CEO Self-Dealing -- Conrad's Black Eye

Stephen Baum

March 5, 2008

So famous, powerful, jet-setting news magnate Conrad Black has been convicted of fraud. And started serving his 6+year sentence today. Many CEOs shudder at what looms in his future – probably more litigation, a possible tell-all book by his wife, the loss of a friend of thirty years, exclusion from important places that were his sanctuary and a distrust by anyone of character with whom he seeks to do business.

And he has given the public yet one more case of self-centered leadership. Another black eye for CEOs. Could anyone have seen it coming?

Based on my own interviews with more than two dozen CEOs, today’s leaders were shaped by experiences that began in their youth. Especially their character, their integrity. If they did something unethical and hated the feeling in the pit of their stomach or the consequences when their parents found out, they would move along the good path. I believe that is true of most of the top hundreds of corporation CEOs. However, if their reaction was that they got away with it or that they could easily abide the consequences, they began to slide down the greasy pole.

At age 14, Black was expelled from a Toronto private school for stealing copies of coming exams and selling them to his fellow students. So it isn’t too much of a stretch to accusations of self dealing as the leader of a public company. It is only my opinion, but I bet that if boards and other entities who placed their trust in him had taken a more thorough look at what shaped him, they might have found other instances, where his otherwise attractive traits – like pushing buttons and testing the limits, thinking big, and generally battling for what he wanted – went awry because he wasn’t motivated by good purpose for the enterprise and all the constituents it touches. Sure, association with him meant rubbing shoulders with the rich and famous and making gains unachievable by other means. But it came with a price.

“In addition to appealing for his freedom, Mr. Black will now be fighting for what’s left of his legacy. In the eyes of Patrick Fitzgerald, the United States attorney who prosecuted him, it is a cautionary tale.”

If you have often wondered what personal traits put a leader in this predicament, count the number of words in an article about his troubles before the telltale word appears: arrogance. As Paul B. Healy,Mr. Black’s own head of investor relations in a prosecution witness in the trial remarked: “This is not a happy day. And I believe that all of this could have been avoided, if you just drop the arrogance.”

Don’t be fooled by his being convicted of lesser than initial charges. That is a pattern that goes back to convicting a famous Prohibition racketeer of tax evasion. But do take away the central message: it takes decades to build a reputation and seconds to lose it.

Finally, how lonely and difficult would your life be if you lost trust and were estranged from friends and family?

This article originally appeared on Stephen Baum is the author.

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