Thursday, May 3, 2007
Does skimming documents satisfy the directors' duty of care? All three members of the audit committee at Hollinger International have testified, and whether or not Conrad Black is found to have committed fraud, the directors' attention to their responsibilities comes off as wanting. Each of the audit committee members testified that they were misled by Black and did not know that the large non-compete payments were going to Black and his confederates, not to the company. The problem is that there is plenty of documentation spelling this out; defense lawyers found eleven instances. James R. Thompson, former governor of Illinois, testified that the documents, principally SEC filings, were lengthy and loaded with jargon and he "would skim them." He conceded that he did not read them in detail -- "I should have, but I did not." See NYTimes, Ex-Governor Assailed as Inept in Trial of Conrad Black.