The unconquerable now is in the hunter’s sights.
Conrad Black still walks with a swagger, but now it is with a bull’s-eye on his back.
Now he is fair game, his newspaper empire, his publicly traded Canadian holding company Hollinger Inc., and Hollinger International embroiled in a financial reporting scandal.
And this time, the former CEO of Hollinger International, the subsidiary of Hollinger Inc., has nowhere to hide, nowhere to run.
In the U.S., at least, the guns are cocked. The Yanks should have a swell time on this hunt.
Meanwhile, in Canada, we collectively puff out our chests – and shrug our shoulders at Conrad Black.
The U.S. Securities and Exchange Commission (SEC) was quick to pounce on this scandal and launch an investigation into Hollinger’s shoddy financial reporting over $32.15 million US in non-competition payments made to Black and other Hollinger executives. The SEC subpoenaed Hollinger International, its audit committee and auditor KPMG.
And it shouldn’t be long before America’s top stock market cop Eliot Spitzer, the New York State attorney general, sinks his teeth into this juicy Hollinger affair.
As usual, it was an American who set off the alarm bells in the first place. Black would probably still be a CEO with two corporate jets, a maid and butler (courtesy shareholders), and not a run-of-the-mill book vendor at an Indigo kiosk hawking a Franklin Delano Roosevelt biography if American Christopher Browne of Tweedy Brown Co., a major shareholder in Hollinger International, hadn’t lodged a formal complaint and investigation of lavish fees paid to Hollinger’s brass.
Thank goodness for the Yanks, because there isn’t much action from anyone with authority in the country where Black should be held accountable.
Don’t expect much from Canadian securities regulators, who have a history of being missing in action when the corporate governance yogurt hits the fan.
Of course, the fact that this country doesn’t even have a national securities regulator but only regional regulators isn’t exactly a reassuring vote of confidence to investors.
As usual, the Americans are taking the lead on this investigation (Hollinger also trades on the New York Stock Exchange) while the Ontario Securities Commission says it is “co-operating” with the SEC.
Boy, them’s fightin’ words, eh?
While all hell was breaking loose in the U.S. with a rash of scandals involving major corporations and brokerage houses in recent years, Canadians were quick to point a finger south and shrug it all off as exclusive all-American hubris.
Well, that rash is spreading awful fast. The Conrad Black affair hits pretty close to home.
And now the SEC, which is constantly under fire for its wrist-slapping disciplinary style, has set its sights on another dubious Canadian company that trades in the U.S, Biovail, and its CEO, Eugene Melnyk, over accounting practices.
But at least we can detect a pulse in the SEC and the U.S. government has taken the bull by the horns by passing the Sarbanes-Oxley bill designed to crack down on corporate governors like Black who choose to run public companies as if they are private companies.
Isn’t it high time somebody in Canada, somebody with the clout of an Eliot Spitzer, stepped to the plate and went to bat for investors? Be it government or the securities regulators, somebody needs to start looking at the big picture and asking the hard questions, such as why Canadian auditors are allowed to set accounting and financial reporting rules.
In Conrad Black, they have their piece of flesh. Now, let’s see if they have the guts to bare their teeth.
* SAGE WORDS: “A man who has never gone to school may steal from a freight car, but a man with a university education may steal the whole railroad.”
– Franklin Delano Roosevelt.
HOT ALBERTA STOCK: DYNASTY GOLD
DYG-TSXV $1.20
Up 55 cents (+89.1%) on 727,600 shares (for week ending Nov. 21).
You want double-barrelled action? Mention gold and China in the same breath and you've got a virtual double in a week. Vancouver upstart Dynasty didn’t even need to throw investors a bone. This company
hasn’t even churned out a press release in more than a month.
COLD ALBERTA STOCK: WEDA BAY MINERALS
WDA-TSX $1.18
Down 42 cents (-26.2%) on 1,304,700 shares (for week ending Nov. 21).
Nothing, not even Weda Bay, goes straight up. Nope, not all the big winners of the previous week’s stunning four-bagger were lounging on a tropical beach. Some of them stayed home to take profits in this company that has been on fire over its nickel prospects in Indonesia.
(Gyle Konotopetz, who once toiled for a Conrad Black-owned newspaper, can be reached at gyle@businessedge.ca)
