Firing Line

W.F.B. vs. the SEC

William F. Buckley Jr., the conservative columnist, editor, spy novelist and talk-show Torquemada, strikes an all wise posture when lecturing Presidents, diplomats and others on their ethical responsibilities. But last week, on the firing line himself in a civil fraud case brought by the Securities and Exchange Commission, Buckley found himself pleading, of all things, ignorance.

The SEC accused Buckley of misusing his position as chairman of the publicly owned Starr Broadcasting Group, Inc., a Westport, Conn., firm owning radio and TV stations throughout the U.S. The charge was that he arranged to have the company bail him and three partners out of a bad investment in some Texas movie theaters by having Starr buy the theaters. Rather than fight the charge, Buckley signed a tough consent decree, saying :hat he wanted to avoid costly litigation. The decree requires him to surrender Starr stock worth more than $600,000 to a court-administered fund that may be distributed to other Starr stockholders and to forgo some payments Starr owed him. The total cost to Buckley could reach $1.4 million, which is unusually stiff for an SEC case. Buckley was also barred from serving as an officer or director of any pubicly owned company for five years.

Buckley helped create Starr in 1966 and was its chairman from 1969 until 977. In 1971 he set up a separate venture called Sitco in partnership with three other Starr officer-directors. Sitco bought 7 Texas movie theaters, but the investment went sour; revenue from the theaters could not cover the interest on the partners' loans, and they faced a threat of personal bankruptcy. In 1974, however, Buckley allegedly proposed that Starr itself buy the theaters. The next year it did --for $8 million, most of which represented assumption of the partners' loans. The SEC charged that this was an improper use of Starr's assets, and that Starr had left out key information, such as the fact that Sitco was losing money, in its 10-K reports. These are reports to the SEC containing detailed financial information that must be submitted annually by nearly all public companies.

Even though he signed a consent decree declining to submit the matter to the courts, Buckley characteristically could not let his differences with the SEC go by without a public riposte. He released copies of his correspondence with the SEC on the matter, plus a long question-and-answer sheet. Among other things, he contended that he could not fairly be blamed for the misleading 10-K reports because he had not bothered to read them, and had relied on the advice of others that they were accurate. Said Buckley: "I did not even know what a 10-K was [at the time]. I live in a world in which people are simply unaware of the uses of boiler plate."

Buckley says he will never again sit on a public company's board. "The evolution of the director's responsibility is running ahead of inflation," he complains. "The contemporary director is supposed to know more about accounting than the company accountant, and more about the law than the company lawyer." In the past Buckley has taken a different line. In 1973 when he was scourging Richard Nixon for ducking responsibility for Watergate, he wrote an imaginary speech on what Nixon should have said when he fired John Ehrlichman and Robert Haldeman: "Theirs alone is not the blame. I am not your President because I am naive."

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