The Conrad Black Trial

If you haven't been following this trial, in some ways it is more interesting that Paris Hilton's jailbird escapades, and certainly it is a great deal more relevant to you.

This is what Prosecutor Patrick Fitzgerald (remember him from the Scooter Libby investigation?) has been doing to fill his free time. The case involves Conrad Black, a member of the House of Lords in England, a Canadian citizen and resident, and one of the biggest media barons in the world. Through one of his companies, Hollinger International, he sold off some newspapers to other buyers, and Hollinger made a profit of $3 billion dollars. For this, Black was given a bonus of almost $60 million dollars. The shareholders saw their stock value increase, which makes this not exactly an Enron case. The other thing that makes it not Enron is the lack of any actual crime that was committed, as discussed in the next paragraph.

Fitzgerald's office seems to object to a group of "non-compete" agreements, i.e. that the person selling the newspaper will not then open a rival newspaper in the same market as the one they just sold. This is standard practice, and happens for obvious reasons that are fairly obvious. If the seller could open a new paper, it would push the value of what they just sold down to zero, bankrupt the person who had bought that paper, and the seller could snap it back up at a fraction of its value. Remember that if you are thinking of purchasing a newspaper or a magazine franchise from someone: always get a non-compete agreement.

In America, you pay taxes on non-competes, because that's the way our tax law is written. In Canada, you don't pay taxes on them. In fact, it's one of the shockingly few things in Canada that isn't taxed. Black, being a Canadian citizen who lives in Canada, pays his taxes according to Canadian law. Shocking concept, isn't it? But Fitzgerald seems to object to that, and wants to send him away to jail for 101 years, not for tax evasion (there would be no hope of securing that conviction) but for defrauding the Hollinger for $60 million. Fitzgerald is saying that these non-compete agreements are illegal, and cost the company money.

I have trouble following how you can cost a company money when you have made the company a profit of $3 billion dollars. Indeed, if anyone wishes to make me a profit of $3 billion dollars, I shall be happy to award them a $60 million dollar bonus, which is what Hollinger did. But perhaps my naive view of the way business works is why I am not a federal prosecutor.

Also, it's hard to say that one defrauds a company when its entire board of directors, the audit committee within the company, and the shareholder's vote all agreed to the sale and the bonuses awarded. That's one heck of a large conspiracy going on there. And now that I think of it, I could have accessed the publicly disclosed records, since I have a computer and access to the internet. I must be part of the conspiracy too!

There was never anything illegal committed, as far as I can tell. Shouldn't a crime have been committed before the government decides to prosecute? Mike Nifong decided to prosecute the Duke Lacrosse team without waiting for them to commit a crime, and people thought it wrong. Well it is wrong. If there is no crime, then prosecution becomes government oppression.

Another odd thing about this case is that it is in the Federal District of Northern Illinois. So they are prosecuting a Canadian citizen over something involving Canadian tax laws. Don't get me wrong: I would love to absorb Canada into the United States lock, stock, and barrel, and make that country work the way it ought to. That's the imperialist in me talking. But to the best of my knowledge, Canada is not yet part of the Union. So why is Fitzgerald claiming sovereignty over our northern neighbor? It makes no sense to me.

If the prosecution wins this case, the precedent it sets is this: you will be prosecuted if the government dislikes you, quite independently of whether you have committed a crime. That would be an alarming thing to have happen in the home of the Free.

My thanks to Mark Steyn for getting me interested in this case.