Crossing swords with [Conrad] Black [aka Lord Tubby of Fleet]
Jan. 25, 2004. 01:00 AM
Crossing swords with Black
LINDA MCQUAIG
Conrad Black is no doubt displeased that Ontario authorities are investigating his financial empire. But at least he doesn't have to worry about waking up to find swarms of burly investigators at the door, keen to poke around in every corner of his stately mansion, including his underwear drawer.
That sort of deep probing may soon be routine for journalists (not to mention young Arab-Canadian males) under the invasive national security laws put in place after 9/11, as Ottawa Citizen reporter Juliet O'Neill discovered one morning last week.
But there's been no such toughening of provincial securities laws, under which Conrad Black is being investigated in connection with allegations he took millions of dollars in unauthorized payments from the treasury of a publicly traded company.
So, it seems, reporting information deemed "national security" is a more serious transgression than allegedly diverting a corporation's funds for one's personal use.
I doubt the public shares this view. There didn't appear to be any public pressure on the RCMP to clamp down on O'Neill, but there's been lots of public pressure for an investigation of Black.
It was this pressure that prompted the Ontario Securities Commission (OSC) to announce last week that it was investigating Black's financial dealings. (An OSC spokesman noted the commission had been taking a "pounding" over its apparent lack of action on the Black front.)
Lest the public now feel confident that Black's activities will be fully probed (and subjected to discipline, if necessary), it's worth noting that the OSC — which is charged with policing the Toronto stock market and by extension the Canadian corporate world — has been timid in the past in its dealings with Black.
Indeed, if history is any guide, Black can expect the long arm of the law in Ontario to be sheathed in a very soft glove.
I happen to have a file that suddenly seems relevant.
In the early 1980s, when I was a writer for Maclean's, I teamed up with the magazine's then-associate business editor, Ian Austen, to write about a case involving Black and one of his companies, Norcen Energy.
Briefly, Norcen launched a takeover bid for Cleveland-based Hanna Mining Co. in 1982. Hanna fought back in court, alleging that Norcen had failed to disclose its takeover intentions in documents it was required to file, thereby allegedly violating U.S. securities laws.
U.S. District Court Judge John Manos apparently agreed; he granted Hanna a temporary injunction, ruling that the evidence "establishes conclusively" that Norcen had formed a takeover intention earlier than it had disclosed.
The U.S. Securities and Exchange Commission (SEC) investigated and received a promise from Black that he'd obey U.S. securities laws in the future. That undertaking has become significant, now that the SEC is investigating Black's recent financial dealings.
Meanwhile, in Canada, an OSC investigation was launched into whether Norcen had violated our securities laws in connection with the takeover bid, which had repercussions for Canadian investors.
After an exhaustive probe, two OSC staff investigators produced a 138-page report recommending that the commission lay a total of 26 securities charges against Black, Norcen and its president, Edward Battle, and that the charges be dealt with in court, not by regulation.
The OSC investigators' tough report received strong backing from the provincial ministry of the attorney general, which was overseeing a parallel investigation conducted by the Metro Toronto police fraud squad.
But when the eight members of the Ontario Securities Commission met in April, 1983 to consider prosecuting Black, they decided not to.
Three days later, the attorney general's ministry, headed by Roy McMurtry (now Ontario's chief justice) asked the commission to reconsider, and sent two top crown attorneys to urge the commission to lay securities charges. In a late-night session lasting six hours, the commission again declined to take action.
Exactly why the commission chose to spare Black isn't clear, but one suspects that the Bay Street connections of many of its members could have been a factor.
After deciding not to prosecute Black, the OSC put out a press release stating that its decision was based on "the investigation carried out by its staff." No mention was made of the fact that its staff investigators had actually come to the opposite conclusion — that a number of charges should be laid against Black.
Black declared himself "absolutely exonerated by the most authoritative body." Indeed, he had been cleared by the OSC.
By deciding not to lay charges back then, the OSC enabled Black to proceed — without any cloud over his reputation — and eventually build up his massive corporate empire.
The rest is history.
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Linda McQuaig is a Toronto-based author and political commentator. Her column appears Sundays. lmcquaig @ sympatico.ca.
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