The role of former Hollinger International chief operating officer David Radler in multimillion-dollar handouts to top executives is under scrutiny as part of the inquest into the ailing media group's finances.
Investigators have been told that Radler -- who quit his job last month when the company admitted "inaccuracies" in financial filings -- organised tax-free payments totalling $9.5 million (€7.8m; £5.5m) after incorrectly informing Hollinger's general counsel that they had the board's blessing. Radler pocketed an estimated $4.3m; Lord Conrad Black (chairman/ceo and largest shareholder) received the same amount, while two other executives picked up the remainder.
This $9.5m is the single biggest slice of the $15.6m that the company recently admitted had been paid out without the approval of independent directors [WAMN: 18-Nov-03].
The cash is linked to the 2000 sale of certain Hollinger publications to Alabama firm Community Newspaper Holdings for $98m. The $9.5m came in the form of 'non-compete' payments, which are tax-free under Canadian law and are designed to prevent companies and individual executives setting up rival titles.
However, sources close to the investigation have claimed CNH only ever sought non-compete agreements with Hollinger itself, and not with specific executives at the company.
Former Hollinger general counsel Mark Kipnis, who also left the firm last month, informed investigators that he arranged the payments to Black and others after Radler told him they had been sanctioned by audit committee head James Thompson.
However, Radler's lawyer, Anton Valukas, insists his client was under the impression the payments had been rubber-stamped. "At all times," he claimed, "Mr Radler believed all non-compete payments had been properly disclosed to and approved by the appropriate committees and board."
Data sourced from: Financial Times; additional content by WARC staff