CHICAGO To the old saw about close counting only in horseshoes and hand grenades, add this.
In the Conrad Black fraud trial, where alleged living large on the shareholder teat is a primary theme, an important prosecution witness was yesterday confronted with an example of his own hand in the corporate cookie jar.
Less than an hour after his cross-examination by Edward Greenspan began here yesterday, Big Jim Thompson was mumbling uncomfortably about the lavish trip he and his wife Jayne took to London -- on the late, lamented Concorde it appears, with a stay at the fabulous Claridge's Hotel thrown in and a big fat dinner at the Wallace Collection, a dishy national art museum, where Tony Blair was the speaker -- compliments of Hollinger International.
It was part of a tab that Mr. Greenspan said may have topped out at $500,000 to $600,000 and may have seen as many as 10 other Hollinger directors flying across the Atlantic.
Mr. Thompson is the former long-time Illinois governor (titles in the land of the free are apparently as enduring as they are in Britain, and here in his hometown he is still always called Governor) and former U.S. attorney for the Northern District of Illinois, the very office that is now prosecuting Lord Black and three other former Hollinger executives.
More relevant to the trial, Mr. Thompson was also a Hollinger director and the chairman of the board's audit committee, the sleepy trio who meant to be the first line of defence in the modern army of corporate government.
Like his fellow audit-committee members, Richard Burt and Marie-Josée Kravis, who preceded him to the witness stand, in his direct examination Mr. Thompson mostly repeated one word: "Never."
He never saw most of the lucrative non-competition payments Lord Black and the others were paid in various deals, he never approved them, he was never given any troubling information about them.
He relied on Lord Black and David Radler, Hollinger's former chief operating officer-turned-government witness who is soon to testify himself, and the rest of the management team.
Or, as he put it once - evoking memories of Everymother saying, "If the other kids all jumped off a bridge, would you jump too?" - "That's what I was told, so that's what I believed."
Mr. Thompson's "nevers" were a tad more troubling than those of Mr. Burt and Ms. Kravis, because, as was evident in Mr. Sussman's questioning, Mr. Thompson has virtually no independent recollection of many of the board and audit committee meetings, memos and telephone calls that are central to the case.
In several bizarre exchanges with Mr. Sussman, Mr. Thompson would say flatly, "I don't recall anything," and then spend minutes being asked a series of specific questions about whatever meeting or memo he didn't remember in the first place. Unsurprisingly, his answer was usually, "I don't recall."
His memory was little better about the London meeting, except that it was a board meeting, or perhaps a meeting of Hollinger's international advisory committee to which board members are usually invited.
Mr. Greenspan asked, "How did you get there?" Mr. Thompson replied, "I presume I flew over."
"You took your wife?" Mr. Greenspan said. "I believe so," Mr. Thompson said. "You stayed at Claridge's, one of the finest hotels in the world?" "I presume." ". . . You flew first class?" Mr. Greenspan asked. "Yes," Mr. Thompson said.
"How much do you think it cost?" Mr. Greenspan asked.
"I haven't the slightest idea," Mr. Thompson said, and Mr. Greenspan pounced: "That's because it never came before the audit committee, did it?" And Mr. Thompson agreed the entire tab never came before the audit committee or the board.
"Who paid?" Mr. Greenspan asked. "I presume Hollinger paid," Mr. Thompson said. "Why did your wife go?" "She was invited."
While providing delicious listening, the Thompsons' little jaunt to England (as well as at least one other they may have made, on the Hollinger jet, to Washington) is evidence of nothing but that the former governor's sleepiness as a watchdog of good corporate conduct extended to his own.
And it is neutral, proves nothing one way or the other, about the charges against Lord Black or the others.
Though both Mr. Thompson and Ms. Kravis acknowledged yesterday they were notified by the U.S. Securities and Exchange Commission at one time that they might face enforcement actions, the SEC later abandoned that, and he, like Ms. Kravis, is accused of no wrongdoing.
But surely the collective performance of the three audit committee members -- a leading economist in Ms. Kravis, a former ambassador and diplomat and arms negotiator in Mr. Burt, and a renowned prosecutor who was twice named as one of the 100 most influential lawyers in the United States by the National Law Journal -- raises questions about the efficacy of the sacred cow that is corporate governance.
If this sophisticated, well-travelled, smart trio, skeptics by nature and profession both, who earned as much as $5,000 per phone meeting and $35,000 a year as a retainer, couldn't be relied upon to bring their rigorous brains to the task, then who could? How much would a company have to pay to get someone who will pay attention?
And, the obverse, are Lord Black and David Radler really so cunning they could have known, when they brought these celebrated and accomplished folks aboard the Hollinger ship, that they were getting the acquiescence and passivity they allegedly sought?
"That's what I was told, so that's what I believed," Mr. Thompson said, and with a straight face too -- who could have guessed those words would ever be uttered by a hard-nosed, cynical old prosecutor?