It is kind of breathtaking to reflect on the contrasting judicial treatment of two rich law-breakers who happened, for a while, to be neighbours on Central Park in New York – Conrad Black and Richard Pratt.
Black was sentenced this morning to 6½ years in prison for having improperly taken $6.1 million in fees out of his company, Hollinger Inc, and for obstructing justice. Pratt was fined $36 million, and did not go to jail, after admitting that he conspired to defraud his customers of something like $400 million through an illegal cartel with his competitor Amcor.
In October 2005, before Black was charged, police seized the US$8.5 million in proceeds from the sale of his Park Avenue, NY, home. Pratt still maintains an apartment at the top of the Sherry-Netherland Hotel on 5th Avenue, just around the corner, for when he visits his Staten Island recycling factory.
Such are the vagaries of justice, I suppose, although Dick Pratt must be reflecting today that he got off very lightly.
And even though Conrad Black’s prosecutors were seeking 30 years, he very definitely did not get off lightly. For at least 5½ years he will be wearing khaki and scrubbing pots and pans for less than $1 an hour at Florida’s low-security Coleman prison.
It is a spectacular fall for a man who was described as a millionaire who lived like a billionaire. (Pratt, on the other hand, is a billionaire who lives like a … well, a billionaire.)
Black’s fall began unspectacularly, on a drizzly New York day in May 2003, when a representative of a fund management firm, and Hollinger Inc shareholder, named Tweedy Browne, showed up at the annual meeting and nagged the board into launching an investigation of certain payments that had been made to Black and other executives.
Eight months later, the former head of Securities and Exchange Commission who had been asked to produce the report, Richard Breedon, came out with a blistering attack on Black, accusing him of running a “corporate kleptocracy”.
Specifically, he accused Black personally of pocketing US$90 million in inappropriate non-compete fees and US$226 million in “management fees” over seven years. The total sum he alleged to have been pilfered from Hollinger by its executives was around US$400 million – 95% of the company’s profits.
And then Black’s long-time right-hand man, David Radler, the President and chief operating officer of Hollinger, cut a deal with the prosecution – getting 29 months’ jail in return for testifying against his boss.
During the prosecution, the sum alleged to have been taken was whittled down to $6.1 million in non-compete fees, and that’s what Black was found guilty of. In sentencing, Judge Amy St Eve said: “Mr Black, you have violated your duty to Hollinger and its shareholders. I frankly cannot understand how someone of your stature could engage in the conduct you did.”
During the trial Conrad Black described his prosecutors as pygmies and declared that he was the victim of a vendetta, but during sentencing this morning he was contrite – sort of – making this statement to the court: “I do wish to express very profound regret and sadness at the severe hardship suffered by all the shareholders, including employees, by the evaporation of $1.85 billion in shareholder value under my successors [at Hollinger].”
But as you can see, to the end he did not take responsibility himself, but blamed “his successors”. He is now expected to appeal, but his chances of success are rated “low”.
Personally, my feelings are mixed: they range from schadenfreude to outright joy.
He was a poor proprietor of John Fairfax during my time as editor of The Age in the early 1990s, and my one meeting with him involved an interminable lecture on the Napoleonic wars. If he had any insights to offer about the management of newspapers, they were not forthcoming.
Alan! You expressed a blunt negative personal opinion! I’ve never seen you do that before. True, Conrad Black won’t be able to retaliate against you for 5 and a half years, but do you realize his incarceration does not commence until March 2008?