Report blasts Black for 'looting' Hollinger

By CTV.ca News Staff and Canadian Press

A new report slams Conrad Black and other controlling shareholders of Hollinger International for "self-righteous, and aggressive looting'" to a tune of more than $400 million US over a seven-year period to satisfy their "ravenous appetite for cash."

The report by a special committee, formed in 2003 to examine allegations of duty breaches by the Chicago-based newspaper publisher's international board, was released to the public Tuesday.

"Not once or twice, but on dozens of occasions Hollinger was victimized by its controlling shareholders as they transferred to themselves and their affiliates more than $400 million in the last seven years," the committee said in the opening pages of its 500-page report.

It says that the $400 million allocated by the company's former CEO Black and former chief operating officer David Radler amounted to 95.2 per cent of Hollinger's net profit from 1997-2003.

The highly anticipated report also scolds Hollinger International's board for being "systematically manipulated" by Black and others.

"The intensity of the pressure for tens of millions in cash payments to Black, irrespective of corporate performance or the fairness of transactions to shareholders, led to a series of abusive transactions in which Hollinger was a victim of Black and Radler's ravenous appetite for cash," the committee said.

"Rather, one scheme after another was devised to siphon away Hollinger's opportunities, its cash flow and a share of its balance sheet.

"For years Black and Radler found excuses for transferring existing cash or assets to themselves, even if it required dismantling Hollinger for their own benefit."

The report said that the board bowed to "insatiable pressure" to "satisfy the liquidity needs he had arising from the personal lifestyle Black and his wife had chosen to lead."

The report cited a $90,000 expense covered by Hollinger for the refurbishment of a Rolls Royce owned by Black for his personal use.

Some of the other lavish items listed on Black's corporate-expense reports included $3,530 for silverware for Black's corporate jet, $24,950 for "summer drinks," and $42,870 for a $212-a-plate birthday dinner for Black's wife, Barbara Ameil Black and 80 guests at New York's exclusive La Grenouille restaurant.

"In Hollinger's world, everything belonged to the Blacks," the report said.

The committee also blasted the board for failing its duties over non-competition payments allegedly paid to Black and his colleagues.

The payments from CanWest Global Communications totaled about $53 million US and were made to prevent Black and his associates from starting up newspapers in regions where the assets CanWest bought from Hollinger were already running.

The big-city Canadian newspapers Hollinger had owned, including the former Southam dailies and the National Post, were sold to CanWest for $3.2 billion in 2000.

Hollinger's dailies in smaller markets in Ontario were sold to Osprey Media Group for $220 million in 2001.

After a bitter battle with the company's directors, Black stepped down as Hollinger International CEO in November 2003 and was forced out of his position as chairman of the company's board in January 2004. Black still holds a seat on the board.

He also remains CEO and chairman of Hollinger Incorporated, a Toronto-based holding company which owns 68 per cent of the voting rights and 18.2 per cent of the equity in Hollinger International.

Hollinger International has filed a $1.25-billion US lawsuit against Black and a number of his colleagues and companies, including Hollinger Inc. and Ravelston Corp., as well as Radler and Hollinger executives Jack Boultbee and Barbara Amiel Black.