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Book Review: A Matter Of Principle By Conrad Black

A Matter Of Principle By Conrad Black

My interest in the Conrad Black case was sparked by an article that appeared last year in Vanity Fair. I quickly forgot it, but when the disgraceful interview conducted by Jeremy Paxman appeared on my YouTube recommended list I was keen to explore the Conrad Black case in more detail. Jeremy Paxman was completely uninformed and came across as a numpty.

According to the initial trial by media, Conrad Black was an entitled, pompous corporate thief in the vein of Kenneth Lay or Dennis Kozwolski. He had stolen hundreds of millions of dollars from shareholders and deserved a life sentence in US prison whilst forfeiting all of his worldly possession.

While you have to take the words of a convicted “criminal” with some caution, the case of Conrad Black and the availability of court judgments on the internet enable the reader to perform “due diligence” on the case he makes for his innocence.

At first skeptical, I am now convinced that he was the victim of a terrible persecution. It all started when a non-shareholder and former SEC chairman Richard Breeden filed a 13D form with the SEC.

It set in motion a series of events where people who had no business interfering in the private affairs of Hollinger were able to cause shareholder losses of more than US$2 billion dollars.

These hangers-on even paid themselves millions of dollars with Hollinger’s money after taking it hostage. Tens of millions of dollars was wasted on high priced lawyers who couldn’t do much more than demand payment in advance from Conrad Black and his fellow defendants.

The corporate governance crew were able to greenmail, bully and intimidate the other directors into allowing a full-blown investigation of Conrad Black and his business partner David Radler’s “wrongdoing”. They included a former Chairman of the SEC and numerous powerful lawyers who cared more about getting paid than getting to the bottom of whether or not fraud had been committed.

It turned out David Radler really was a crook. He took the coward’s way out with plea bargain, serving up Conrad Black on a platter. The actual turn of events, which can be independently verified with a few hours Google searching, was completely different from the Murdoch media narrative.

Conrad Black very clearly sets out how the plea bargain process works – in exchange for false testimony, you can bargain with the prosecutors to save your own skin. In terms of game theory it makes perfect sense. For non-sociopaths it is morally repugnant behaviour.

One of the reasons that Conrad Black was so misrepresented in the media was that he refused to plea bargain with the US Justice behemoth.
For his insolence, the FBI seized the proceeds of a New York apartment sale. They had no claim to it but stopped $10 million from going to his defence lawyers.

Although convicted on “honest services” grounds and for obstruction of justice, Conrad Black didn’t back down. His appeal to the Supreme Court led to the “honest services” clause being struck out and very stern comments on how the original judge should review his reasoning in the case.

The author of the “honest services” conviction was Richard Posner of the Chicago 7th Circuit Court of Appeal. Black rails against Posner’s megalomania and refers to his reputation on the bench for a lack of attention to detail.

The case against Conrad Black had shrunk from an enormous alleged fraud to a handful of technicalities. But despite the Supreme Court effectively overturning his convictions, Posner ignored them and issued another judgment that still incorporated the unconstitutional “honest services” nonsense.

In order to save face for the US Department of Justice, the SEC and the greenmail corporate governance activists his sentence in Federal prison was reduced to 42 months in 2010. He had to serve another 7 and a half months before he could be released.

His time in prison wasn’t completely in vain. In this book Conrad Black clearly explains how US justice is not justice at all. He rails against the plea bargaining system, civil asset forfeiture, intimidation of witnesses and the implausibly high success rate of US prosecutors.

He talks about how upskilling in prisons is non-existent, why there are major incentives for prison populations to keep on growing and with his signature style mounts a convincing argument that the entire US justice system now operates on the basis of “guilty until proven innocent”.

If Conrad Black was not a multi-millionaire with the willingness to fight and the financial capacity to do so, he was facing a life sentence for a vendetta by corporate governance greenmailers.

The cost of this injustice has been the destruction of a career, the destruction of more than $2 billion in shareholder wealth and the enormous cost incurred by the SEC, DoJ and FBI in hounding Conrad Black for almost a decade.

This book completely altered my thinking on the role that corporate governance plays in public companies. The ability for an outsider to essentially hold an entire company hostage and bill it for the privilege shocks me.

The real world evidence of regulatory capture, rent seeking, miscarriage of justice, abuse of due process, judicial over-reach and a whole plethora of other abuses makes A Matter Of Principle a solid read for anyone interested in how the US justice system can pummel even an entrenched member of the 1%.