes to independent boards. [The story of O'Reilly versus O'Brien has also been webbed by AllAfrica.com.]
6. Andrew Clark of the Guardian has written a report that briefly summarizes the entire testimony of Mr. Funk.
7. The First Post has webbed a report by Paul Waldie, which begins with a recount of the defense resting. It also has a follow-up on an earlier story by Mr. Waldie, the interview with ex-juror Sandra Grubar, noting that "[p]rosecutors brushed off the comments, claiming she'd missed key evidence."
8. A report by Mary Vallis has been webbed by the Vancouver Sun. Most of it reviews the testimony of Mr. Funk, both under direct and cross-examination.
9. Janet Whitman's latest report, webbed by the New York Post, begins with Mr. Black's waival, and adds that his lawyers were probably responsible for him not taking the stand. She also mentions Ms. Grubar's conclusion that the prosecution's case is too weak to merit a guilty verdict, as well as the fact that she had "missed crucial testimony."
10. Rick Westhead of the Toronto Star has a recap of both the defense resting and Mr. Funk's testimony, with an excerpt from the cross-examination of him.
11. A quite possibly related item has been webbed by the Chicago Sun-Times: Hollinger Inc. is asking for two seats on the board of directors of the Sun-Times Media Group. The board has pulled a demur so far, on the grounds of potential conflict of interest. (There's still a lawsuit pending against Mr. Black by STMG.)
12. The Sun-Times has also webbed a detailed recapping of Mr. Funk's testimony, which shows a more self-confident side to him under cross examination. "Funk, who often wore a bemused expression while getting grilled, called using non-compete agreements as a cover for fraud 'silly.' He called another contention by the prosecution 'a stretch.'" The report does mention that he conceded that he hadn't followed the case in trial.
13. Another report by Mr. Waldie, webbed by the Globe and Mail, discusses what's expected to take place in today's proceedings with the jury absent. The procecution has asked for an "ostrich instruction" to be added to those given to the jury, which permits the jury to use circumstantial evidence to convict. "The lawyers for Lord Black and the other defendants have filed motions to exclude it. They argue prosecutors have not put forward enough evidence to show that the defendants deliberately avoided the truth." Judge St. Eve is also expected to rule today on the motions to acquit, or Rule 29 motions, as well as motions to dismiss some charges.
14. The Age of Australia has webbed the Reuters report that focuses in on the defendants declining to testify.
Tuesday, June 12, 2007
The Verdict: Last Call
Tonight's episode of The Verdict had a brief segment on Conrad Black's refusal to take the stand, and the end of the evidentiary part of the trial. The sole guest was Hugh Totten.
There was a relatively short defense, without Conrad Black testifying. His refrainment was expected. There was no reason for Mark Kipnis to take the stand either, so the other two had little reason to do so too. Eddie Greenspan believes that he has impugned the testimony of the key prosecution witnesses, so he focused on the peripheral charges against Mr. Black.
Ms. Todd asked if there will there be a conviction of anyone. Csr. Totten believes so; Mr. Kipnis will walk, but other three “have a tough road ahead of them.” Ms. Todd then brought up the obstruction of justice charge. Csr. Totten thought that Mr. Black's actions during May of 2005 did look suspicious. He added that the defense did little to challenge the buyers who testified for the prosecution that they didn’t ask for non-compete agreements with Hollinger Inc. or with any individuals (but instead went along with them.)
When asked by Ms. Todd if there was a parallel between Conrad Black and Martha Stewart, who got convicted largely because she didn't testify in her own defense, Csr. Totten replied that the jurors did hear the tapes of Conrad Black, showing him in a less-than-impressive light.
There was a relatively short defense, without Conrad Black testifying. His refrainment was expected. There was no reason for Mark Kipnis to take the stand either, so the other two had little reason to do so too. Eddie Greenspan believes that he has impugned the testimony of the key prosecution witnesses, so he focused on the peripheral charges against Mr. Black.
Ms. Todd asked if there will there be a conviction of anyone. Csr. Totten believes so; Mr. Kipnis will walk, but other three “have a tough road ahead of them.” Ms. Todd then brought up the obstruction of justice charge. Csr. Totten thought that Mr. Black's actions during May of 2005 did look suspicious. He added that the defense did little to challenge the buyers who testified for the prosecution that they didn’t ask for non-compete agreements with Hollinger Inc. or with any individuals (but instead went along with them.)
When asked by Ms. Todd if there was a parallel between Conrad Black and Martha Stewart, who got convicted largely because she didn't testify in her own defense, Csr. Totten replied that the jurors did hear the tapes of Conrad Black, showing him in a less-than-impressive light.
Cleanup Batters, Part 2
The first trial observer today with details on today's testimony is Mark Steyn. Two of today's entries in his Maclean's Conrad Black trial blog relate to what Christopher Paci was brought back to the stand to testify about: a conference call that Csr. Paci had had with the Audit Committee. He testified that "'the person I believed to be Governor Thompson on the conference call said the transactions had been approved.'" After Csr. Paci was excused a second time, the cross-examination of Alan Funk resumed. Jeffrey Cramer went after the amount of fees charged by Mr. Funk and his associates, "his son and his brother (an expert in 'international tax law')."
Paul Waldie has written a report, webbed by the Globe and Mail, that also covers the cross-examination of Mr. Funk. In addition to the size of the fees charged, "Mr. Cramer also went after Mr. Funk's conclusions, suggesting that he had not examined many key documents. Mr. Funk stood by his conclusions." It ends with two notes: the defense may not rest today; and, the prosecution may call a rebuttal witness.
Mr. Waldie, in an interview aired at 1:55 PM on BNN, said that the current exchange “sums up the entire case.” It’s the cross-examination of Mr. Funk by Csr. Cramer, in which Mr. Funk concurred that lying and misrepresenting can escape a paper trail but also insisted that the amount and kind of documentation by Hollinger Int'l is inconsistent with criminal fraud.
Romina Maurino's first report of the day, as webbed by 680 News, fleshes out that exchange mentioned by Mr. Waldie. When asked if fraud by top management was the most difficult to detect, Mr. Funk assented. When asked if inadequacy of doumentatiion could be evidence of fraud, though, Mr. Funk answered "'Hypothetically, yes,'... adding that there was too much disclosure by Hollinger in this case to suggest fraud."
The Financial Post has webbed a report by Mary Vallis, which has information about two issues relating to Mr. Funk's testimony. First of all, the prosecution plans to call an employee of KPMG as a rebuttal witness. Secondly, counsel for the other three defendants notified Judge St. Eve before the jury arrived, that they will not refer to Mr. Funk's testimony in their closing arguments. Only Ron Safer, counsel for Mark Kipnis, might do so.
The Bloomberg report, written by Andrew Harris and Bob Van Voris, has some excerpts from the cross-examination of Mr. Funk: "A company's top managers are in the best position to perpetrate a fraud, [Mr. Funk testified.]... 'Those are the best frauds,' Funk told prosecutor Jeffrey Cramer during cross-examination testing his court-certified expertise.... 'Sometimes the fraudsters are more clever than the auditors,' said Funk, who is also a former U.S. Federal Bureau of Investigation special agent."
Mr. Waldie, as webbed in the Globe and Mail, has also reported that the defense has rested. All four defendants have declined their right to testify. According to the report, that rebuttal witess is not expected to testify; tomorrow will be confined to legal arguments made to the judge. So, the expected rebuttal witness will evidently not be called after all. A report from the Canadian Press, webbed by 680 News, mentions the same items.
So does the Associated Press report written by Mike Robinson, as webbed by the Chicago Tribune. It also explicitly mentions that the prosecution's rebuttal witness was excused. At that point, Judge St. Eve explicitly announced that "'we are done with the evidentiary portion of this case.'" The rest of the report recaps highlights of the charges and the defense's answers to them.
The Reuters report, written by Andrew Stern, focuses on Conrad Black's denial of his right to testify. Now that Mr. Black's non-appearance of the witness stand is a certainty, the report also conveys the disappointment some felt at not seeing him take the stand.
CTV News has webbed an expanded Canadian Press report, which quotes legal expert Lee Dunst about the significance of the Conrad Black and the other defendants' decision not to testify. It ends with a summary of Mr. Funk's testimony, both under direct and cross-examination. The same report, explicitly credited to Romina Maurino, has been webbed by 680 News.
And finally, the defense's resting has made it onto Radio New Zealand.
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Editor and Publisher has a report on the latest Sun-Times Media Group annual meeting...which lasted thirty-five minutes. No shareholders' questions were asked at all.
Douglas Bell, in the Toronto Life Conrad Black trial blog, has written an eyewitness account of yesterday's session at the trial, including the revelation of the threat E-mail. He says that John O'Sullivan had taken "a serious pasting on cross-examination."
From the "Black Board," Mary Vallis reports on the gremlins in and surrounding the courtroom, especially the ones clustering around the court projector.
Paul Waldie has written a report, webbed by the Globe and Mail, that also covers the cross-examination of Mr. Funk. In addition to the size of the fees charged, "Mr. Cramer also went after Mr. Funk's conclusions, suggesting that he had not examined many key documents. Mr. Funk stood by his conclusions." It ends with two notes: the defense may not rest today; and, the prosecution may call a rebuttal witness.
Mr. Waldie, in an interview aired at 1:55 PM on BNN, said that the current exchange “sums up the entire case.” It’s the cross-examination of Mr. Funk by Csr. Cramer, in which Mr. Funk concurred that lying and misrepresenting can escape a paper trail but also insisted that the amount and kind of documentation by Hollinger Int'l is inconsistent with criminal fraud.
Romina Maurino's first report of the day, as webbed by 680 News, fleshes out that exchange mentioned by Mr. Waldie. When asked if fraud by top management was the most difficult to detect, Mr. Funk assented. When asked if inadequacy of doumentatiion could be evidence of fraud, though, Mr. Funk answered "'Hypothetically, yes,'... adding that there was too much disclosure by Hollinger in this case to suggest fraud."
The Financial Post has webbed a report by Mary Vallis, which has information about two issues relating to Mr. Funk's testimony. First of all, the prosecution plans to call an employee of KPMG as a rebuttal witness. Secondly, counsel for the other three defendants notified Judge St. Eve before the jury arrived, that they will not refer to Mr. Funk's testimony in their closing arguments. Only Ron Safer, counsel for Mark Kipnis, might do so.
The Bloomberg report, written by Andrew Harris and Bob Van Voris, has some excerpts from the cross-examination of Mr. Funk: "A company's top managers are in the best position to perpetrate a fraud, [Mr. Funk testified.]... 'Those are the best frauds,' Funk told prosecutor Jeffrey Cramer during cross-examination testing his court-certified expertise.... 'Sometimes the fraudsters are more clever than the auditors,' said Funk, who is also a former U.S. Federal Bureau of Investigation special agent."
Mr. Waldie, as webbed in the Globe and Mail, has also reported that the defense has rested. All four defendants have declined their right to testify. According to the report, that rebuttal witess is not expected to testify; tomorrow will be confined to legal arguments made to the judge. So, the expected rebuttal witness will evidently not be called after all. A report from the Canadian Press, webbed by 680 News, mentions the same items.
So does the Associated Press report written by Mike Robinson, as webbed by the Chicago Tribune. It also explicitly mentions that the prosecution's rebuttal witness was excused. At that point, Judge St. Eve explicitly announced that "'we are done with the evidentiary portion of this case.'" The rest of the report recaps highlights of the charges and the defense's answers to them.
The Reuters report, written by Andrew Stern, focuses on Conrad Black's denial of his right to testify. Now that Mr. Black's non-appearance of the witness stand is a certainty, the report also conveys the disappointment some felt at not seeing him take the stand.
CTV News has webbed an expanded Canadian Press report, which quotes legal expert Lee Dunst about the significance of the Conrad Black and the other defendants' decision not to testify. It ends with a summary of Mr. Funk's testimony, both under direct and cross-examination. The same report, explicitly credited to Romina Maurino, has been webbed by 680 News.
And finally, the defense's resting has made it onto Radio New Zealand.
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Editor and Publisher has a report on the latest Sun-Times Media Group annual meeting...which lasted thirty-five minutes. No shareholders' questions were asked at all.
Douglas Bell, in the Toronto Life Conrad Black trial blog, has written an eyewitness account of yesterday's session at the trial, including the revelation of the threat E-mail. He says that John O'Sullivan had taken "a serious pasting on cross-examination."
From the "Black Board," Mary Vallis reports on the gremlins in and surrounding the courtroom, especially the ones clustering around the court projector.
Media Roundup: Wrapping It Up (Plot's Turn)
The media reports, webbed overnight and this morning, on the Conrad Black trial have three focal points: the testimony of Alan Funk; the previous testimony of John O'Sullivan; and, the threatening E-mail introduced into evidence yesterday:
1. The report by David Litterick of the Telegraph is entitled "Lord Black juror says evidence 'is pretty shaky'."
2. An updated Bloomberg report centres on the testimony of Alan Funk, a forensic accountant and former FBI agent. "Kipnis' lawyer, Michael Schwarz,... questioned Funk about his review of records kept by Hollinger's outside auditor, KPMG LLP. Schwarz also asked Funk about his review of witness interview notes compiled by the FBI and the U.S. Internal Revenue Service and his observation of seven other witnesses at the trial." Mr. Funk testified that the way Hollinger International was run, especially its heavy reliance upon outside accounting staff, is inconsistent with the operation of a company that is trying to cover up fraud. He did, however, stipulate under cross-examination by Jeffrey Cramer that it is "sometimes necessary to 'go beyond the paper trail' to determine whether there is fraud." The rest of the report summarizes the completed testimony of John O'Sullivan and the testimony of Laurent Weisel, one of Conrad Black's lawyers, who said that he and his colleagues had answered four SEC requests for documents back in 2003 and '04, without even the appearance of justice obstruction.
3. An anecdote revolving around Judge St. Eve's demand for punctuality is the first item of two in Patricia Best's latest "Nobody's Business" column in the Globe and Mail. [The anecdote's also been blogged.]
4. A report by Ameet Sachdev of the Chicago Tribune reviews all of yesterday's testimony and evidence, including that threatening E-mail written by "Brent Herbert."
5. The Vancouver Province has webbed an excerpt of the Bloomberg report, which focuses on the testimony of Mr. O'Sullivan and ends with a mention of Csr. Weisel's.
6. Mary Vallis' latest report, webbed by the National Post, begins with more details on the threatening E-mail, which was actually addressed to Richard Perle although the threat was meant for Mr. Black himself. The "second" E-mail was a forwarded copy of the threat with an added note by Mr. Perle recommending that it be forwarded to the London police. The rest of the report recaps Mr. O'Sullivan's testimony, mentioning that Conrad Black had put Mr. Sullivan up in his residence for approx. 18 months, and it goes into detail about Mr. Funk's on page 2. His testimony is described as "slow and at times labourious. Several jurors repeatedly glanced at the clock, while others closed their eyes at times during Mr. Funk's testimony." The report ends with three questions asked by Csr. Cramer under cross examination. Two of them, Mr. Funk answered "'yes'" to; the third, "'Whether or not the buyers required the non-compete agreements, you'd agree with me that might be relevant?'", Mr Funk answered "'No.'"
7. A write-up from the Canadian Press, webbed by CBC News, mentions that the cross-examination of Mr. Funk will continue today, and that the defense should call a few more witnesses, "but none of the remaining witnesses will take more than 30 minutes each."
8. An opinion piece by Lisa Kate Osofsky, webbed by the Times Online, advocates the introduction of plea bargaining for serious fraud cases in the U.K.
9. An abridged version of Ms. Vallis' report has been webbed by the Vancouver Sun. It focuses upon the threatening E-mail and Mr. O'Sullivan's testimony.
10. A report by Rick Westhead of the Toronto Star is entitled "Death threat by 'prophet' spurs laughter." Near its end, it mentions some of the items that were in the 13 boxes: "On the list [of their contents] were Black's correspondence with Toronto Cardinal Aloysius Ambrozic, photos, work papers and a copy of a non-compete agreement signed by Black in 2000. Personal effects such as Black's Air Miles statements and insurance papers for Amiel's jewellery were also included." A sidebar on Mr. Funk's testimony reveals that he testified that he had gone through about 400,000 pages of KPMG work-paper documents.
11. Paul Waldie's first report of the day, webbed by the Globe and Mail, focuses on the threatening E-mail, mentioning that it was brought in to counter suggestions by the prosecution that Mr. Black's security worries didn't begin until 2003. It also mentions the introduction of the 13 boxes' content list into evidence by Csr. Genson.
12. The latest from Mary Wisniewski of the Chicago Sun-Times centres on the testimony of Mr. O'Sullivan, and notes that what he said on the stand "contradicted claims by prosecution witnesses that the December 2000 surprise party for Black's wife was just a party without a business purpose." At its end, it mentions the testimony of Mr. Funk.
13. The second report by Mr. Waldie, also webbed by the Globe, has an itinerary of the rest of the trial. Once the defense witnesses are done with - the report mentions two of them by name - Judge St. Eve will formally ask each of the defendants if they want to testify in their own defense. Closing arguments will begin next Monday. Slated for each are: Julie Ruder, for the prosecution; Csr. Genson, for Conrad Black; "followed likely by Patrick Tuite for Mr. Boultbee, Benito Romano for Mr. Atkinson and Ronald Safer for Mr. Kipnis." Then comes the rebuttal from the prosecution and instructions to the jury.
14. An excerpt from the same Bloomberg report has been webbed by the Melbourne Herald-Sun. It focuses upon the testimony of Mr. Funk.
1. The report by David Litterick of the Telegraph is entitled "Lord Black juror says evidence 'is pretty shaky'."
2. An updated Bloomberg report centres on the testimony of Alan Funk, a forensic accountant and former FBI agent. "Kipnis' lawyer, Michael Schwarz,... questioned Funk about his review of records kept by Hollinger's outside auditor, KPMG LLP. Schwarz also asked Funk about his review of witness interview notes compiled by the FBI and the U.S. Internal Revenue Service and his observation of seven other witnesses at the trial." Mr. Funk testified that the way Hollinger International was run, especially its heavy reliance upon outside accounting staff, is inconsistent with the operation of a company that is trying to cover up fraud. He did, however, stipulate under cross-examination by Jeffrey Cramer that it is "sometimes necessary to 'go beyond the paper trail' to determine whether there is fraud." The rest of the report summarizes the completed testimony of John O'Sullivan and the testimony of Laurent Weisel, one of Conrad Black's lawyers, who said that he and his colleagues had answered four SEC requests for documents back in 2003 and '04, without even the appearance of justice obstruction.
3. An anecdote revolving around Judge St. Eve's demand for punctuality is the first item of two in Patricia Best's latest "Nobody's Business" column in the Globe and Mail. [The anecdote's also been blogged.]
4. A report by Ameet Sachdev of the Chicago Tribune reviews all of yesterday's testimony and evidence, including that threatening E-mail written by "Brent Herbert."
5. The Vancouver Province has webbed an excerpt of the Bloomberg report, which focuses on the testimony of Mr. O'Sullivan and ends with a mention of Csr. Weisel's.
6. Mary Vallis' latest report, webbed by the National Post, begins with more details on the threatening E-mail, which was actually addressed to Richard Perle although the threat was meant for Mr. Black himself. The "second" E-mail was a forwarded copy of the threat with an added note by Mr. Perle recommending that it be forwarded to the London police. The rest of the report recaps Mr. O'Sullivan's testimony, mentioning that Conrad Black had put Mr. Sullivan up in his residence for approx. 18 months, and it goes into detail about Mr. Funk's on page 2. His testimony is described as "slow and at times labourious. Several jurors repeatedly glanced at the clock, while others closed their eyes at times during Mr. Funk's testimony." The report ends with three questions asked by Csr. Cramer under cross examination. Two of them, Mr. Funk answered "'yes'" to; the third, "'Whether or not the buyers required the non-compete agreements, you'd agree with me that might be relevant?'", Mr Funk answered "'No.'"
7. A write-up from the Canadian Press, webbed by CBC News, mentions that the cross-examination of Mr. Funk will continue today, and that the defense should call a few more witnesses, "but none of the remaining witnesses will take more than 30 minutes each."
8. An opinion piece by Lisa Kate Osofsky, webbed by the Times Online, advocates the introduction of plea bargaining for serious fraud cases in the U.K.
9. An abridged version of Ms. Vallis' report has been webbed by the Vancouver Sun. It focuses upon the threatening E-mail and Mr. O'Sullivan's testimony.
10. A report by Rick Westhead of the Toronto Star is entitled "Death threat by 'prophet' spurs laughter." Near its end, it mentions some of the items that were in the 13 boxes: "On the list [of their contents] were Black's correspondence with Toronto Cardinal Aloysius Ambrozic, photos, work papers and a copy of a non-compete agreement signed by Black in 2000. Personal effects such as Black's Air Miles statements and insurance papers for Amiel's jewellery were also included." A sidebar on Mr. Funk's testimony reveals that he testified that he had gone through about 400,000 pages of KPMG work-paper documents.
11. Paul Waldie's first report of the day, webbed by the Globe and Mail, focuses on the threatening E-mail, mentioning that it was brought in to counter suggestions by the prosecution that Mr. Black's security worries didn't begin until 2003. It also mentions the introduction of the 13 boxes' content list into evidence by Csr. Genson.
12. The latest from Mary Wisniewski of the Chicago Sun-Times centres on the testimony of Mr. O'Sullivan, and notes that what he said on the stand "contradicted claims by prosecution witnesses that the December 2000 surprise party for Black's wife was just a party without a business purpose." At its end, it mentions the testimony of Mr. Funk.
13. The second report by Mr. Waldie, also webbed by the Globe, has an itinerary of the rest of the trial. Once the defense witnesses are done with - the report mentions two of them by name - Judge St. Eve will formally ask each of the defendants if they want to testify in their own defense. Closing arguments will begin next Monday. Slated for each are: Julie Ruder, for the prosecution; Csr. Genson, for Conrad Black; "followed likely by Patrick Tuite for Mr. Boultbee, Benito Romano for Mr. Atkinson and Ronald Safer for Mr. Kipnis." Then comes the rebuttal from the prosecution and instructions to the jury.
14. An excerpt from the same Bloomberg report has been webbed by the Melbourne Herald-Sun. It focuses upon the testimony of Mr. Funk.
Monday, June 11, 2007
The Verdict: The Juror's Tale
Tonight's episode of The Verdict had a brief segment on what excused juror Sandra Grubar had to say, and what it implies for the outcome of the Conrad Black trial. The two guests were Paul Waldie and Steve Skurka. Mr. Waldie was the reporter who had interviewed the ex-juror.
He said that she was excused to look after her sick father, who has since recovered; she’s been trial-watching ever since. She wasn’t convinced by the prosecution’s key witnesses while she was empanelled. Since she was excused, though, she has seen some evidence from the prosecution that was “more compelling.” She didn't see the testimony of David Radler and most of the audit committee. Despite her skepticism towards the prosecution's case, she did like the prosecution's opening statement.
Csr. Skurka added that the impression she conveys may be misleading. She may be like the excused juror from the Scott Peterson case: that juror had also said that the prosecution's case was “not convincing,” but Mr. Peterson was convicted anyway. Trial observers can’t read too much into Ms. Grubar's interview.
Mr. Waldie noted that Eddie Greespan had to give up his favourite in-depth cross-examinational style due to differing court procedure rules and conventions. Csr. Skurka mentioned that Csr. Greenspan didn’t cross-examine that much during Ms. Grubar's sitting time. Mr. Waldie informed him that she was empanelled during Csr. Greenspan's cross-examinations of Gordon Paris and Fred Creasey. As far as the closing argument for Conrad Black's defense is concerned, Mr. Waldie continued, Edward Genson will probably deliver it because it was he who had given the opening argument.
Ms. Grubar's report on the other jurors was important too. The jury isn’t all blue collar; some are middle managers. Not all are from the city itself; some are from Chicago suburbs. They're middle class. They also understand what the issues and “business concepts” are.
Regarding the wealth/class factor: she said that the lavish-lifestyle argument of the prosecution wasn't convincing. On the other hand, she said that Mark Kipnis is the most likable of all the defendants, and is the most like them. He's the most down-to-earth.
[This episode of The Verdict will be broadbanded as of 10:30 pm tonight, and will stay up until about 10:30 PM or so tomorrow.]
He said that she was excused to look after her sick father, who has since recovered; she’s been trial-watching ever since. She wasn’t convinced by the prosecution’s key witnesses while she was empanelled. Since she was excused, though, she has seen some evidence from the prosecution that was “more compelling.” She didn't see the testimony of David Radler and most of the audit committee. Despite her skepticism towards the prosecution's case, she did like the prosecution's opening statement.
Csr. Skurka added that the impression she conveys may be misleading. She may be like the excused juror from the Scott Peterson case: that juror had also said that the prosecution's case was “not convincing,” but Mr. Peterson was convicted anyway. Trial observers can’t read too much into Ms. Grubar's interview.
Mr. Waldie noted that Eddie Greespan had to give up his favourite in-depth cross-examinational style due to differing court procedure rules and conventions. Csr. Skurka mentioned that Csr. Greenspan didn’t cross-examine that much during Ms. Grubar's sitting time. Mr. Waldie informed him that she was empanelled during Csr. Greenspan's cross-examinations of Gordon Paris and Fred Creasey. As far as the closing argument for Conrad Black's defense is concerned, Mr. Waldie continued, Edward Genson will probably deliver it because it was he who had given the opening argument.
Ms. Grubar's report on the other jurors was important too. The jury isn’t all blue collar; some are middle managers. Not all are from the city itself; some are from Chicago suburbs. They're middle class. They also understand what the issues and “business concepts” are.
Regarding the wealth/class factor: she said that the lavish-lifestyle argument of the prosecution wasn't convincing. On the other hand, she said that Mark Kipnis is the most likable of all the defendants, and is the most like them. He's the most down-to-earth.
[This episode of The Verdict will be broadbanded as of 10:30 pm tonight, and will stay up until about 10:30 PM or so tomorrow.]
Cleanup Batters, Part 1
The testimony of the first witness of the week has been disclosed in a report written by Romina Maurino and webbed by the Toronto Star. That witness was journalist John O'Sullivan, who testified that "[a] posh birthday party for Conrad Black's wife was really a business event 'masquerading' as a social gathering and was not unlike other Hollinger International dinners... O'Sullivan, who has known the Black family for more than 20 years, said he attended the dinner and considered it a 'business event masquerading as a social occasion.'" To back this opinion up, he noted that two of the prominent guests were not personal friends of the Blacks.
Paul Waldie added to the above in a BNN interview, aired at 1:55 PM. He reported that Edward Genson had shown some documents to the court before John O'Sullivan began his testimony. Entered into evidence was a death threat that Conrad Black had received in July 1999. An E-mail from Richard Perle, which had warned Mr. Black to get in touch with the U.K. police about it, was also entered. These two E-mails are related to Conrad Black's claim that he had used the Hollinger International corporate jet largely for security purposes. After testifying about the business nature of the birthday party, Mr. O’Sullivan admitted that he didn’t know the details of how it was planned. This afternoon, forensic auditor and former FBI agent Alan Funk is expected to take the stand; Mr. Funk looks like the last witness. With regard to his article about the ex-juror's belief that the defendants are not guilty, Mr. Waldie noted that she did miss most of the testimony as a juror, including David Radler's. She's been watching the trial subsequently, though, and still has doubts.
An updated version of Ms. Romino's report, webbed by Canada East Online, has an excerpt from the cross-examination of Mr. O'Sullivan by Eric Sussman. "Lead prosecutor Eric Sussman tried to portray O'Sullivan as a biased witness, suggesting he owed Black 'a debt of gratitude' after the mogul helped him secure a position as editor-at-large of the National Review magazine." Mr. O'Sullivan disagreed with the suggestion that an investment by Mr. Black in National Review was a disguised payoff to get him the job. The report also has a few excerpts from that threatening E-mail.
A Bloomberg report on Mr. O'Sullivan's testimony, written by Bob Van Voris and Andrew Harris, has also been webbed. It confirms that "O'Sullivan... testified that the primary purpose of Barbara Amiel Black's birthday party was business networking." Also contained in it is a brief profile of Mr. O'Sullivan.
So has a Reuters report, written by Andrew Stern. It has more details on the cross-examination of Mr. O'Sullivan: Csr. Sussman suggested that Mr. Black had been quite the patron to this defense witness. In addition to Mr. Black putting Mr. O'Sullivan in as an opinion page advisor to the National Post, a $400,000 investment in the National Interest magazine had accompanied Mr. O'Sullivan's appointment as editor-in-chief. "To make his point, Sussman read what he said was a memo from National Interest publisher Irving Kristol prior to O'Sullivan's appointment at the journal, explaining that he didn't want O'Sullivan to work there." Until, Csr. Sussman added, that investment had been made. Mr. O'Sullivan countered that the Nixon Center had bought a half-interest, and that National Interest executives had "'asked me to become editor.'"
Mary Vallis' report, webbed by the Financial Post, says that Mr. O'Connor testified, under direct examination by Eddie Greenspan, that "several of the attendees at the December 2000 event were not close friends of the Blacks... He also agreed that 11 of 14 members of Hollinger International Inc.'s board were in attendance." It also contains a courtroom joke about the threatening E-mail introduced as evidence this morning. [I got the link to this article through the National Post's blog "Posted."]
A third version of Ms. Maurino's report, webbed by 570 News, has details on Mr. Funk's testimony, given under direct examination, at its end. He testified that "he didn't find any evidence of fraud when reviewing documents used by auditors KPMG in an investigation of deals that involved non-compete payments." In fact, he testified that the disclosure he saw was inconsistent with a pattern of fraud. "He also testified he did not find any evidence of shredded or doctored documents, or of 'cooked books.'"
More of Mr. Funk's testimony has been added to an updated version of the Reuters report, starting on page 2 of it. He stated while on the stand that "'[a]ll the essential information was disclosed to the auditors,'... Funk said he based his findings on watching parts of the trial and his review of documents including internal working papers of Hollinger's auditors, KPMG." He also disclosed that he had billed $425/hour for his forensic work.
There's more excerpted from that threatening E-mail in Ms. Maurino's third revision of her report, as webbed by 680 News: "'Money. Power. It all comes to nothing,' the e-mail read [in part.] 'And how do these rich people do it - so gosh damned happy all the time? Mr. Black has never learned that dark art, and if he hasn't learned it by now, he probably never will, which is great news, at least from the point of view of this prophet.'"
And finally, James Bone of the Times Online provides a recap of all the day's trial events, including a mention of Sandra Grubar.
----------
Mark Steyn is back on the "Jim (the Skim) Thompson" theme in his Maclean's Conrad Black trial blog. After subjecting Jeffrey Cramer's opening statement to methodical mockery which cumulates with "when you need an unwitting front man for your conspiracy they don't come any dumber than a former federal prosecutor," he concludes, "[t]he reality is: The Skimmer signed off on everything. He always did. Maybe, from the vantage of 2007, he shouldn't have. But at the time he did. End of story."
In a rare moment of harmonization, Douglas Bell, in the Toronto Life Conrad Black trial blog, says that Mr. Waldie's report, at a minimum, "bodes well for the defence." The regular Toronto Life day poll, asking "Based on today's evidence, I think Conrad Black is Guilty/Not Guilty," squares with his latest post. As of 4:50 PM ET, it's running 2 to 1 in favour of "Not Guilty." That's the most pro-defense result I've seen so far from it.
An old article, dated May 4, that was webbed by The Lawyers Weekly discussed the fallout for Torys, LLP as a result of two of their lawyers being dragged into the Conrad Black trial. It concludes that there will be none after the dust settles. Steve Skura is one of the lawyers quoted in it.
Csr. Skurka himself has some comments on the trial in an entry posted today in his blog "The Crime Sheet." They come after his description of a code of honour in the Canadian legal profession (or calling) that treats an oral agreement with the same seriousness as a written contract, a tradition that makes such contracts normally superfluous. He points out that the reason explaining why Mark Kipnis is the only defendant to call a character witness is that such a maneuver allows the prosecution to call rebuttal witnesses; Mark Kipnis is the only defendant with none.
Paul Waldie added to the above in a BNN interview, aired at 1:55 PM. He reported that Edward Genson had shown some documents to the court before John O'Sullivan began his testimony. Entered into evidence was a death threat that Conrad Black had received in July 1999. An E-mail from Richard Perle, which had warned Mr. Black to get in touch with the U.K. police about it, was also entered. These two E-mails are related to Conrad Black's claim that he had used the Hollinger International corporate jet largely for security purposes. After testifying about the business nature of the birthday party, Mr. O’Sullivan admitted that he didn’t know the details of how it was planned. This afternoon, forensic auditor and former FBI agent Alan Funk is expected to take the stand; Mr. Funk looks like the last witness. With regard to his article about the ex-juror's belief that the defendants are not guilty, Mr. Waldie noted that she did miss most of the testimony as a juror, including David Radler's. She's been watching the trial subsequently, though, and still has doubts.
An updated version of Ms. Romino's report, webbed by Canada East Online, has an excerpt from the cross-examination of Mr. O'Sullivan by Eric Sussman. "Lead prosecutor Eric Sussman tried to portray O'Sullivan as a biased witness, suggesting he owed Black 'a debt of gratitude' after the mogul helped him secure a position as editor-at-large of the National Review magazine." Mr. O'Sullivan disagreed with the suggestion that an investment by Mr. Black in National Review was a disguised payoff to get him the job. The report also has a few excerpts from that threatening E-mail.
A Bloomberg report on Mr. O'Sullivan's testimony, written by Bob Van Voris and Andrew Harris, has also been webbed. It confirms that "O'Sullivan... testified that the primary purpose of Barbara Amiel Black's birthday party was business networking." Also contained in it is a brief profile of Mr. O'Sullivan.
So has a Reuters report, written by Andrew Stern. It has more details on the cross-examination of Mr. O'Sullivan: Csr. Sussman suggested that Mr. Black had been quite the patron to this defense witness. In addition to Mr. Black putting Mr. O'Sullivan in as an opinion page advisor to the National Post, a $400,000 investment in the National Interest magazine had accompanied Mr. O'Sullivan's appointment as editor-in-chief. "To make his point, Sussman read what he said was a memo from National Interest publisher Irving Kristol prior to O'Sullivan's appointment at the journal, explaining that he didn't want O'Sullivan to work there." Until, Csr. Sussman added, that investment had been made. Mr. O'Sullivan countered that the Nixon Center had bought a half-interest, and that National Interest executives had "'asked me to become editor.'"
Mary Vallis' report, webbed by the Financial Post, says that Mr. O'Connor testified, under direct examination by Eddie Greenspan, that "several of the attendees at the December 2000 event were not close friends of the Blacks... He also agreed that 11 of 14 members of Hollinger International Inc.'s board were in attendance." It also contains a courtroom joke about the threatening E-mail introduced as evidence this morning. [I got the link to this article through the National Post's blog "Posted."]
A third version of Ms. Maurino's report, webbed by 570 News, has details on Mr. Funk's testimony, given under direct examination, at its end. He testified that "he didn't find any evidence of fraud when reviewing documents used by auditors KPMG in an investigation of deals that involved non-compete payments." In fact, he testified that the disclosure he saw was inconsistent with a pattern of fraud. "He also testified he did not find any evidence of shredded or doctored documents, or of 'cooked books.'"
More of Mr. Funk's testimony has been added to an updated version of the Reuters report, starting on page 2 of it. He stated while on the stand that "'[a]ll the essential information was disclosed to the auditors,'... Funk said he based his findings on watching parts of the trial and his review of documents including internal working papers of Hollinger's auditors, KPMG." He also disclosed that he had billed $425/hour for his forensic work.
There's more excerpted from that threatening E-mail in Ms. Maurino's third revision of her report, as webbed by 680 News: "'Money. Power. It all comes to nothing,' the e-mail read [in part.] 'And how do these rich people do it - so gosh damned happy all the time? Mr. Black has never learned that dark art, and if he hasn't learned it by now, he probably never will, which is great news, at least from the point of view of this prophet.'"
And finally, James Bone of the Times Online provides a recap of all the day's trial events, including a mention of Sandra Grubar.
----------
Mark Steyn is back on the "Jim (the Skim) Thompson" theme in his Maclean's Conrad Black trial blog. After subjecting Jeffrey Cramer's opening statement to methodical mockery which cumulates with "when you need an unwitting front man for your conspiracy they don't come any dumber than a former federal prosecutor," he concludes, "[t]he reality is: The Skimmer signed off on everything. He always did. Maybe, from the vantage of 2007, he shouldn't have. But at the time he did. End of story."
In a rare moment of harmonization, Douglas Bell, in the Toronto Life Conrad Black trial blog, says that Mr. Waldie's report, at a minimum, "bodes well for the defence." The regular Toronto Life day poll, asking "Based on today's evidence, I think Conrad Black is Guilty/Not Guilty," squares with his latest post. As of 4:50 PM ET, it's running 2 to 1 in favour of "Not Guilty." That's the most pro-defense result I've seen so far from it.
An old article, dated May 4, that was webbed by The Lawyers Weekly discussed the fallout for Torys, LLP as a result of two of their lawyers being dragged into the Conrad Black trial. It concludes that there will be none after the dust settles. Steve Skura is one of the lawyers quoted in it.
Csr. Skurka himself has some comments on the trial in an entry posted today in his blog "The Crime Sheet." They come after his description of a code of honour in the Canadian legal profession (or calling) that treats an oral agreement with the same seriousness as a written contract, a tradition that makes such contracts normally superfluous. He points out that the reason explaining why Mark Kipnis is the only defendant to call a character witness is that such a maneuver allows the prosecution to call rebuttal witnesses; Mark Kipnis is the only defendant with none.
Media Roundup: Recapping and Handicapping
The media reports, webbed overnight and this morning, on the Conrad Black trial are moving into speculation on what the outcome will be:
1. Paul Waldie has a scoop from an ex-juror, as webbed by the Globe and Mail. It comes from an interview with that former juror, Sandra Gruber, who was excused four weeks after the trial started back in April. Ms. Gruber "says she didn't see enough evidence to convict Lord Black during her time at the trial.... 'I just never thought he would be found guilty,' Ms. Grubar said in [that] interview. The case 'was pretty shaky.'" The rest of the interview deals with why she reached the decision she did, her impressions of the lawyers, and a debunking of the outside impression that the case is too complex for the jury to understand. [This same story has also been picked up by CTV News.]
2. From the "Business English" section of the Financial Times Deutchland, a column that says Conrad Black's justification for the party as in part a business expense is plausible because "schmooze parties" tend to work for the ambitious.
3. The Vancouver Sun has webbed a CP forecast that anticipates the defense resting "by mid-week." Closing arguments are scheduled to begin next Monday.
4. The Calgary Sun has webbed an abridged CP report, written by Romina Maurino, which reviews the course of the trial so far after quoting one expert, Rick Powers, to the effect that it's "very unlikely" that Conrad Black will see the inside of a jail after the trial is over.
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Bloomberg has a review of Mr. Black's latest book, Invincible Quest: the Life of Richard Milhous Nixon, written by Charles Trueheart. According to Mr. Trueheart, the biography is exhaustive and very thoroughly researched. Written in "muscular, allusive, witty and often pungent prose, Black vividly paints Nixon's determination and wile, his resilience and uncanny ability to surmount deep character flaws to succeed in a vocation that is usually merciless to introverts." Mr. Truehart, though, finds a fault, in the book trying too hard to be balanced.
1. Paul Waldie has a scoop from an ex-juror, as webbed by the Globe and Mail. It comes from an interview with that former juror, Sandra Gruber, who was excused four weeks after the trial started back in April. Ms. Gruber "says she didn't see enough evidence to convict Lord Black during her time at the trial.... 'I just never thought he would be found guilty,' Ms. Grubar said in [that] interview. The case 'was pretty shaky.'" The rest of the interview deals with why she reached the decision she did, her impressions of the lawyers, and a debunking of the outside impression that the case is too complex for the jury to understand. [This same story has also been picked up by CTV News.]
2. From the "Business English" section of the Financial Times Deutchland, a column that says Conrad Black's justification for the party as in part a business expense is plausible because "schmooze parties" tend to work for the ambitious.
3. The Vancouver Sun has webbed a CP forecast that anticipates the defense resting "by mid-week." Closing arguments are scheduled to begin next Monday.
4. The Calgary Sun has webbed an abridged CP report, written by Romina Maurino, which reviews the course of the trial so far after quoting one expert, Rick Powers, to the effect that it's "very unlikely" that Conrad Black will see the inside of a jail after the trial is over.
----------
Bloomberg has a review of Mr. Black's latest book, Invincible Quest: the Life of Richard Milhous Nixon, written by Charles Trueheart. According to Mr. Trueheart, the biography is exhaustive and very thoroughly researched. Written in "muscular, allusive, witty and often pungent prose, Black vividly paints Nixon's determination and wile, his resilience and uncanny ability to surmount deep character flaws to succeed in a vocation that is usually merciless to introverts." Mr. Truehart, though, finds a fault, in the book trying too hard to be balanced.
Sunday, June 10, 2007
Entrepreneurship, Unruliness and Regulation
In an attempt to find out why things recurrently spin out of control in American business, I’ve recently read through two critical books about Wall Street. The first, License to Steal: The Secret World of Wall Street and the Systematic Plundering of the American Investor by "Anonymous" and Timothy Harper, claims to be an exposé of New York brokers’ crookedness. In that goal, it misses its mark, because it’s really an exposé of the shadier part of the brokerage industry: “broker-dealers.” The anonymous fellow who supplied the meat of it has clearly internalized the broker-dealer worldview, and thus misses the fact that broker-dealers are routinely put below the salt by full-service brokerage houses. As an example of this internalization, he insists that the spread between the highest buyers' price for a stock (the “bid”) and the lowest sellers' price for that same stock (the “ask”) is always a profit centre for the firm handling the sale. He takes it for granted that a brokerage firm can always buy at the bid and sell at the ask, and that all brokerage firms routinely do so when they need extra money. This is impossible, except for a brokerage firm that also makes a market in that stock – a broker-dealer, in other words. "Anonymous"' repeated insistence that even the most prestigious brokerage firms pull the same tricks that broker-dealers do, is the standard justification used by employees and principals of the latter for their own conduct.
Nevertheless, it was interesting to read a portrayal of the above-the-salt part of the brokerage industry from a below-the-salt fellow. “Anonymous” did get his start in a prestigious full-service firm, as a cold caller. From his description of the job, it’s clear where relatively recent brokers’ callousness, the kind portrayed in the early part of the movie Wall Street, comes from. Cold callers can’t see the person on the other end of the line as a human being; if they do, then they’ll be lousy at the job. This necessity can’t help but introduce a habitual insincerity, and an attitude that the client is merely a revenue source. Any broker who’s been through the cold-call grinder is habituated to precisely that attitude, and its implication: every sales practice is okay as long as neither the client nor the compliance officer object. “Good business” means an account that stays; “observance of fiduciary duty” means following the rules that securities regulators, securities dealers’ associations, and firm’s management have imposed.
There’s been a lot written about the professionalization of Wall Street. A largely unwritten part of the story is that security analysis, stock brokering and even investment dealer management were not professions in the days of yore; they were callings. Like any other calling, the member’s own ethical sense was also used to evaluate his (back then, it was “his”) own performance. The old descriptions of the field, as it was ‘way back then, tend to zero in on the class aspect of it: the field was all-but-impossible to make a mark in unless you went to the right private school (which, more frequently than you might think, was a Roman Catholic private school.) Also highlighted was the class attitude there, too. Less frequently illustrated was the fact that this class attitude, a different kind of “class callousness,” was the byproduct of a certain code of honour, whose fount was “take responsibility for your losses and make restoration for your mistakes like a man.” As is usual with mottoes of this sort, the word “man” excluded a lot of men from its range.
Needless to say, this kind of ethos cannot be called forth by regulating. Rules, regulations and even statutes only modify behavior. Except for family-firm holdovers and the occasional “Junior” in a regular firm, the old code is gone from Wall Street, and from Canada’s Bay Street as well.
What has replaced it is an ethos similar to the one a doctor has internalized – to get his or her way through pre-med. Quick and accurate memorizing is the cynosure of investment professionalism nowadays, and so is a kind of obedience. Reliance upon computational and analytic procedures, instead of being a badge of callowness, is now the foundation upon which the securities industry professional builds his or her career. Believe it or not, it was normal ‘way back when to laugh at “theoretical” colleagues who trusted formal techniques of investment analysis. Such colleagues were, back in the days of old, judged to be “out of it,” or “not ready for the real world.” Nowadays, expressing such an attitude in a major investment dealer, except circumspectly, marks the holder of it as a dinosaur or Neanderthal. What made the rise of the bookworms possible was, in fact, the thorough regulation of the field. Bookworms don’t resent regulation; they see it as yet another learning opportunity.
There's a certain irony in a highly regulated industry churning out far more profits than its largely unregulated forebear did. What made this ratchet-up possible was the salesperson’s attitude described above, as juxtaposed with the old-style uppers’ attitude. All codes of honour are at heart codes of self-restraint; with regard to upper-class people in trade, the self-restraint is typically expressed in turning away profitable opportunities – in some case, highly profitable opportunities – on the basis that “there are some things that one does not do.” (When the upper class is predominant in an organization, this rule is informally but very definitely - "arbitrarily" - enforced.) It’s not often noted that the upper class in business societies tend to look down on many kinds of trade as ‘opportunistic’, ‘greedy’, and/or ‘mean-minded’.
As a result, any industry that is dominated by the upper classes is managed in an unentrepreneurial way. Once this is realized, only a class barrier stands between that industry and major profit expansion in it. This has been very obvious in the investment industry.
Another, though less obvious, side effect of the replacement of honor-driven management with market-oriented management is the growth of regulations once the uppers are either edged out or have become managers-emeritus. The ultimate source of it is the accumulation of potential conflicts of interest in a firm dominated by the upper class. These potentialities are usually harmless, or benign, because taking advantage of them is something that a gentleman simply does not do. So, any conflict-of-interest scenario is dismissed out of hand as not a problem, because it usually isn’t from an atheoretical point of view.
Once the entrepreneurial middle class takes over, though, a change in perspective ensues. The activities that “one does not do” become potential profit centres. “Greed” becomes a matter of charging what the market will bear. Both of these shifts spur the industry’s growth beyond the imagination of the old gentry.
But they also actualize those potential ethical lapses. Since the uppers have a habit of confounding legitimate entrepreneurship with crookedness, the middles eventually shrug off any warnings about “gouging” as mere upper-class effeteness, once the transition is complete. Some of those previously-frowned-on activities, though, are genuinely unethical.
As a result, the regulators are called in by angry customers, suppliers, and/or investors.
----------
As footnote #1, I mention Martin Mayer’s Nightmare on Wall Street as a good recounting of Salomon Brothers as a firm that went down this genteel-to-entrepreneurial-to-opportunistic-to-outlaw slope. An earlier entry in this blog flushed out his worldview, which you can adjust for if you don’t share it and want to read the book anyhow.
As footnote #2: if you’re up on current management jargon and want to put a theoretical backbone to the above, here are the relevant concepts: agency problems, or principal-agent problems; tragedies of the commons; and, taboos as a means of avoiding both of the above. Also, the Coase Theorem would be informative about the transition phase, including the dark side of it. (Hint: a stake in a hot IPO can be used as a compensatory payoff for an aggrieved clent.)
And, as footnote #3, the kind of upper-class fellow who's likely, in the above transition model, to be both the profit-exploder and the accident waiting to happen is what sociologists call the "status-lender." Conrad Black is definitely one; so is John Gutfreund. A status lender is agreeable with, tolerant of, but condescending to his or her "inferiors."
Nevertheless, it was interesting to read a portrayal of the above-the-salt part of the brokerage industry from a below-the-salt fellow. “Anonymous” did get his start in a prestigious full-service firm, as a cold caller. From his description of the job, it’s clear where relatively recent brokers’ callousness, the kind portrayed in the early part of the movie Wall Street, comes from. Cold callers can’t see the person on the other end of the line as a human being; if they do, then they’ll be lousy at the job. This necessity can’t help but introduce a habitual insincerity, and an attitude that the client is merely a revenue source. Any broker who’s been through the cold-call grinder is habituated to precisely that attitude, and its implication: every sales practice is okay as long as neither the client nor the compliance officer object. “Good business” means an account that stays; “observance of fiduciary duty” means following the rules that securities regulators, securities dealers’ associations, and firm’s management have imposed.
There’s been a lot written about the professionalization of Wall Street. A largely unwritten part of the story is that security analysis, stock brokering and even investment dealer management were not professions in the days of yore; they were callings. Like any other calling, the member’s own ethical sense was also used to evaluate his (back then, it was “his”) own performance. The old descriptions of the field, as it was ‘way back then, tend to zero in on the class aspect of it: the field was all-but-impossible to make a mark in unless you went to the right private school (which, more frequently than you might think, was a Roman Catholic private school.) Also highlighted was the class attitude there, too. Less frequently illustrated was the fact that this class attitude, a different kind of “class callousness,” was the byproduct of a certain code of honour, whose fount was “take responsibility for your losses and make restoration for your mistakes like a man.” As is usual with mottoes of this sort, the word “man” excluded a lot of men from its range.
Needless to say, this kind of ethos cannot be called forth by regulating. Rules, regulations and even statutes only modify behavior. Except for family-firm holdovers and the occasional “Junior” in a regular firm, the old code is gone from Wall Street, and from Canada’s Bay Street as well.
What has replaced it is an ethos similar to the one a doctor has internalized – to get his or her way through pre-med. Quick and accurate memorizing is the cynosure of investment professionalism nowadays, and so is a kind of obedience. Reliance upon computational and analytic procedures, instead of being a badge of callowness, is now the foundation upon which the securities industry professional builds his or her career. Believe it or not, it was normal ‘way back when to laugh at “theoretical” colleagues who trusted formal techniques of investment analysis. Such colleagues were, back in the days of old, judged to be “out of it,” or “not ready for the real world.” Nowadays, expressing such an attitude in a major investment dealer, except circumspectly, marks the holder of it as a dinosaur or Neanderthal. What made the rise of the bookworms possible was, in fact, the thorough regulation of the field. Bookworms don’t resent regulation; they see it as yet another learning opportunity.
There's a certain irony in a highly regulated industry churning out far more profits than its largely unregulated forebear did. What made this ratchet-up possible was the salesperson’s attitude described above, as juxtaposed with the old-style uppers’ attitude. All codes of honour are at heart codes of self-restraint; with regard to upper-class people in trade, the self-restraint is typically expressed in turning away profitable opportunities – in some case, highly profitable opportunities – on the basis that “there are some things that one does not do.” (When the upper class is predominant in an organization, this rule is informally but very definitely - "arbitrarily" - enforced.) It’s not often noted that the upper class in business societies tend to look down on many kinds of trade as ‘opportunistic’, ‘greedy’, and/or ‘mean-minded’.
As a result, any industry that is dominated by the upper classes is managed in an unentrepreneurial way. Once this is realized, only a class barrier stands between that industry and major profit expansion in it. This has been very obvious in the investment industry.
Another, though less obvious, side effect of the replacement of honor-driven management with market-oriented management is the growth of regulations once the uppers are either edged out or have become managers-emeritus. The ultimate source of it is the accumulation of potential conflicts of interest in a firm dominated by the upper class. These potentialities are usually harmless, or benign, because taking advantage of them is something that a gentleman simply does not do. So, any conflict-of-interest scenario is dismissed out of hand as not a problem, because it usually isn’t from an atheoretical point of view.
Once the entrepreneurial middle class takes over, though, a change in perspective ensues. The activities that “one does not do” become potential profit centres. “Greed” becomes a matter of charging what the market will bear. Both of these shifts spur the industry’s growth beyond the imagination of the old gentry.
But they also actualize those potential ethical lapses. Since the uppers have a habit of confounding legitimate entrepreneurship with crookedness, the middles eventually shrug off any warnings about “gouging” as mere upper-class effeteness, once the transition is complete. Some of those previously-frowned-on activities, though, are genuinely unethical.
As a result, the regulators are called in by angry customers, suppliers, and/or investors.
----------
As footnote #1, I mention Martin Mayer’s Nightmare on Wall Street as a good recounting of Salomon Brothers as a firm that went down this genteel-to-entrepreneurial-to-opportunistic-to-outlaw slope. An earlier entry in this blog flushed out his worldview, which you can adjust for if you don’t share it and want to read the book anyhow.
As footnote #2: if you’re up on current management jargon and want to put a theoretical backbone to the above, here are the relevant concepts: agency problems, or principal-agent problems; tragedies of the commons; and, taboos as a means of avoiding both of the above. Also, the Coase Theorem would be informative about the transition phase, including the dark side of it. (Hint: a stake in a hot IPO can be used as a compensatory payoff for an aggrieved clent.)
And, as footnote #3, the kind of upper-class fellow who's likely, in the above transition model, to be both the profit-exploder and the accident waiting to happen is what sociologists call the "status-lender." Conrad Black is definitely one; so is John Gutfreund. A status lender is agreeable with, tolerant of, but condescending to his or her "inferiors."
Media Roundup: Sunday's Slowdown
The media reports on the Conrad Black trial, webbed overnight and today, have dwindled to the usual Sunday fare, although in unusual flavour this Sunday:
1. A recap of the week's testimony by Ruth Dudley Edwards, webbed by the Irish Independent of Dublin, has disappointment as its theme, at the quantity and names of the no-shows to the witness stand. There seems to be a bit of blarney inserted into this peice.
2. In a column by the Chicago Sun-Times' Paige Wiser, on a recently-released list of 100 big words that every high-school graduate oughta know, Ms. Wiser puts Conrad Black in as the man most likely to know all of them.
3. The Canadian Press has issued its usual Sunday feature report on the trial's progress and where it's going. This week's, as webbed by CTV News, is entitled "Convictions in Black trial doubtful: observers." It contains the opinions of three experts: the first, assistant dean of management Rick Powers, believes that it's unlikely that Mr. Black will go to jail if convicted of anything, as "it's starting to appear that Black followed the law;" the second, former federal prosecutor Lee Dunst, remains neutral on the outcome; he only notes that it hinges upon the witness' credibility; and the third, Toronto lawyer James Morton, offers his personal opinion, "'If I was deciding at this point, I would acquit,''' and a professional opinion: that the prosecution was too distracted by the side issue of the perks.
1. A recap of the week's testimony by Ruth Dudley Edwards, webbed by the Irish Independent of Dublin, has disappointment as its theme, at the quantity and names of the no-shows to the witness stand. There seems to be a bit of blarney inserted into this peice.
2. In a column by the Chicago Sun-Times' Paige Wiser, on a recently-released list of 100 big words that every high-school graduate oughta know, Ms. Wiser puts Conrad Black in as the man most likely to know all of them.
3. The Canadian Press has issued its usual Sunday feature report on the trial's progress and where it's going. This week's, as webbed by CTV News, is entitled "Convictions in Black trial doubtful: observers." It contains the opinions of three experts: the first, assistant dean of management Rick Powers, believes that it's unlikely that Mr. Black will go to jail if convicted of anything, as "it's starting to appear that Black followed the law;" the second, former federal prosecutor Lee Dunst, remains neutral on the outcome; he only notes that it hinges upon the witness' credibility; and the third, Toronto lawyer James Morton, offers his personal opinion, "'If I was deciding at this point, I would acquit,''' and a professional opinion: that the prosecution was too distracted by the side issue of the perks.
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