OTHER PEOPLE'S MONEY.(The Talk of the Town)(Conrad Black)

Two summers ago, Conrad Black, who was the chairman and C.E.O. of the newspaper giant Hollinger International, sent an e-mail to two of his fellow-executives complaining about the company's critics. Hollinger's stock price had been falling for two years, and shareholders had been grumbling that Black and his colleagues were more interested in lining their own pockets than in looking after the company's interests. Black found their whinging tiresome. Hollinger, he wrote, had gone public only to make "cheap use of other people's capital." In other words, the shareholders should remember their role, which was to hand over their money and keep their mouths shut. "They are a bunch of self-righteous hypocrites and ingrates," Black wrote.

Black's disdain reflected an assumption that his power was secure. When, in 1994, Hollinger went public, Black retained voting control, and so he never worried much about outside investors, behaving more like a feudal lord than like the C.E.O. of a publicly traded enterprise. He and his partners took home millions--on top of their salaries--in "management fees" and stuck private jets, personal chauffeurs, and household staff on Hollinger's tab. The company even put up twelve million dollars for a collection of F.D.R. memorabilia--when Black happened to be working on a biography of F.D.R.

In the end, the ingrates got their revenge. In recent months, Black has been deposed as chairman and C.E.O., called on the carpet by the Securities and Exchange Commission, and sued by Hollinger, which is looking to reclaim those management fees. Suddenly, Black has become an unwelcome intruder in the affairs of a company that he started.

Black succumbed to what might be called Hammer's syndrome: the failure of people who have taken a private company public to understand that the company is no longer entirely theirs. The condition owes its name to its most notorious exemplar, Armand Hammer, the founder of Occidental Petroleum. Its chief symptom is an acute inability to abide by the rules that come into play when you use other people's money--most obviously the fact that the cash a company earns does not belong to the biggest shareholder. Hammer, for instance, used Occidental's assets to buy a $5.8-million Leonardo da Vinci notebook (which Hammer renamed after himself), finance an art museum (named after himself), and fund the second volume of his autobiography. And he kept collecting a million-dollar salary long after he stopped doing any real work (and even after he died). More recently, the Rigas family, which founded a cable company called Adelphia Communications, used corporate money to build a golf course, fund an independent film, and buy an N.H.L. franchise. And in the late nineties Charles Wang, the founder of Computer Associates, used accounting shenanigans to justify bonuses worth more than a billion dollars for himself ...