So, despite being acquitted on 9 of 13 counts, former Hollinger CEO Conrad Black was convicted yesterday in Chicago of three counts of mail fraud and one count of obstruction of justice (previous posts on the case are here). Three of Black’s former Hollinger associates were also convicted of three counts of mail fraud.
The essence of the verdict against Lord Black and the others is that they stole millions in non-compete compensation from the sale of Hollinger assets that should have gone to Hollinger. As noted earlier here, the big problem with that theory is that the payments were disclosed and approved on multiple occasions by Hollinger’s audit committee and board of directors. Thus, in effect, Lord Black and the others were convicted for not disclosing their receipt of the non-compete payments well enough.
The implications of this latest government foray to regulate business through the criminalization of merely questionable business transactions is troubling, to say the least. As noted most recently here and many times over the years on this blog, the presumption in these prosecutions over wealthy businesspeople is no longer innocent until proven guilty. Rather, the presumption is that that these defendants are rich and the government is accusing them of all sorts of bad stuff, so they must have done something wrong. Although I think Lord Black made a mistake in not taking the stand in his own defense, a reasonable counter-argument can be made that doing so doesn’t make any difference when dealing with such an onerous presumption. Do any of us really think that we could stand up in the face of such winds if they turn toward us?
An extremely talented businessman and author is now facing the prospect of spending a good part of the remaining part of his life in prison. For an extraordinarily insightful analysis of Lord Black’s career and the vested interests that pursued the criminal case against him, take the time to read this lengthy Adrian and Olga Stein essay (pdf) entitled Conrad Black, Corporate Governance, and the End of Economic Man. The conclusion of the Steins’ essay is particularly apt in light of the verdict against Lord Black:

The prosecutors of Conrad Black know nothing of the ìanimal spiritsî to which Lord Keynes refers. Their only interest is to squash any independent spirit in the interest of defending the mirage of ideas that falls under the rubric of corporate governance. For the general public the challenge is to realise that injustice can conceal itself in attacks on the powerful, the privileged, the wealthy, and the elected; natural objects of resentment and envy, they are people for whom we tend to think a ëfallí or redress is in order. The injustice proceeds in small and public acts of complicity, and finds an abode in various subconscious registers of the psyche where schadenfreud and vicarious pleasure in the failures and misfortunes of others fester. The Spanish Inquisition, the French revolutionary trials, the Alfred Dreyfus Affair, the Soviet show trials, and the McCarthy-era hearings all happened within a sanctioned legal framework, with voluminous evidentiary support, cooperative witnesses, and with broad public consent. These trials were often conducted by zealous prosecutors. All of them maintained the pretense or facade of pursuing justice. It is only with the passing of time and the shift in the historical frame of reference that we come to understand the ëinjusticeí. The imperative is to see
injustice in all of its guises, to face it squarely, and confront it with courage.

Update: Larry Ribstein provides his usual sharp insight, while Peter Henning provides this initial analysis of the sentencing issues. Also, here are some further thoughts on the problems that juries confront in sorting out the issues in trials such as Black’s.