A Black Day for Yellow Journalism

Former media mogul Conrad Black has been convicted by a Chicago jury of three counts of mail fraud and one count of obstruction of justice and could face up to 35 years in prison for looting his former company, Hollinger International, of tens of millions of dollars.

Before his downfall, Black was a smaller-scale version of Fox-TV owner Rupert Murdoch, building a media empire that he used to inject his right-wing views into U.S., Canadian, British and Australian politics. He pumped money into the pockets of the neoconservative pundits who helped sell the war in Iraq and gave them prominent voice in his own newspapers.

In the interest of full disclosure, I should note that one of those pundits was his own obnoxious wife, Barbara Amiel Black, whose punditry included a jab at me in August 2003, when she complained in one of her columns that the British Broadcasting Corporation had interviewed me for a documentary about the techniques used by the U.S. and British governments to sell the war to the public. Amiel wrote that by interviewing people like me, BBC had shown a "political agenda that should be investigated. ... The war being won, the corporation's present stance is focused on attacking the reasons for it, especially the non-discovery of WMD." My judgment was suspect, she suggested, because I was "anti-war, anti-Bush and has an unhappy if not conspiratorial view of how governments in the West get voter support" — none of which I would necessarily deny (although I suspect that "unhappy" better describes her these days than me).

Banana Republicans coverNow that a jury has found Black guilty himself of conspiring to defraud his own business partners, it seems like a good time to publish an excerpt from the 2006 book that I co-wrote with John Stauber, Banana Republicans: How the Right Wing is Turning America Into a One-Party State. In the passage below, we include Conrad Black as an example of the corrupting influence that moneyed interests have on journalistic pundits whom they hire for lucrative side gigs as "corporate consultants."

The section below that discusses Conrad Black appeared in the U.S. edition of Banana Republicans, but our British publisher chose to leave it out when the book was published there, for fear of running afoul of England's onerous libel laws. Now that Black is officially a felon, however, perhaps the time has arrived when we can afford to share the full story even with our friends who live under the yoke of British tyranny.

This excerpt originally appeared as part of chapter one, titled "The Marketplace of Ideas":

Following the collapse of Enron, the Center for Public Integrity (CPI), a consortium of independent investigative journalists, compiled an extensive report that showed how the energy giant integrated strategic funding of think tanks into the rest of its lobbying activities, which gained favorable treatment from state and national governments on at least 49 occasions between the late 1980s and the company's scandal-ridden bankruptcy in December 2001. "To achieve its legislative goals," the CPI reported, "Enron employed multi-pronged strategies that included doling out campaign contributions to influential politicians, employing a nationwide network of lobbyists and building grassroots support for policy changes by bankrolling think tanks and other organizations that advocated those changes." Think tanks functioned within a network of Enron-funded organizations that advocated for the company's interests, including the Alliance for Lower Electric Rates Today, Americans for Affordable Electricity, Americans for Fair Taxation, the American Legislative Exchange Council, Citizens for a Sound Economy, International Climate Change Partnership, and the National Wetlands Coalition. "Before Enron started promoting the nationwide restructuring of the electricity industry," the CPI report stated, "the notion of a 'free market' for electricity was an academic issue discussed by university economists and think tank policy specialists who debated what constituted a natural monopoly. Enron made it into a political issue."

The Washington Post also investigated Enron's lobbying machine, which even used a computer program to calculate the exact dollar value to the company of the changes it got politicians to implement. "They called it 'the matrix,'" the Post reported, "a computer program that brought a scientific dimension to Enron's effort to seduce politicians and sway bureaucrats. With each proposed change in federal regulations, lobbyists punched details into a computer, allowing Enron economists in Houston to calculate just how much a rule change would cost. If the final figure was too high, executives used it as the cue to stoke their vast influence machine, mobilizing lobbyists and dialing up politicians who had accepted some of Enron's millions in campaign contributions." (In the end, of course, the program failed to account for the company's own cooked books, which kept the economists from noticing that Enron was hemorrhaging money even as they thought they were counting every penny.)

In addition to using election campaign contributions to cultivate support, the Post reported, "Enron 'collected visible people' by gathering up pundits, journalists and politicians and placing them on lucrative retainers. For a couple days spent chatting about current events with executives at Enron's Houston headquarters, advisors could walk away with five-figure payments." From 1989 to 2001, Enron gave 74 percent of its election contributions to Republicans, and most of the pundits on the payroll were conservatives as well, such as Weekly Standard editor William Kristol, commentator Larry Kudrow of the National Review, Bush economic advisor Lawrence B. Lindsey, Wall Street Journal columnist and former Reagan speechwriter Peggy Noonan, and Republican National Committee chairman Mark Racicot. (Princeton economist Paul Krugman was one of the few liberal thinkers hired to serve on Enron's advisory panel, from which he resigned when he later became a columnist for the New York Times.)

These disclosures prompted a bit of soul-searching from Robert W. Hahn, director of the heavily corporate-funded American Enterprise Institute-Brookings Joint Center for Regulatory Studies. Hahn penned an essay for the Policy Review, a publication of the conservative Hoover Institution, in which he frankly admitted that Enron was only the tip of the iceberg with respect to conflicts of interest affecting thinkers and the thoughts they think. "I am aware of many people who write opinion pieces on a particular subject for direct compensation. Some disclose that information while many others do not," Hahn wrote. "No one seems to care, except editors at major newspapers. They are less likely to publish op-eds that come with some kind of disclosure statement because they do not want to be viewed as supporting free advertisements for a particular point of view. This creates an incentive not to disclose. ... The basic problem is that we are all walking conflicts of interest because most of us have to work for a living. And in exchange for money, most of us make compromises. ... Should I note on the bottom of my op-eds that a small part of my compensation at AEI and Brookings is linked to the number of op-eds I publish in newspapers? This, indeed, has an effect on the number of op-eds I write, if not their bias." Hahn went on, however, to conclude that full public disclosure of these financial conflicts of interest "would actually do more harm than good by reducing the pool of experts and encouraging people to circumvent the system. ... Indeed, if disclosure requirements are enforced more rigorously, I would expect more think tanks to emerge that serve as fronts for all sorts of preferred interest group policies."

The financial unraveling of media mogul Conrad Black provided yet another example of rich people who collect conservative thinkers the way other people collect stamps or autographs. Until his resignation, Black, a British lord, was CEO of Hollinger International, a media conglomerate whose holdings included more than a hundred newspapers around the world such as the Chicago Sun-Times, the Daily Telegraph and Spectator newspapers in London, and the Jerusalem Post. Black himself sat on the board of directors of two think tanks — the Hudson Institute and the Nixon Center. His resignation from Hollinger in December 2003 occurred after the company fell into financial crisis, prompting minority shareholders to form an investigative committee, which found more than $32 million in payments that "were not authorized or approved by either the audit committee or the full board of directors of Hollinger." By January, the investigation had uncovered more than $200 million in dubious transactions, prompting the company to file a lawsuit against Black, alleging that he had "diverted and usurped corporate assets and opportunities from the Company through systematic breaches of fiduciary duties owed to the Company and its non-controlling public shareholders." The "systematic breaches" included "excessive, unreasonable and unjustifiable fees" paid from Hollinger to another company owned by Black, as well as other irregularities and "sham transactions." They also involved other tangled financial dealings reflecting what the New York Times described as a "seemingly porous boundary among Lord Black's social, political and business lives."

Prior to his fall from grace, Black had built a reputation for himself as a deep thinker in his own right, publishing a thick biography of Franklin D. Roosevelt, its dust jacket decorated with laudatory blurbs from conservative intellectuals including Henry Kissinger, columnist George F. Will, and National Review founder William F. Buckley, Jr. "What the blurbs did not mention was that each man was praising the work of a sometime boss," the Times reported. "During the 1990's, Lord Black had appointed all three to an informal international board of advisors of Hollinger International, the newspaper company he controlled. For showing up once a year with Lord Black to debate the world's problems, each was typically paid about $25,000 annually." In addition to Buckley, Kissinger and Will, Black's advisory board included luminaries such as former British Prime Minister Margaret Thatcher, former U.S. National Security Advisor Zbigniew Brzezinski, and Richard Perle, the former assistant secretary of defense to Ronald Reagan.

Most of these illuminati had received payments of more than $100,000 over the years but hadn't felt compelled to disclose the payments when they publicly praised or disseminated Black's political views. During the buildup to war with Iraq, for example, George Will had written a column praising a hawkish speech that Black gave in London. After the New York Times called to ask if he should have disclosed his financial relationship with Black at the time, Will snapped, "My business is my business. Got it?"

Buckley was a bit more polite but equally evasive. When Black's financial scandal began making the news in November 2003, Buckley had written a defense of the embattled mogul, calling him "extraordinarily learned, profoundly instructed, modest in demeanor, eloquent in speech and in kindnesses." Responding to editorial criticism of Black in the New York Observer, Buckley blasted the editorial as "febrile with hate" and added, "Since your mind inclines in that direction, hear this: he has never donated a nickel to any of my enterprises."

Technically, that might have been true, since the money Buckley received over the years was payment for services, not a "donation." But it was a lot more than a nickel. When queried by the New York Times, Buckley estimated that Black had paid him at least $200,000.