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| Hot Type, for the week of August 26, 2005 -- continued Fourteen months later the National Review weighed in on the murders of Goodman, Schwerner, and Cheney in Mississippi. It noted that a federal grand jury convened in Neshoba County had returned indictments against local police officers. "It is everyone's impression, including ours, that some, at least, of the Neshoba police are a crummy lot," said the magazine airily. "But we pause for reflection. Are 'violation of the Civil Rights Act' and the even more tenuous 'conspiracy to violate' going to become a catch-all charge by which the Federal Government can get its hands on nearly any citizen?" In the view of this conservatism, which has slowly taken over the country, the cure for jim crow was far worse than the disease. Clueless in Chicago The David Radler indictment let Jim Thompson claim the only vindication open to him: blamelessness on account of cluelessness. "They either falsified the documents or kept them from the audit committee and the board," Thompson told the Tribune's John Kass after Radler was indicted on August 18. "I've served on more than a dozen corporate boards, and I've never been lied to before by management." As head of the audit committee of the Hollinger International board, Thompson was supposed to be the guardian at the gate, challenging anyone who approached the stockholders' treasure. The committee met regularly with Radler, who in addition to being publisher of the Sun-Times was president, COO, and deputy chairman of the board of Hollinger International. These meetings would be followed by meetings of the full board, which looked to Thompson's committee for direction. During the period from January 1999 to May 2001 Hollinger was allegedly defrauded of more than $32 million by Radler, Hollinger attorney Mark Kipnis, and Ravelston, a private holding company Radler ran with Hollinger chairman Conrad Black. (According to civil suits now being litigated, Black, Radler, and their friends actually raked off many times that.) Thanks to a bizarre ownership structure, Black and Radler controlled Hollinger International through Ravelston despite holding relatively little Hollinger stock. This arrangement made the value of that stock of dubious importance to them. The indictment explains, "Every $100 that was transferred out of International and into Ravelston . . . would cost [Black and Radler] $19, but give them $79." A favored means of making these transfers, according to the indictment, was to sell off newspapers and write into the sales contracts spurious "noncompete" clauses that diverted millions of dollars of the proceeds to Ravelston. In one case, Hollinger allegedly sold newspapers to a company Radler and other Ravelston officials partly owned: they had "in essence, negotiated an agreement with themselves . . . not to compete against themselves . . . resulting in them paying themselves . . . approximately $1.2 million." The indictment alleges ten separate sales in which the defendants "failed to disclose [side deals and payments] to International's Audit Committee, thereby breaching their fiduciary duty." A year ago, after Black and Radler were banished from the board, Richard Breeden, a former chairman of the Securities and Exchange Commission, submitted a 513-page report to it that reached the same conclusion Fitzgerald's grand jury would reach: the audit committee had been "repeatedly and deliberately misled" by Radler and Black. But Breeden also assigned moral culpability, and he concluded that the audit committee's "ineffectiveness is primarily a consequence of its inexplicable and nearly complete lack of initiative, diligence or independent thought." Thompson made his reputation in 1973 by sending federal judge Otto Kerner to prison. He persuaded a jury that by accepting racetrack stock while he oversaw the state's racing board as governor, Kerner had deprived the public of its "intangible right" to his honest service. This intangible right was teased out of the federal mail-fraud statute; eventually the U.S. Supreme Court would rule that the statute didn't support it, but by then Kerner was long dead. Now Fitzgerald has indicted Radler on the theory that he schemed to deny Hollinger stockholders of not only money and property but their "intangible right of honest services." Fitzgerald says Radler intends to plead guilty and cooperate with the ongoing investigation, whose ultimate quarry is presumably Black. One onlooker would like it to be someone else. Anton Kerner has been trying to vindicate his father since he died in 1976. "My interest is not that Thompson goes to jail," he e-mailed me, "but that the standard of justice he applied to Otto Kerner is either applied to him or is repudiated by the Department of Justice." Fat chance. Congress wrote the intangible right to honest service into law as soon as the Supreme Court ruled it wasn't there. But though shareholders must have some kind of right to assume a board of directors isn't comatose, a board member simply isn't as answerable as a governor. Kerner knows that, but he's savoring the moment. Send tips, tirades, and comments to hottype@chicagoreader.com |
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