Black Isolated as Auditor and Vice-Chair Quit Hollinger Inc

24 December 2003

Lord Conrad Black of Crossharbour, chairman of Hollinger International and its closely-held parent Hollinger Incorporated, on Tuesday became increasingly isolated with the resignation of group auditor KPMG.

The exit comes as investigations into the company and alleged unauthorized payments to its directors move into overdrive.

And in a double blow to the beleaguered peer, his trusted lieutenant on the parent board, vice-chairman Daniel Colson, followed KPMG through the 'out' door.

However, Colson remains vice-chairman and chief operating officer of Hollinger International -- the US-listed publishing group whose properties include Britain's Daily Telegraph and the Chicago Sun-Times.

This is ostensibly to allow Colson more time to focus on the company's management -- although some insiders suggest he may wish to distance himself from the labyrinthine parent.

Black, who resigned as ceo of Hollinger International last month, remains its non-executive chairman. But he has relinquished neither role at parent Hollinger Inc, an entity 78% owned by Black's privately-held investment vehicle Ravelston.

KPMG, formerly auditor to both Hollinger companies, said its walkout was prompted by Hollinger Inc's failure to comply with management changes comparable to those at its operating unit. Hollinger Inc is also beset by acute liquidity problems.

And in a move that will not help those problems one iota, credit rating agency Standard & Poor's on Tuesday lowered its grading on Hollinger International from BB- to B+. At the same time it relegated the group to 'negative watch', citing concerns about its failure to file audited third quarter financial statements.

Data sourced from: Financial Times; additional content by WARC staff