The trial of Mr. Conrad Black -- Lord Black of Crossharbour -- began last week in Chicago. While the proceedings will offer considerable insight into the lives of the rich and famous, it will also provide a vivid reminder of the need for effective corporate oversight and the vital role played by boards of directors.
Mr. Black is a legendary newspaper businessman. He turned a $500 investment in a weekly Toronto newspaper into an empire of 600 papers with annual revenues of nearly $2 billion, making Hollinger International (his holding company) the third-largest newspaper company in the world. Its holdings included the Chicago Sun-Times, the Daily Telegraph of London, the Jerusalem Post and Canada's National Post, in addition to hundreds of small community newspapers in North America. The company has been known as the Sun-Times Media Group since divesting itself of all the big papers except Chicago.
Mr. Black and three associates are charged with two sets of crimes. The first concerns his readiness to treat Hollinger as a piggy bank and use it to bankroll an extraordinary lifestyle. He charged the company, among other things, $600,000 for a vacation on a Pacific Island and $40,000 for his wife's birthday party. The total amount of money diverted between 1997 and 2003 is reported to have been $400 million, about 95 percent of Hollinger's entire adjusted net income during that time.