No Questions Asked
Thompson might feel differently about primrose paths now that he’s traveled one of his own. Kerner and his pal Theodore Isaacs were accused of doing a secret deal that brought them racetrack stock worth more than $300,000. On Thompson’s watch–since 1998 he’s chaired the Hollinger International board’s three-person audit committee–Conrad Black and David Radler allegedly fleeced the company of more than $400 million. Thompson isn’t pleading stupidity, exactly.
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The Tribune was referring to Thompson’s treatment in a 513-page report on Hollinger International prepared by a “special committee” headed by Richard Breeden, former chairman of the Securities and Exchange Commission. Breeden didn’t accuse Thompson of doing anything illegal–no one’s done that except perhaps Otto Kerner’s son Anton–but he made Thompson look ridiculous. Thompson is–as Kerner was–a man of the world: U.S. attorney, governor, chairman of Winston & Strawn, member of the 9/11 Commission. How could he have been taken in so easily?
According to the report, Black and Radler raked in their gains in two primary ways: in “management fees” paid to companies they controlled and in “noncompete” payments that purchasers of Hollinger properties supposedly insisted on paying so that Black and Radler wouldn’t launch new papers and go into business against them.
The Breeden report dwells on the CanWest transaction. Almost $52 million of the sale price was allocated to noncompete payments, with Black and Radler getting some $12 million apiece and Ravelston some $20 million. According to the report, the audit committee was falsely told–and believed–that these were terms CanWest had insisted on. Among the things the committee didn’t ask, says the report, was “the obvious question of why Black, Radler [and lesser Ravelston officials] were entitled to receive payments for doing something they were already obligated to do by virtue of their status as Hollinger officers (since Hollinger had also signed a non-compete agreement with CanWest).”
May 2001: ratified “in a 20-minute telephone conversation” the CanWest noncompete payments even after finding out management had used inaccurate information to justify them.
The courts will decide if Thompson is personally liable for anything. The Breeden report leaves the question dangling.
