Tuesday, May 30, 2006

So, Mr. Black, have you considered Cuba?

So, Mr. Black, have you considered Cuba?
Headshot of Margaret Wente

These can't be happy times for Canada's best-known former newspaper
proprietor. The U.S. Justice Department has bagged its biggest trophy
yet. The two men who ran Enron Corp. are going to jail for a very long
time, and the next target in prosecutors' sights is Conrad Black.

Mr. Black has good reason to curse Enron's name. Because of Enron,
white-collar criminals are being pursued with more zeal than drug lords
and the mob. They're going to the same jails, too. No more Club Fed.

The sentences are harsh -- 25 years for WorldCom's Bernie Ebbers, 15 and
20 years respectively for the Adelphia cable guys, 81/3 to 25 years each
for the rogues at Tyco International.

All these men have found out the hard way that U.S. prosecutors are more
cutthroat than anyone they ever met in the business world. They'll sweat
you till you beg for mercy. They'll hound your friends and wives.
They'll squeeze your former partners until they beg to rat you out. And
when the judge sends you away, they'll hang your mug shot on their
trophy wall.

This time, it took a mere six days for a Texas jury to deliver more than
two dozen guilty verdicts against former Enron chairman Ken Lay and
onetime CEO Jeffrey Skilling. "Prosecutors have tasted the red meat,"
one former federal prosecutor told The Wall Street Journal.

They've also perfected the art of the kill. This time, they didn't
bother deluging the jury with volumes of arcane accounting data. They
turned Enron into a trial of character. Were these guys playing on the
level, or were they not? Were they honest at all times, or not?

The prosecution didn't have to show that Mr. Lay and Mr. Skilling
masterminded a fraud. They didn't have to show criminal intent. All they
had to do was convince the jury that these men were not always
completely forthcoming about the pickle the company was in. The defence,
for its part, said Enron was brought down by vindictive journalism and
evil speculators. "This is not a case of 'hear no evil, see no evil,' "
Mr. Skilling's lead lawyer told the jury. "This is a case of 'there was
no evil.' "

But the prosecution persuaded several highly placed Enron insiders to
testify otherwise. One was former chief financial officer Andrew Fastow,
whose co-operation they gained by leaning on his wife, Lea. They nailed
her on a minor charge of tax evasion, then threatened to temporarily
orphan the Fastow children by sending both their parents to jail at the
same time. They also worked their persuasive charm on former treasurer
Ben Glisan, who had kept detailed notes of key meetings. He saw the
light after being detained for 11 days in solitary and then serving time
with certain cellmates who, he said, made him fear for his


People figured that Ken Lay, Enron's aw-shucks, Bible-toting founder,
would win the jury over with his folksy charm. Uh-uh. On the stand, he
demolished himself. He even picked fights with his own lawyer. By the
end, his reputation as a mild-mannered good guy was in shreds.

Like Mr. Lay, Mr. Black appears supremely confident that his day in
court will vindicate him. "I would not be so sure about the fall of the
titan," he wrote in an e-mail to my colleague Lawrence Martin a few
months ago. "I will win this case and too many people are over-invested
in the theory of my permanent downfall." Unfortunately, he lacks even a
semblance of Mr. Lay's folksy charm. Will a Chicago jury take to him?
What's your guess?

Mr. Black, too, intends to mount a "there was no evil" defence. He
insists that he "did not receive a cent that was not approved . . . and
publicly disclosed" or "that was disproportionate to the huge gains that
were generated" by him and his management team." Unfortunately, he, too,
has someone who has been persuaded to co-operate with the prosecution --
David Radler, who will be allowed to do his time in kinder, gentler
Canada in exchange for services rendered.

It would be wrong, of course, to make much of these parallels. Mr. Black
has yet to have his day in court and, in the larger scheme of things,
he's just a pipsqueak. The Enron debacle destroyed billions of dollars
in market value and thousands of jobs. Mr. Black's alleged fraud amounts
to a measly $80-million -- hardly enough to make an ambitious prosecutor
get out of bed.

Yet, with the U.S. justice system in a lynching mood, even the most
blameless tycoon might be pondering his options. I hear Cuba's nice. The
winters are warm and the cigars are great. There's free health care. And
the Americans can't extradite you.

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