Crossposted at The Next Agenda
Conrad Black's trial on a variety of fraud charges continues with jury selection today in Chicago.
For months Black's supporters have claimed that he is being persecuted by a runaway justice system. The motive for the prosecution, they say, is envy.
Conrad and the American Way Is Lord Black the victim of a new culture of envy in the US, asks Margareta Pagano She quotes an article by Alykhan Velshi, head of a neo-con think thank, The Foundation for the Defense of Democracies:
The crux of Velshi's argument is that the vendetta against Black came about because existing laws, such as that which allows the pre-trial seizure of assets, have been corrupted by a growing culture of envy. Add to this the way corporate governance in the US has shifted in favour of minority shareholders and you have a poisonous climate in which business now operates.
The law, writes Velshi, is focused "less on securing justice than on bringing down the high and mighty, all the while pandering to the politics of envy."
In Velshi's world Black's style of "proprietorship" is the issue. Great men should not be encumbered by regulation, nor should they be accountable to anyone but the board. Furthermore the board of directors of a company shouldn't be accountable to anyone else, especially security exchanges and the government.
Tough new rules brought in by the 2002 Sarbanes-Oxley Act (Sarbox) - which makes board directors responsible for any wrongdoing within the company - are making the US marketplace anti-competitive.
As for minority shareholders, their new powers are based on two misplaced assumptions: first, that minority shareholders are weaker than majority shareholders, and second, that management of a company is improved by giving minority shareholders additional rights.
Minority shareholders may not have a representative on the board. They may not be able to ask questions of management. They may not be able to express their opinions of management. Annual meetings open to shareholders have long been treated by corporate management as requirements best disposed of quickly and with as little input as humanly possible. Corporate finance viewed this way is a confidence game. Small investors be damned. Corporate Annual Meetings Undergoing Change And Tough Scrutiny But Can Be Powerful Corporate Tools
The Case For The Annual Meeting
But Carolyn Brancato, Director of The Conference Board's Global Corporate Governance Research Center, describes the annual meeting as "the one occasion when general shareholders can meet with the board of directors face to face, question them about company performance and policy, debate any outstanding issues, and then vote on the motions put before them."
Investors and executives point out that institutional investors have a major edge over other shareholders, since they have preferential access to board members at almost any time they wish. So for them, most of what takes place at the annual meeting is often redundant and their attendance is viewed as unnecessary. It's also charged that very little meaningful discussion takes place at many annual meetings, especially when they are dominated by single-issue activists. Some critics also question the value of open voting since institutional investors already have decided most of the issues with the company beforehand.
*emphasis added
That's the way it should be according to Velshi. If one should question the system one is attacking the Master's of the Universe, out of envy. They are our betters. We best let them take care of business without impediment. Scrutiny is bad for business.
Don't listen to a word of it.
These people hold the seven deadly sins close to their hearts. They know all about greed and envy, their modus operandi. It moves them. See Peter C. Newman's reflections on Conrad Black from 2003. Conrad Black's Fall
AFTER CONRAD BLACK's career totalled last week, I looked back through the book I had written about him in 1982, when he was only 38. He was flying high then; I called him the Establishment Man, and his future appeared limitless. He had just completed his daring takeover of ARGUS Corp., multiplying the $7 million he inherited from his family into control over corporate assets worth $4 billion, using tactics that I recorded as requiring "the balls of a canal horse."
I had spent much of four years interviewing him, but I still remember the chill I felt late one evening, sitting in his splendid Argus headquarters, when we got on the subject of greed. "The darker side of Black's nature," I wrote later, "is governed by a brash certainty that he is somehow exempt from evil intent. There exists a mile-wide streak of righteousness in the man, a glut of self-confidence that transcends run-of-the-mill arrogance. Within his imperious bearing thrives a decisive inclination to avarice."
"Greed," he confessed, that long ago evening, "has been severely underestimated and denigrated, unfairly so, in my opinion ... It is a motive that has not failed to move me from time to time." Little did I realize how profound a foreshadowing of his own destiny that would turn out to be.
If company policy allows entertainment expenses and travel expenses the executive must live within the rules of that policy. The surest way for an underling to be fired is to be found stealing. Theft of a small item, even as inexpensive as a pencil, can be grounds for dismissal. Minor fraud on a travel claim has ended more than a few careers. And petty theft is prosecuted in the courts every day.
This trial isn't about Black's extravagant lifestyle and Patrick Fitzgerald's envy of it. This trial isn't about an alleged crime that only looks minor compared to Ken Lay and Enron. No. It is about the accused taking company assets that they weren't entitled to. It is about the theft of assets that belonged to the company. It is about shareholders being denied their expected return on their investment.
Envy is irrelevant.