I was always a big supporter of Jim Thompson. He set the standard for federal prosecutors and was a pretty good governor. I thought that he did a good job as one of the only non-partisan participants on the 9/11 Commission. He kept the White Sox in Chicago, which qualifies him for sainthood on the South Side. His "last act" leaves me personally disgusted.
F. Scott Fitzgerald said American lives have no second act. There's a corollary that came to light, not for the first time, as "Big Jim" Thompson took his blows on the witness stand last week: Beware the final acts.
Curtain falls on dismal final act
Like so many others, Thompson tarnished legacy with serious mistakes late in career
By David Greising
Tribune chief business correspondent
Published May 6, 2007
James Thompson was a federal prosecutor who sent Illinois Gov. Otto Kerner to jail. Later as the state's longest-serving governor, Thompson kept the White Sox from leaving Chicago, repaved the state's roads and expanded McCormick Place.
Once discussed as a potential vice-presidential candidate to the first President Bush, he sat on President George W. Bush's 9/11 Commission. There, his incisive questioning was a relief from the histrionics of other members who seemed to love the spotlight more.
And now this. Thompson was an inattentive board member at Hollinger International Inc. He merely skimmed disclosures, and missed non-disclosures, as Conrad Black and his cronies allegedly looted the company that published the Chicago Sun-Times and other newspapers in the U.S., Canada, London and Jerusalem.
F. Scott Fitzgerald said American lives have no second act. There's a corollary that came to light, not for the first time, as "Big Jim" Thompson took his blows on the witness stand last week: Beware the final acts.
Time and again in business, people who were stellar performers damage their life's luster late in their careers. Silly, ill-conceived or even catastrophic mistakes can leave an indelible coda when they happen so late.
Thompson, 70, is hardly the first eminence to impale himself. Clark Clifford, adviser to presidents, narrowly escaped indictment in the scandal of Bank of Commerce and Credit International, which in 1991 blew up amid allegations of bribery, fraud and missing funds.
"I have a choice of either seeming stupid or venal," Clifford said, in explaining how he got swept into the mess.
Robert Jaedicke had served as dean of Stanford University's Business School before his ill-fated assignment as head of Enron Corp.'s audit committee. In that role, he suffered through a brutal Senate hearing in the aftermath of the company's collapse.
Human passions take a big toll. Last week, John Browne, the chairman of oil giant BP PLC, was three months away from retirement but abruptly resigned after admitting he lied to a British court in a scandal related to his use of company resources to help his male lover start a business.
Harry Stonecipher, who came out of retirement to help engineer the turnaround at Chicago-based Boeing Co., was brought down by an office affair. And World Bank President Paul Wolfowitz, long a fixture in conservative Washington politics, is embroiled in a scandal involving allegations that he used his position at the bank to advance his girlfriend's career.
When catastrophe hits in the gloaming, it tends to destroy the one thing such supersuccessful people tend to care most about: their legacies. They have made their fortunes. They have built their monuments. At the end stage of their careers, what often matters most is the reputation they will leave behind.
Donald Jacobs has empathy, to a point. Following reports of Thompson's testimony last week, the retired former dean of Northwestern University's Kellogg School of Management, felt the tremors of a great name tarnished.
"For a person like Jim Thompson, reputation is what it's all about," Jacobs said. "It's not nice to say, but he's etching his tombstone" with the testimony in Black's trial.
The image etched by Thompson's two days of testimony isn't pretty. He skimmed over key disclosures that might have alerted him to the scheme allegedly masterminded by Black. A change in the Hollinger's corporate constitution required at least one member of the audit committee to be a financial expert. Thompson, the committee's chairman, kept holding meetings even though no one on the committee met the new requirement.
Lawyers for Black and other defendants pushed a line of questioning that implied Thompson was dazzled by the perquisites of being on Black's board: A dinner at which British Prime Minister Tony Blair spoke; flights on the corporate jet; and belonging to a board studded with statesmen, including Henry Kissinger.
In one instance, it dawned on Thompson that $28 million in payments to Black, his partner David Radler and two others for their role in a big transaction might be out of line. He asked for a comparison with other newspaper deals. At the next meeting, no comparison was provided, but Thompson OKd the payments anyway and commended them to the full board.
"He asked the right question and didn't wait for an answer," Jacobs said. "To me, that doesn't satisfy the duty of care" that a director owes to shareholders.
It is worth noting that Thompson is not an isolated case of director indifference or ineptitude. At Enron, Tyco International Ltd., WorldCom Inc. and others in the rogues gallery of corporate comeuppance, directors have failed just as flagrantly or even more so. Last year's scandal at Hewlett-Packard Co. -- authorizing spying and identity theft in the effort to stop leaks from the boardroom -- shows they sometimes go along with practices that should be vetoed on their face.
Post-Enron reforms were supposed to fix some of these problems. Who knows? Had Enron happened earlier, Thompson might have taken his Hollinger duties more seriously and sniffed out conflicts of interest.
Tips were everywhere, even in Hollinger's public disclosures. "Did you want it in bigger print? Did you want it in neon?" defense lawyer Patrick Tuite derisively asked last week, when Thompson said no one at Hollinger had alerted him.
Andrew Weissmann, lead prosecutor in the early Enron cases, said the problem with boards before Enron was that nobody took the job seriously.
"Things were running well at Enron. The directors weren't there to oversee things, they were there as embroidery," Weissmann said. "In terms of not having adequate oversight in place on the board, that was fairly typical of the times."
The post-Enron reforms have put the onus on board members to be more aggressive. They have more personal accountability, not just in terms of reputation but legally, as well.
Still, other problems persist. Weissmann believes that the phenomenon of "overboarding," sitting on too many boards, is at the root of many board failures. Half a decade after Enron, though, it remains pervasive.
More than 1,000 directors sit on four or more boards, according to data from The Corporate Library, a firm that researches governance issues. Forty corporate chief executives sit on two boards besides their own. Most directors also sit on not-for-profit boards that consume time and attention.
"Are these distractions significant?" asks Ric Marshall, The Corporate Library's chief analyst, in an e-mail exchange. "Enough so that they are one of the factors we consider in our governance risk ratings."
Jacobs, who sits on three boards, said directors late in their career fall into a trap of underestimating the work, and the personal risks, of sitting on a board.
"If you ask Jim Thompson, I suspect it's not about the money," Jacobs said. "If you ask him to rank things -- give back all the money he earned as a director or get back the damage to his reputation -- he'd want the reputation back."
But that's the trouble with stumbling late in a career. Younger people can fail and bounce back. A blot near the closing curtain might never go away.
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dgreising@tribune.com
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