A:

The term "corporate kleptocracy" is believed to have originated in a 2004 report by the Special Committee of the Board of Directors of Hollinger International.

Conrad Black, CEO of Hollinger International, modeled himself after media baron William Randolph Hearst. He set about creating his own empire by buying up newspapers and, when he had acquired enough capital, taking over the holding company - Argus Corporation. Black bought up newspapers and magazines all over Canada and seemed to have the magic touch for turning underperforming assets into cash cows. Soon, Black was buying up newspapers all over the world and, at one time point in the 1990s, owned papers in Australia, Jerusalem, Britain, and the U.S. His company, now called Hollinger International, was a global force that his hero - Hearst - never could have imagined.

Unfortunately, Conrad Black had an equal amount of vice to go with his uncompromising vision. Although his company performed well from its varied businesses and holdings, profits were not increasing. In fact, the company lost more than $200 million in 2003. When shareholders started an inquest, they found that Conrad Black, his friends and his family - who all held high positions in the company - essentially had been looting the company coffers through expense accounts. Worse yet, Black sold off some of the marquee assets to further his own interests.

The shareholders' committee released a report in 2004 that the SEC later made public. The report was full of accusations that would have impressed even Hearst, the father of "yellow journalism". Lady and Lord Black were paid millions in fees for intricately titled activities that shareholders discovered amounted to reading the paper and having lunch. Adding to the already considerable insults, the Blacks' philanthropy often came at the expense of Hollinger International rather than out of their own pockets. The case against Black was shuffled between countries, with Black's native Canada finally sentencing him to 6.5 years in prison on December 10, 2007. Of the hundreds of millions of dollars that Black had consumed, shareholders only received $6.1 million in restitution.

To learn more about corporate rises and falls, check out What Enron Taught Us About Retirement Plans.

This question was answered by Andrew Beattie.

RELATED FAQS
  1. How is the stock market affected by Thanksgiving and Black Friday?

    See why Thanksgiving and Black Friday sales numbers are considered to be important indicators for stock market activity throughout ... Read Answer >>
  2. What is Black Friday?

    Black Friday is a popular label attached to the Friday following Thanksgiving Day in the US. This day marks the beginning ... Read Answer >>
  3. How effective is creating trade entries after spotting a Three Black Crows pattern?

    Understand the basics of the three black crows candlestick pattern and how this reversal signal is used for the creation ... Read Answer >>
  4. How do I implement a forex strategy when spotting a Three Black Crows Pattern?

    Learn a common forex trading strategy traders use to capitalize on the bearish market reversal signal given by the three ... Read Answer >>
  5. How are Three Black Crows patterns interpreted by analysts and traders?

    Understand the basics of the three black crows pattern and how analysts and traders interpret this bearish reversal pattern ... Read Answer >>
  6. How do a corporation's shareholders influence its Board of Directors?

    Find out how shareholders can influence the activity of the members of the board of directors and even change official corporate ... Read Answer >>
Related Articles
  1. Economics

    Where Does the Term "Black Friday" Come From?

    The term Black Friday can be used in a couple of different contexts; one positive and one negative.
  2. Savings

    9 Worst Items to Buy on Black Friday

    If these items are on your holiday shopping list, consider finding a substitute – or don't expect to get the deal of the year.
  3. Credit & Loans

    Steps To Getting Out Of Debt

    Learn how to get your bank account back in the black and reach your financial goals.
  4. Investing

    4 Ways To Invest In Oil

    Many investors are looking for a way to invest in oil. Find out how you can buy into black gold.
  5. Investing

    Retailers Rebel Against Black Friday: Bad Move?

    The Black Friday creep may have hit a wall as some stores are shutting their doors on Thanksgiving and even Black Friday to give employees the day off.
  6. Budgeting

    3 Stores to Avoid This Coming Black Friday

    Learn what stores are best to avoid if you absolutely must participate in the madness known as Black Friday, and identify ways to obtain even better deals.
  7. Professionals

    Five High-Profile CEO Fails

    Enron filed for bankruptcy after the SEC accused CEO Kenneth Lay and others of manipulating accounting rules and masking enormous losses and liabilities.
  8. Forex Education

    October: The Month Of Market Crashes?

    In the finance world, October is a month to be feared, but is it justified?
  9. Your Clients

    How Black Millennials Are Closing the Wealth Gap

    African American Millennials are setting up their future children and grandchildren to succeed. Here's how.
  10. Investing News

    Hearst and Condé Nast in the Digital Age

    Condé Nast and Hearst are converting potential loss into opportunity by adapting to the digital age and transforming their products and operations.
RELATED TERMS
  1. Corporate Kleptocracy

    Buzzword that describes the greed of corporate executives who ...
  2. Black Market

    Economic activity that takes place outside government-sanctioned ...
  3. Black

    A description of a positive balance on a company's financial ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, ...
  5. Black Money

    Money earned through any illegal activity controlled by country ...
  6. Black Thursday

    The name given to Thursday, Oct. 24, 1929, when the Dow Jones ...

You May Also Like

Trading Center