Conrad Black, the former CEO of Hollinger International Inc, conspired with associates to systematically loot the newspaper publishing company of more than US$400 million, nearly all of its profits from 1997 through last year, 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 which 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 following 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 past year. Born in Canada, he renounced his citizenship to accept the title of Lord Black of Crossharbour in the UK, 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 US$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 other associates that were often not properly disclosed.
From 2000 to last year, the committee found, the company paid about US$390,000 to lease and repair various cars, including a Bentley and Rolls Royce in London. Black also billed the company for US$28,480 for three dinners for former secretary of state Henry Kissinger, who is a board member, and his wife; as well as US$24,950 for "summer drinks."
Black released a statement through his 65-percent owned Ravelston Corp of Canada saying that the report is "recycling the same exaggerated claims laced with outright lies that have been peddled in leaks to the media and over-reaching lawsuits."
Radler couldn't be reached for comment.
The investigators also found that the company's audit committee, which was chaired by former Illinois governor James Thompson, was frequently misled by Black, Radler and other insiders, who also withheld important information from them on a regular basis. Thompson declined to comment on the specifics of the report, but acknowledged that he had put his faith in Radler and in Black.
"I've never been on a board where you start with the presumption that the CEO is a crook," Thompson said in an interview.
The committee also criticized Richard Perle, a member of Hollinger International's board, saying that he "repeatedly breached his fiduciary duties" a member of the board's executive committee. Perle was assistant secretary of defense under former US president Ronald Reagan and a former chairman of the Defense Department's Defense Policy Board in the current Bush administration.
They found that Perle repeatedly signed papers without evaluating or even reading them, including several that cleared the way for payments to insiders in a way that allowed Black and Radler to avoid disclosing them to the board or to its audit committee.
The report concluded that the amount of money looted from Hollinger by Black and others over the period of 1997-2003 represented just over 95 percent of the company's entire earnings during that time.
Black has already lost two legal battles against Hollinger in Delaware's Chancery Court, the last of which blocked his effort to call a shareholder vote on the company's move to sell one of its main assets, The Daily Telegraph of London, to the Barclay Brothers of the UK.
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