Hollinger Report Slams Black's 'Corporate Kleptocracy'

01 September 2004

The long-awaited internal report into the rein of Lord Conrad Black and his henchmen at Hollinger International [H-Intl] was published Monday.

Over a year in preparation by a special committee of the H-Intl board at an alleged cost of $25 million (€20.52m; £13.87m), the 500-page document finds that Black and other executives were wrongfully paid nearly $200m in "unjustifiable" fees -- at a time when the company was underperforming in comparison with its media rivals.

The report details how Black and David Radler, his long-standing lieutenant, allegedly colluded to steal $400m from Hollinger -- an amount equating to 95% of the company's adjusted net income during the period 1997 - 2003.

It also slams the group of political and financial glitterati which once adorned the company's board, condemning their failure to rein-in the greed of the company's most senior executives. Former US defence adviser to the Bush administration Richard Perle was particularly singled out for rebuke.

Other notables who served on the board as independent directors during that time included erstwhile US secretary of state Henry A Kissinger, former Illinois governor James Thompson, British publisher Lord George Wiedenfeld, economist Marie-Joseé Kravis (wife of the corporate raider Henry Kravis) and Robert Strauss, senior partner at one of the world's largest law firms Akin Gump Strauss.

Also gracing this luminous lineup was A Alfred Taubman, the disgraced former chairman of Southeby's (who remained on the Hollinger board even while serving a prison sentence).

Summarizes the report: "As a group, the Hollinger board [and particularly the audit committee] was not alert and didn't notice when Black and Radler were driving their bloated fee requests past them."

Lord Black promptly issued a statement via Ravelston, the privately-owned company through which he controlled his Hollinger assets, robustly defending his actions and -- in typical Black style -- launching a counter-attack.

He accused Richard Breeden (the one-time chairman of the Securities and Exchange Commission who led the Hollinger inquiry) of "squandering" over $25m of shareholders' money on the investigation and "eroding the value" of Hollinger's assets.

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