Conrad Black and Hollinger Inc

 

Conrad Black became the poster child for corporate criminality in Canada during the late 1990s and early 2000s.  Black, who grew up the wealthy son of a prominent Canadian financier, used his inheritance to begin a morally ambiguous career as a corporate predator, buying the controlling interest in companies and stripping them of their assets, including pension fund surpluses, for his own benefit (Shaoul).  Black reached his peak of celebrity and business fame when he bought control of a British newspaper company and built a media empire centred around promoting conservative political views.  Black was a major ideological supporter of British Prime Minister Margaret Thatcher and other late Twentieth century Neo-Conservative politicians (Shaoul).

Black’s media holdings grew to include Canadian newspapers, including the National Post, a paper that reflected Black’s own conservative political beliefs.  The Hollinger Group was the 3rd largest newspaper group in the world by the end of the twentieth century (Shaoul).  Black maintained control of the business through the holding company he inherited from his father, Ravelston.  In addition to Hollinger Inc., Black also controlled Hollinger International.  Using his media empire as his personal podium, Black encouraged deregulation of business laws and helped create a climate where the kind of activities he would engage in with his own company would be accepted as normal corporate behaviour(Shaoul).

The company that Black owned was treated as his own bank account.  In this way Black was using the company as his own imaginary friend.  Glasbeek wrote that corporate leaders like Black use the corporation like a child uses an imaginary friend, to avoid taking blame for their misdeeds.  Black used his corporation as a means to make himself even wealthier than he already was (Glasbeek,7). According to reports at the time Black put friends on the board of directors, friends who turned a blind eye as Black took over $400 million into his own personal fortune, a total that was 95% of company’s net profits for the period (Shaoul).  Black used company money to pay for charitable donations in his name not the company’s.  In addition, the company was charged for numerous personal expenses for Black and his wife Barbara Amiel (Shaoul).  All this while at the same time preaching the conservative principles of self-reliance, trusting the market implicitly, and telling the average person that they are not as successful as the corporate elite because they don’t work hard enough (Glasbeek, 11).

The board of directors never questioned any of the money being looted from the company.  Only when an American investment firm that owned a share of Hollinger International questioned the amount of company money going to Black and his holding company did the fraud come to light (Shaoul).  Without the intervention of another wealthy corporation it is possible that Black would have never been investigated or prosecuted.  In world that Black grew up in, the business class was not viewed as criminals when they committed acts that would get those of less social status sent to prison.  Black would not have viewed what he did as a criminal act, crime was something committed by the poor or uneducated (Sutherland, 137).  Black saw himself as merely working the system to his advantage.  By 2003 a report of Black’s activities within his own company found that he had paid himself and his cronies more than $30 million that they were not entitled to and millions more had been paid to his holding company that was not authorized. The scale of what Black did was his undoing.  The public has a harder time understanding the crimes of the white collar criminal, it can be hard to make heads or tails of a financial crime as there are seldom bodies left behind or visible marks on the victims (Sutherland, 138).

As a result of his fraud being made public, Black was forced out as CEO of Hollinger International but he had once more trick up his sleeve.  Black sold his profitable newspaper holdings through Hollinger Inc., behind the back of Hollinger International and depriving them of the opportunity to sell the papers to the highest bidder (Shaoul).  Investors took Black to court to try and block the sale. The judge who heard the case and issued the injunction blocking the sale was critical of Black’s self-serving secret deals that would benefit only Black, not the company (Shaoul).  The timing of the revelations about Black and his fraud was unfortunate for him.  Occurring in the early part of the twenty-first century, Black joined a long list of other corporate criminals.  Enron and other companies, whose executives had lined their pockets while investors were given misleading or false financial statements, had created an atmosphere where the prosecution of white collar criminals was accepted, and in  some cases, demanded by the public and their government representatives (Friedrichs, 114).

The court case blocking the sale would not be the last time that Black would be under fire in the legal system.  By 2004, the Securities Exchange Commission in the United States charged Black and others with fraud for the way he tried to sell the newspapers he owned.  The next year Black was charged with more crimes by the US Attorney’s Office, including mail fraud and wire fraud.  The charges included accusations that Black used company money to throw a birthday party for his wife that cost $42,000 (CBC News).  It would take over 2 years but Black was convicted by the jury and sentenced to pay back some of the money he was convicted of stealing, as well as serve jail time (NPR). Black would eventually serve over three years of his sentenced time in a US jail.  Black returned to Canada in 2012. In 2013 the Ontario Securities Commission began a process that took nearly two years to ban Black from ever again being a director or officer of a publicly traded company.  Black was unapologetic about his role in the collapse of Hollinger and blamed his partner for any of the actions that led Black be convicted(Globe and Mail).

Black’s lack of remorse is predictable.  Conrad Black built his financial empire using shady business practices in an era when white collar crime was not as publicly documented.  His success in creating a media business that enriched him and provided him a platform to spread his conservative brand of politics blinded him to his own hypocrisy.  In preaching deregulation and self-reliance while looting his own company, Black was taking advantage of the company he built and the political climate he was shaping.  Black did not apologize because he truly believes he is blameless, and that it was his investors fault for not understanding the rules of the game, a game he was making up as he went along.

 

 

 

Bibliography

Shaoul, Jean. “Conrad Black and Hollinger International: A Financial Oligarchy out of Control.” World Soclalist Website. N.p., 16 Sept. 2004. Web. 10 Mar. 2017

“Conrad Black Charged with 8 Counts of Fraud.” CBC News. N.p., 17 Nov. 2005. Web. 10 Mar. 2017.

“Conrad Black Found Guilty of Fraud Charges.” NPR. N.p., 13 July 2007. Web. 10 Mar. 2017.

“Conrad Black Tesstifies He Feels No Guilt or Shame over Actions at Hollinger.” Globe and Mail. N.p., 13 Nov. 2013. Web. 10 Mar. 2017.

Glasbeek, Harry. 2002. Wealth By Stealth: Corporate Crime, Corporate Law, and the Perversion of Democracy. Toronto, CA: Between The Lines. Retrieved from http://www.ebrary.com.proxy.hil.unb.ca

Friedrichs, David. 2004. “Enron Et Al.: Paradigmatic White Collar Crime Cases for the New Century.”Critical Criminology Vol 12 (2): 113-132

Sutherland, Edwin H. 1944. “Is White Collar Crime a Crime?” American Sociological Review Vol 10(2): 132-139

 

 

 

 

 

 

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