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Former Hollinger International, Inc. CEO Conrad Black and His 'Corporate Kleptocracy' are caught
We are hearing about decades of looting the huge publishing company. Where was the Board of Directors? Who was minding the store? ![]()
Hollinger Panel Says Black Looted Company
Findlaw Legal News, August 31, 2004 By Kenneth Li and Sinead Carew NEW YORK (Reuters) - Conrad Black, the former CEO of Hollinger International Inc., looted the newspaper publisher of hundreds of millions of dollars to indulge his appetite for private jets and club memberships, according to a report filed on Tuesday. In a filing with the U.S. Securities and Exchange Commission, a special committee of Hollinger's board described a "corporate kleptocracy" at the top of the company that publishes the Chicago Sun-Times. "Hollinger was a company where abusive practices were inextricably linked to every major development or action," the report said. A key driver of the abuses were "... insatiable demands for cash from Black, whether to prop up his empire or to fuel his political and social ambitions in multiple countries," the report said. The report said Black, former Chief Operating Officer David Radler and other former executives of Hollinger Inc. Black and Radler were the controlling shareholders of Hollinger Inc., the parent company of Hollinger International, via their private holding company Ravelston Corp. BOARD "INERT AND INEFFECTIVE" The report castigated the overall performance of the company's board of directors and called its internal audit committee "inert and ineffective," as Black siphoned off profits for nearly a decade. In a statement, Ravelston defended the publisher's board of directors and said the report was "laced with outright lies." "The report is full of so many factual and tainting misrepresentations and inaccuracies that it is not practical to address them in their entirety here," Ravelston said in a statement, vowing to resolve the matter in court. Hollinger Inc. has 68 percent voting control and 18.2 percent equity interest in Hollinger International, which also publishes the Jerusalem Post. Black, who had renounced his Canadian citizenship in order to allow him to accept induction into the British House of Lords in 2001, resigned in November as chief executive of Hollinger International after an internal investigation found he had pocketed millions in disputed payments. The company later removed him as chairman. The investigation by a special committee of three independent directors was launched in May 2003 at the urging of shareholders, led by New York investment firm Tweedy Brown. "This report ... is a small step toward the eventual reimbursement of monies inappropriately taken from this company," said Laura Jereski, an analyst at Tweedy Brown, which owns an 18 percent stake in the publisher. REPORT RECOMMENDS PERLE REPAY BONUSES The special committee also said that director Richard Perle, a former Pentagon adviser who was a member of the board's executive committee, "repeatedly" signed off on transactions that were beneath the radar of the audit committee. The panel said Perle, who remains on the board, should be required to repay the more than $3 million in bonuses. Perle could not be immediately reached for comment. The panel absolved two independent directors -- former Secretary of State Henry Kissinger and Shmuel Meitar, vice chairman of Aurec Ltd. -- of wrong-doing, saying they were deliberately fed misleading information. It said other independent directors, including former Illinois Gov. James Thompson and former U.S. Ambassador to Germany Richard Burt, were in a similar position. Following the report, a stay on a lawsuit filed last January by Cardinal Capital Management, a Hollinger International shareholder, is likely to be lifted, said a source familiar with the matter. Cardinal had sued Black and the firm's directors, alleging that independent board members stood by while Black and other executives looted the company. Hollinger International itself has a suit outstanding against Black that seeks $1.25 billion in damages. Hollinger International also said the conduct of its independent directors is the subject of mediation. |