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Sunday 5 August 2007

The Black art of skating on very thin ice

Disgraced media mogul Conrad Black may be down but he’s not out – by a long shot – writes Ruth Dudley Edwards

LAST week I learned what a ‘Kristi Yamaguchicaliber rhetorical salchow’ is and read a long article in The Economist about the Sarbanes-Oxley Act.

Yep, I’m back with Conrad Black. I bade him goodbye two weeks ago, after 19 articles covering his case, but I should have known it was only au revoir.

Black may be down but he’s not out, and Hollinger International and Hollinger Inc, companies he used to control, are still in the news.

The Kristi reference came in an article by the political commentator Dan Proft, about the Chicago Sun-Times, once a modest jewel in Black’s glittering media crown. Shortly after Black’s indictment in November 2005, Proft recollected, the paper announced it would be returning to its ‘liberal, working-class roots’ and although its fortunes have plummeted since Black lost control, it reacted with glee to his conviction.

Proft had fun with the Sun-Times Media Group’s CEO, Cyrus Friedheim, who — with several other directors from his time as CEO of the banana-producer, Chiquita Brands International — is facing the possibility of a federal prosecution for terrorism-related crimes for paying protection money to a Colombian terrorist group.

“Invoking the ‘working class’ on behalf of a paper run by Freidheim,” gloated Proft, “a morally ambiguous corpo-ratista, is a Kristi Yamaguchicaliber rhetorical salchow.” (She’s a figure skater; a salchow involves a take-off from a back inside edge, landing on the back outside edge of the opposite foot after one or more rotations in the air. Isn’t Google wonderful?)

The paper will have been further soured by two developments.

First, its owners, the Sun-Times Media Group, formerly known as Hollinger International Inc, announced it would cough up $30m to settle fraud class actions arising from the Black indictment.

And a few hours later, Hollinger Inc, its parent company, filed for bankruptcy protection to protect its assets from creditors, and chucked three directors off the Sun-Times board, to which it added six of its own representatives, who are thought to want to auction off all its newspapers.

Poor old Friedheim is having a rough time. A septuagenarian with a hitherto blameless record, best-known for The Trillion-Dollar Enterprise: How the Alliance Revolution Will Transform Global Business — a book widely hailed as visionary — now faces a real possibility of ending up in chokey alongside Black.

It cuts no ice with US prosecutors to proffer excuses about bribery and protection money being a way of life. Since the Enron scandal, US business is required to be purer than pure and the Feds are Robespierres.

Sarbanes-Oxley (named after congressmen Michael Oxley and Paul Sarbanes), which massively tightened up accountancy procedures and financial controls in business, became law five years ago.

Even Oxley admits that SOX, as it is known, was hastily conceived and badly drafted. Although it has succeeded in its primary purpose — that of restoring public confidence in American capitalism — it is making accountants and lawyers multimillionaires while causing managers to look over their shoulders rather than towards the horizon.

Over-regulation, along with overzealous prosecutors, is sapping American entrepreneurial spirit.

Conrad Black would have much to say about SOX, but for now, as he awaits sentencing on November 30, he’s trying to keep his mouth shut.

On Wednesday he failed to persuade Judge Amy St Eve to allow him to spend some of his bail time in Canada. The prosecution flourished a letter from the Canadian Department of Justice saying they would have difficulty extraditing him, and he couldn’t raise enough money to increase his $21m bond to a level she thought would be certain to bring him back to Chicago.

Hollinger Inc. not only refused to release more money to him, but alleged he was hiding around $60m in assets.

If Black is hiding assets — which he denies — he’ll be needing every cent. His lead attorneys — who did a patchy job for him — each sent him an invoice for an additional million dollars just before making their closing arguments to the jury.

Then there’s the little matter of his new lawyer, Andy Frey, who will handle the appeal and is not cheap. Frey is famous for having won for the cigarette manufacturers Philip Morris a big punitive damages case.

Asked by The Wall Street Journal who might portray him in a movie, he said he used to be mistaken for the Raymond Burr, of the Perry Mason TV series, but since he is dead, Sean Connery is perfect.

I’m not the only one hoping he can produce the necessary salchows to save Black from the penitentiary.

Ruth Dudley Edwards

© Ruth Dudley Edwards