Hot Type, for the week of January 30, 2004 -- continued The suit continues: "That contempt extended further to Defendants' perception of the Company's independent directors [such as Thompson], who had the unenviable task of protecting [Hollinger's] public shareholders from the Defendants' repeated and systematic schemes to divert corporate assets and opportunities to themselves. The job of the independent directors was made more difficult by Defendants' repeated failures to seek prior authorization for self-dealing transactions, and to then seek after-the-fact 'ratification' based on rationalizations such as inadvertent error or oversight. On various occasions, one or more of the Defendants made misrepresentations and misleading statements to the Audit Committee and Board, and failed to provide directors with material and complete information." The italics are Hot Type's; they point out managerial conduct the most somnolent board should have noticed. A Hollinger spokesperson tells me that Black's "contempt" for the shareholders was revealed to the board only when the special committee began turning up evidence of it. But what about his "contempt" for outside board members like Thompson? How could Black have somehow managed to deceive these subtle, worldly men into thinking he respected them when he didn't? The proof he didn't was the blatantly slapdash way he and Radler presented important issues to the board. Thompson rejects the implicit suggestion by Cardinal Value that the directors were too busy dozing or spreading cream cheese on bagels or being chummy with Black and Radler to care about the fast ones those two allegedly were putting over. But as for Black's "contempt" -- that's a literary conceit of the Hollinger suit's authors. "I certainly never felt any personal contempt," Thompson tells me. Year after year Black addressed Hollinger shareholders in high style. In the 1998 annual report he promised: "The controlling stockholder [Black] will do whatever is appropriate and necessary to achieve realistic value for the interests of all persevering stockholders." In 1999 he cajoled: "Last year was successful in most respects, except in the performance of the stock price." But he feared not. "Neurotic concern about the future of even well-managed companies in this industry will subside eventually." In 2000 Black rejoiced that "last year was an unprecedentedly successful one in the Company's operations and in its tortuous struggle to fulfill the legitimate ambitions of the shareholders." A year later the picture had darkened. "This is the last time," Black wrote in 2001, "we will have to inflict upon our persevering shareholders (including ourselves in management) financial results that are apparently absurdly unsatisfactory. Fortunately, the semblance of a grievous financial setback in 2001 is only an appearance. . . . As large shareholders, we identify altogether with the shareholders who have placed their confidence and savings with us and we are more determined than ever that their patience and trust will be rewarded." In reality, the Hollinger suit against Black and the others alleges, Black and Radler were allowing those long-suffering shareholders to unknowingly "finance their own lifestyles and to support [their] independent pursuits." An August 2002 Black memo to another executive is quoted: "There has not been an occasion for many months when I got on our [company] plane without wondering whether it was really affordable. But I'm not prepared to reenact the French Revolutionary renunciation of the rights of nobility." Thompson joined the board in 1994. Can we suppose that for nine years he and the other directors had no idea that Black was capable of such a thought? Did the board never suspect that a man who chose to be identified in the annual report as "the Hon. Conrad M. Black, P.C., O.C." (though after he entered Britain's House of Lords he became "The Lord Black of Crossharbour, PC (Can), OC, KCSG") might not hold the shareholder uppermost in his concerns? The editor of Britain's Sunday Telegraph, a Hollinger paper, came to Black's defense last week by laughing at his accusers. "What I have found truly disgusting," wrote Dominic Lawson, "is the way in which in recent weeks many of those who enjoyed the Blacks' extraordinary hospitality have been cackling with glee and scorn at the revelations of corporate excess which have brought about their downfall. They are the very same people who drank the shareholders' champagne and swallowed the shareholders' caviar at the Blacks' Kensington home. Still, Conrad has a profoundly realistic appreciation of human nature. I don't think he will be surprised. "I don't even have much sympathy for the shareholder groups who launched the campaign to oust Conrad Black. When a man has a corporate structure like Conrad's in which he controls around three quarters of the votes with barely a third of the equity, it can mean only one thing. He wants the pleasure of access to the equity markets but with the privileges of a private company. In other words, they had it coming to them." Anton Kerner thinks Thompson has it coming to him. He goes so far as to point out that the "intangible rights" theory isn't limited to the prosecution of public officials. Since Otto Kerner's trial this theory has led an interesting life. In 1987 it was found unconstitutional by the U.S. Supreme Court. The justices didn't object to the idea in theory, but they couldn't find it in the mail-fraud statute. "Had he lived, Kerner almost certainly would have seen his conviction overturned, as did former Maryland governor Marvin Mandell in a 1977 corruption case [heard by the same judge who tried Kerner]," wrote Barnhart and Schlickman. But Kerner died of lung cancer in 1976, little more than a year after he was paroled because of illness. Anton Kerner and his sister went to court anyway to expunge the record and were told they couldn't act for their father. In 1988 Congress added the specific phrase "intangible right of honest service" to the federal mail-fraud statute. The theory that had condemned Otto Kerner could again be invoked. It's since been applied to private as well as public cases, and was recently used against Enron's former CFO, Andrew Fastow, who was accused of conspiring "to deprive Enron and its shareholders of their right of honest services." Fastow pleaded guilty this month and was sentenced to ten years in prison. But the bar's set high. In a 1997 opinion the federal Sixth Circuit Court in Chattanooga asserted that "enforcement of an intangible right to honest services in the private sector . . . has a much weaker justification [than in the public sector] because relationships in the private sector generally rest upon concerns and expectations less ethereal and more economic than the abstract satisfaction of receiving 'honest services' for their own sake." Mere negligence isn't criminal. Mere incompetence isn't criminal. Mere indifference to shareholders isn't criminal. "That's not a theory that's been put forward by anybody I can see," Thompson tells me when I ask if the theory of intangible rights could be applied to the mess at Hollinger. He doesn't think it can be. Even if he's wrong, there's a huge practical difference in the eyes of the law between a senior management official like Fastow -- or Black and Radler -- and an outsider who merely serves on a board. But Anton Kerner can dream. "I seek not malicious satisfaction in the misfortune of others," he e-mails me, "but only my father's vindication in highlighting Thompson's ironic troubles at Hollinger." Give 'Em What They Want When James Cuno accepted his new position in Chicago, the Tribune ran its story on page one January 22 and headlined it "Rising star chosen to lead Art Institute." The Sun-Times ran its story on page four the same day and headlined it "Art Institute's new leader says he's no stuffy snob." Presumably both papers know their readers. The second paragraph of the Tribune story told us that Cuno was getting "a second chance at realizing a long-held vision." The second paragraph of the Sun-Times story told us that Cuno is a "baseball nut." The Tribune story then explained that two years ago, when Cuno was director of Harvard's art museums, plans to add a new building designed by Renzo Piano fell through. The Sun-Times story then explained that when Cuno left Harvard two years ago staffers printed up Jim "Bash" Cuno baseball cards that showed him wearing a Boston Red Sox uniform. "He ate it up," said a colleague. The Tribune story had more to say about the Piano building Cuno had been unable to put up along the Charles River and the Piano wing the Art Institute plans to begin building this fall. The Tribune story didn't mention baseball. The Sun-Times story had more to say about the Red Sox and Cubs baseball games that Cuno plans to watch this summer. The Sun-Times story didn't mention Renzo Piano. The Tribune reported that Cuno has called the Art Institute "the greatest municipal art museum in America." The Sun-Times reported that Cuno "has certainly hit the big leagues." Send tips, tirades, and comments to hottype@chicagoreader.com Copyright © 2004 Chicago Reader, Inc. All rights reserved.