[Capítulo IV: Fallas en nuestra economía de mercado] Corporate Kleptocracy
[http://www.nytimes.com/2004/09/02/opinion/02thu2.html?ex=1251864000&en=861fd8cbc4aaeb6d&ei=5089&partner=rssyahoo]
The New York Times > Opinion > Corporate Kleptocracy
(Esta clase de problemas no son exclusivos de nuestra economía como se puede deducir de este artículo)
White-collar crooks typically skim from the top, but Conrad Black stands accused of pocketing the whole top, the middle and much of the bottom of the barrel of his company's assets. An inquiry that was commissioned by the company, the Hollinger International newspaper publisher, and led by Richard Breeden, a former chairman of the Securities and Exchange Commission, accuses Mr. Black and his chief operating officer, David Radler, of helping themselves to some $400 million of Hollinger funds from 1996 to 2003. That's roughly 95 percent of the company's net income for the period.
Hollinger owns The Chicago Sun-Times, The Jerusalem Post and many smaller papers, and recently sold The Daily Telegraph in London. Conrad Black, who was born a Canadian but is now a British lord, is the publicly traded company's largest shareholder and was its chief executive until last fall. He treated Hollinger as if it were his private piggy bank, the inquiry found.
Its report, entitled "A Corporate Kleptocracy," accuses holding companies controlled by Mr. Black and Mr. Radler of siphoning off hundreds of millions of dollars from Hollinger in dubious management fees and absurd noncompete fees. The men are also accused of having the company bankroll joyrides on the company jet, handbags and exercise equipment for Mr. Black's wife, birthday opera tickets, and those generous charitable donations that make one an esteemed member of the community.
As in the case of Enron and Tyco and other recent tales of corporate thievery, a hapless board of celebrity directors figures prominently in this case. The Hollinger board included the likes of Henry Kissinger; Robert Strauss, the former Democratic Party leader and ambassador to the Soviet Union; and Richard Burt, the former ambassador to Germany. Richard Perle, the Washington foreign policy hawk who served in President Ronald Reagan's Defense Department, comes in for special criticism in the report - he is accused of pocketing more than $5 million in fees from the company, partly from inappropriate dealings that were conflicts of interest. Plenty of investors may have been suckered into buying Hollinger shares because of its board's star power, but its directors seem to have acted as Mr. Black's marionettes.
Mr. Black and Mr. Radler deny any wrongdoing and disagree with the conclusions of the 513-page report. Part of their defense is to assert that the directors signed off on all their compensation, but some directors have been saying they were misled. The new Hollinger board and investors are seeking to recover $1.25 billion from Mr. Black and others, and the escalating legal battle will continue the scrutiny of the role of the board.
It is hard to imagine that directors who were even minimally engaged in the running of a company wouldn't have raised more questions about Mr. Black's behavior. If there was ever a mess that made the case for the S.E.C.'s using the post-Enron reforms to force boards to exercise greater vigilance, this is it. Corporate kleptocracy should at least be a challenge.
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Posted by Alberdi & Urquiza to Capítulo IV: Fallas en nuestra economía de mercado at 9/02/2004 02:20:00 PM
The New York Times > Opinion > Corporate Kleptocracy
(Esta clase de problemas no son exclusivos de nuestra economía como se puede deducir de este artículo)
White-collar crooks typically skim from the top, but Conrad Black stands accused of pocketing the whole top, the middle and much of the bottom of the barrel of his company's assets. An inquiry that was commissioned by the company, the Hollinger International newspaper publisher, and led by Richard Breeden, a former chairman of the Securities and Exchange Commission, accuses Mr. Black and his chief operating officer, David Radler, of helping themselves to some $400 million of Hollinger funds from 1996 to 2003. That's roughly 95 percent of the company's net income for the period.
Hollinger owns The Chicago Sun-Times, The Jerusalem Post and many smaller papers, and recently sold The Daily Telegraph in London. Conrad Black, who was born a Canadian but is now a British lord, is the publicly traded company's largest shareholder and was its chief executive until last fall. He treated Hollinger as if it were his private piggy bank, the inquiry found.
Its report, entitled "A Corporate Kleptocracy," accuses holding companies controlled by Mr. Black and Mr. Radler of siphoning off hundreds of millions of dollars from Hollinger in dubious management fees and absurd noncompete fees. The men are also accused of having the company bankroll joyrides on the company jet, handbags and exercise equipment for Mr. Black's wife, birthday opera tickets, and those generous charitable donations that make one an esteemed member of the community.
As in the case of Enron and Tyco and other recent tales of corporate thievery, a hapless board of celebrity directors figures prominently in this case. The Hollinger board included the likes of Henry Kissinger; Robert Strauss, the former Democratic Party leader and ambassador to the Soviet Union; and Richard Burt, the former ambassador to Germany. Richard Perle, the Washington foreign policy hawk who served in President Ronald Reagan's Defense Department, comes in for special criticism in the report - he is accused of pocketing more than $5 million in fees from the company, partly from inappropriate dealings that were conflicts of interest. Plenty of investors may have been suckered into buying Hollinger shares because of its board's star power, but its directors seem to have acted as Mr. Black's marionettes.
Mr. Black and Mr. Radler deny any wrongdoing and disagree with the conclusions of the 513-page report. Part of their defense is to assert that the directors signed off on all their compensation, but some directors have been saying they were misled. The new Hollinger board and investors are seeking to recover $1.25 billion from Mr. Black and others, and the escalating legal battle will continue the scrutiny of the role of the board.
It is hard to imagine that directors who were even minimally engaged in the running of a company wouldn't have raised more questions about Mr. Black's behavior. If there was ever a mess that made the case for the S.E.C.'s using the post-Enron reforms to force boards to exercise greater vigilance, this is it. Corporate kleptocracy should at least be a challenge.
--
Posted by Alberdi & Urquiza to Capítulo IV: Fallas en nuestra economía de mercado at 9/02/2004 02:20:00 PM
posted by Pablo Presas at 5:24 p.m.
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