Timing is Everything

As a businessman, Conrad Black’s successes were invariably put down to impeccable timing. In landing Argus and The Daily Telegraph, his unerring sense of carpe diem was generally conceded to be the deciding factor. And yet, just as fate deals Lord Black a cruel hand, it seems this instinct has abandoned him. Take, for instance, his decision to fight in open court the indictments against him by the government of the United States. These charges came during a period of intense focus on the part of the Department of Justice on so-called white-collar or corporate crime.

A piece published Thursday in the In-House Counsel section of Law.com traces the history of this phenomenon back to the advent of the DOJ’s Corporate Fraud Task Force, in the wake of the Enron debacle. The product of an executive order by George Bush in July 2002, the task force, co-ordinating the resources of nine federal law enforcement agencies, was created to “restore investor confidence—and to deliver a strong dose of deterrence to executive suites.” In pursuing this end over the course of the past five and some years, the task force “won an unprecedented 1,236 corporate fraud convictions, including the convictions of 214 chief executive officers and presidents, 53 chief financial officers, 23 corporate lawyers and 129 vice-presidents.” All this was announced by then–attorney general Alberto Gonzalez at a five-year anniversary event on July 17—four days after the Black verdict. Amid the self-congratulation, though, it’s interesting to note the precipitous decline in indictments throughout 2006 and 2007 as compared to the relatively steady stream from 2002 through 2005.

“After issuing detailed reports in 2003 and 2004, the task force stopped reporting on its efforts in 2005, just as corporate fraud indictments slowed to a trickle. Our analysis shows 357 indictments in major corporate fraud cases between 2002 and 2005. But only 14 indictments were identified by the Justice Department as significant corporate fraud cases in 2006. There have been only 12 major corporate fraud cases indicted so far in 2007.”

In short, Black’s is arguably, for the moment at least, the last great fraudster trophy on the DOJ wall, joining the likes of Rigas, Ebbers and Kumar. Whether this is a result of a genuine change in corporate behaviour or the DOJ changing priorities—and therefore declaring victory—remains to be seen (the outcome of the SEC’s ongoing investigation into RIM’s backdating of executive stock options could be something of a harbinger in this regard). That Black would choose to fight a then-rising political tide against corporate malfeasance, rather than cut a deal, speaks to the decline of the very powers that put him across the DOJ’s bow in the first place.

What’s Behind the Drop in Corporate Fraud Indictments? [Law.com]