Cardinal Value Equity Partners, another disgruntled shareholder in Hollinger International, has filed a lawsuit against the beleaguered company, accusing its board of repeatedly approving deals that allowed former ceo (and current chairman) Lord Conrad Black and other executives to "line their pockets at shareholder expense".
The action, lodged in December at Delaware Chancery Court, charges that the Hollinger board rubberstamped without independent confirmation a number of deals that were costly to HI and its shareholders.
The lawsuit cites much chapter and verse in support of its accusations. At a 2001 meeting, for example, Hollinger's audit committee (which at the time included the former governor of Illinois James R Thompson; the quondam US ambassador to Germany Richard R Burt; and Marie-Josée Kravis, an economist and wife of financier Henry Kravis) approved the sale of two publications for just one dollar.
These were knocked-down to Horizon Publications, a company controlled by Lord Black and Hollinger's former chief operating officer David Radler. The reason given for the sale was that the publications had negative cash flow and that $1 (€0.79; £0.56) represented their "fair market value"
There was no independent valuation or a fairness opinion. Nor, the lawsuit alleges, did the audit committee even discuss why a company controlled by Black should sell properties for so little, if a second company also controlled by Black obviously believed them potentially profitable.
Black recruited prestigious names from the worlds of politics and finance to adorn the Hollinger board. In addition to the 'independent' directors already mentioned, other notables serving during the period covered by the lawsuit were A Alfred Taubman (who remained on the board even while serving a prison sentence), Black's wife Barbara Amiel and one-time US secretary of state Henry A Kissinger.
• Separately, according to a company insider, Black last week failed to make the initial $700,000 he had agreed to pay Hollinger in respect of monies received by him that were allegedly the property of the company and its shareholders. The payment would have been the first tranche of $7.2 million due to be handed back by June 2004.
Data sourced from: New York Times; additional content by WARC staff