The Black Trial and Corporate Governance

20 Nov ’05

Much has been made in recent years, particularly since the introduction of Sarbanes-Oxley, of the increasing responsibility of corporate directorship. Before that, it was the steadily expanding scope of director’s statutory liability that attracted the attention of board candidates. And in each case, many doom and gloom forecasts were issued about the impact these ‘onerous’ requirements would have on the hiring of corporate boards. Well, maybe.

But as doom and gloom goes, none of it holds a candle to what could be the most significant event in corporate governance in a very long time – the defence of Conrad Black. The Globe offers some insights today in a piece on his likely defence strategy and why it’s relevant to governance:

For all the uncertainty over Lord Black’s fate, you can take one thing to the bank: His high-priced legal team will turn a Chicago courtroom into a stage for mutual recrimination by quickly putting Hollinger International’s star-studded board on trial. And who could blame them? This is a board some of whose members one shareholder described as “totally quiescent,” a sleepy group of conservative glitterati that viewed their directorships as more of a political salon than a fiduciary duty. Even the company itself, in a report issued last year by a group of independent directors, acknowledged the board was “inattentive,” and failed to ask the sort of probing questions that may have uncovered Lord Black’s alleged chicanery with the corporate coffers. They claim they were lied to, but the deposed press baron will point out — rightly, in many cases — that they nevertheless lent their approval to most of the transactions under the scrutiny of the Feds. Who’s a jury to believe?

(My guess? Fitzgerald. And nobody else will come out of this in one piece.)

A flashy trial and a Board dragged blinking into the sunlight would be a very good thing.

Nothing else could do as much to put an end to the notion of directorship as a sleepy sinecure. And while one must feel sorry for all of the unfortunate individuals who now have to go through this, a flashy trial and a Board dragged blinking into the sunlight would be a very good thing.

One final note: the Canadian press is doing itself harm by taking too much schadenfreude from this mess. Its delight is just a little too transparent. We get it: you don’t like the guy, so now you’re going to write a lot of mocking stories about him. You win, and we’re impressed. And now we know just a little too much about whether or not you can truly approach any story from the centre. (Honestly, Globe – describing jail time for Black as a “Weekend at Bernie’s“?? That would be cruel, if it weren’t milk-through-the-nose-snortingly funny. OK, it’s cruel and funny).

Finally, an odd piece of related news – most of the top hits for Yahoo News searches on “Ebbers” are now about Conrad Black.

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