It is not pretty. The decision of Judge Richard Posner of the Seventh Circuit Court of Appeals of Chicago in the case of Conrad Black is a wonderful example of the end of a concept. The concept of the manager as hero perhaps. The end of the immunity of the executive who is only looking out for the betterment of the shareholder...ok, the majority shareholder...or it is the shares of the executive? Certainly the concept that Conrad Black is a greatly misunderstood and greatly impeded genius is over. The papers are full of their take on Posner's deconstruction of the collapsed scheme but here is the ruling in full in pdf form. There is a key passage you really need to understand:
They are making a no harm-no foul argument, and such arguments usually fare badly in criminal cases. Suppose...your employer owes you $100 but balks at paying, so you help yourself to the money from the cash register. That is theft...even though if the employer really owes you the money you have not harmed him. You are punishable because you are not entitled to take the law into your own hands. Harmlessness is rarely a defense to a criminal charge; if you embezzle money from your employer and replace it (with interest!) before the embezzlement is detected, you still are guilty of embezzlement.
I think any well raised child would recognize that principle. Note how it is so simply put. But it frames so much of the creeping acceptance of executive and managerial excesses of the last few decades, perhaps starting with the narrative 1987 movie Wall Street and the years that follow in which such an approach to capitalism seemed less and less a deviation, inculcating an idea that things that are wrong might not be wrong. But Judge Posner knows what wrong is. And now so does Conrad.
Comments
jay currie - June 27, 2008 2:52 am
That is, as Posner's work tends to be, a pretty incisive opinion. Made all the more incisive because Posner pulls on the mask of innocence and refuses to even think that the effective owner of a company might arrange his affairs so as to minimize the taxes he might owe. Plus, and for the first time I have seen, Posner invents a really convincing argument as to why Black's removal of documents (? we still don't know what was in the boxes) from his office is, in fact a crime even though copies of all the material had long been available to the prosecution: according to Posner, the mere fact the documents were in Black's office had potentially probative value which was destroyed when he removed them notwithstanding the fact that copies of those documents had already been made available to the prosecution - location included.
Black and his inner circle were idiots - they might even have committed civil fraud - but to accept this as criminal fraud is more than a stretch.
Of course, had Black not been an idiot, he would not have been charged at all.
I remember, as I read Newman's book on Black, marveling at the sheer power of "proprietorship". The problem Black had - other than the fact he never had any real money - is that he failed to note the distinction between a private and a public company.
To his great cost Black continued to behave as if he owned the company rather than the shares which controlled the company. There is a distinction and one which Posner is more than willing to make crystal clear.
Alan - June 27, 2008 8:00 am
You have fallen into the same trap that Black did - to a minor degree, of course. You have asserted that you didn't know what is in the boxes yet said that the content was known to the prosecution. You may just be suffering from an unfortunately placed question mark but it does speak to a failture to grasp what is pointed out above - no harm is not the definition of no crime as the undoing what was does is not enough. Libertarians may not like it - but the breach of the law is in the embezzlement not in the counting of the cash after the fact. "Effective owner" is the sort of fudging you hear from defence council all the time - reaching for the untenable. Not grasping that Posner might have something to teach you on the basic limits of decency is a greater stretch.