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Hollinger Panel Finds Tycoon Looted Firm

September 01, 2004|From Associated Press

Conrad Black, the former chief executive of Hollinger International Inc., conspired with associates to systematically loot the newspaper publishing company of more than $400 million -- nearly all of its profit from 1997 through 2003, an internal investigation found.

The report, which was filed with the Securities and Exchange Commission on Tuesday, was prepared by a special committee of Hollinger's board that was formed last year to examine concerns from shareholders about payments made to Black and others.

Black has since been forced out as CEO and chairman of Hollinger International after initial findings from the committee that he and others improperly received millions in fees and payments that should have gone to the company. He remains the company's controlling shareholder.

The committee's 500-page report makes even more sweeping allegations of wrongdoing, accusing Black and a senior associate, former Chief Operating Officer David Radler, of milking the company to satisfy their "ravenous appetite for cash."

In an introduction to their report, the three-member committee wrote: "This story is about how Hollinger was systematically manipulated and used by its controlling shareholders for their sole benefit, and in a manner that violated every concept of fiduciary duty."

The report was the latest blow to Black, a flamboyant media tycoon who has been steadily losing his grip on his newspaper empire over the last year.

Born in Canada, he renounced his citizenship to accept the title of Lord Black of Crossharbour in Britain, where he moved in high-level social circles. He also published a widely praised 1,280-page biography of Franklin Delano Roosevelt last fall.

The committee found that Black had Hollinger pay for at least $8.9 million worth of FDR memorabilia while he was working on the book, as well as a number of perquisites for himself, his wife and associates that were often not properly disclosed.

From 2000 to 2003, the committee found, the company paid about $390,000 to lease and repair various cars, including a Bentley and Rolls Royce in London.

Black also billed the company for $28,480 for three dinners for former Secretary of State Henry Kissinger, who is a board member, and his wife; as well as $24,950 for "summer drinks."

Black released a statement saying that the report was "recycling the same exaggerated claims laced with outright lies that have been peddled in leaks to the media and overreaching lawsuits." Radler couldn't be reached for comment.

The three-member committee was made up of outside directors and was advised by Richard Breeden, a former SEC chairman who also acted as a court-appointed bankruptcy monitor for WorldCom Inc.

Hollinger International's special committee is also suing Black, Radler and others in federal court in Chicago, seeking $1.25 billion in damages and accusing the group of racketeering. The committee also submitted its final report to that court late Monday.

The report was disclosed a day after Hollinger International's parent company, Toronto-based Hollinger Inc., disclosed that the SEC's Midwest regional office planned to recommend civil charges be filed against it for alleged violations of the Securities Exchange Act.

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