Black's conviction presents latest deterrent against CEO misdeeds
Former Hollinger CEO Conrad Black was convicted on three counts of mail fraud plus obstructing justice.
By Mark Trumbull | Staff writer of The Christian Science Monitorfrom the July 16, 2007 edition
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The message of the Enron era is still resonating for top executives: If you defraud your company, you could pay a big price.
A jury in Chicago amplified that warning Friday, convicting newspaper publisher Conrad Black of looting his media empire and carting away evidence. Unless he is successful on appeal, the Canadian-born tycoon with a flair for bombast faces a prison term of up to 35 years.
The trial is the latest in a series of high-profile checks on corner-office power. But at a time when stock-market indexes are hitting record highs, it's also a reminder that federal prosecutors aren't finished with their pursuit of white-collar crime.
"It's still in full swing," says Charles Elson, director of the Center for Corporate Governance at the University of Delaware. "My guess is that there are a lot of ongoing investigations."
What happens next, though, will depend on how seriously today's business leaders heed these courtroom dramas. A series of CEO prison terms is clearly acting as a strong deterrent to corporate misdeeds, experts say. But as the recent stock-index records attest, the business world is awash in money – with attendant temptations. Large sums are flowing in relatively new and unregulated channels.
"Certainly one wants to look very carefully at the hedge fund and private equity world, to see if there are any brewing scandals," says David Ruder, who served as chairman of the US Securities and Exchange Commission in the late 1980s.
Chief executives of publicly traded companies, for their part, make huge decisions and rake in huge paychecks. Yet in the end, they are servants as well as leaders.
"The corporation doesn't belong to the officer," says Mr. Ruder, who is affiliated with the Northwestern University School of Law in Chicago. "But sometimes, for the corporate managers, they don't quite see it that way."
A spate of high-profile trials since 2004 has helped send the message. Jeffrey Skilling of Enron, Bernard Ebbers of WorldCom, John Rigas of Adelphia Communications, and Dennis Kozlowski of Tyco International are among the former CEOs convicted in criminal trials.
Before the collapse of energy giant Enron Corp. in 2001, it was rare for a chief executive officer to pay for misdeeds with a long prison term.
Now, in addition to a tougher enforcement climate for old rules, they live under tough new rulers as well – vouching personally for corporate financial statements.
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