It's a tougher world; A director visits with his former CEO, now residing in the Gray Bar Hotel.

• Author: Sutton, Gary
• Position: SUTTON'S LAWS

THE FRISKED ME. My name had been pre-screened for visitation rights. The buzzer sounded, the steel door swung open, clanged shut behind me, and I was escorted into the waiting area.

He entered wearing pale green pants and a shirt, not unlike hospital scrubs, except this was prison garb.

Once he was our CEO. Now I oversee the business on an interim basis.

It gives a director things to mull over. Like how the rules change.

[ILLUSTRATION OMITTED]

His crime, by the way, was antitrust, or price-fixing. (When you visit

your coffee boutique, chances are good it will have posters up assuring you that their beans are bought on a "Fair Trade" basis. "Fair Trade" is an acceptable phrase for price-fixing. Avoiding the brutality of the marketplace and competitive bids. Go figure.)

Our former CEO caught his sales manager talking with another supplier. This happens. This other supplier, however, had also been acquired by us. Part of the deal to pass the FTC was that we could rationalize the back ends of both businesses, but the products would be built independently and marketed separately. This is a classified service so I'm not naming names. My guy chewed out the manager and reminded him of the legally binding agreement they'd signed.

Well, that's not enough these days. The sales guy conspired anyway. It was discovered. Mr. Sales got six years, but a promise of cutting that to three if he'd testify that the CEO was part of the conspiracy. He did. He received three years in the slammer, but was released a year early after pleading that he had alcohol problems. There's another "go figure."

Our CEO was assured by legal counsel that they could beat his indictment.

"They only have the testimony of a convicted felon," the lawyers said. "And in the investigation, this felon was found to be embezzling."

But the legal team also said it was a 60:40 probability that they could win a jury trial, and if they lost, our CEO would get six years of free housing and meals, plus fifteen cents an hour for his labor inside. And, the expense would run over seven figures to go to trial--win or lose. But a plea bargain would only mean one year of prison.

He took the year.

Today, you better document stringently the absolute rules in dangerous areas. Make the managers read and sign them...