Independent directors of media group Hollinger International are probing more multimillion-dollar payments to Lord Conrad Black and colleagues.
A special committee of board members investigating the company's corporate governance has turned its attention to around $53 million (€44.6m; £31.1m) in 'non-compete fees' paid to Black and other senior Hollinger executives.
The Canadian-born peer controls the media group -- owner of Britain's Daily Telegraph, the Chicago Sun-Times in the US and the Jerusalem Post in Israel -- through a labyrinthine ownership structure involving parent Hollinger Inc and Ravelston, Black's private firm.
Earlier this week, however, he dramatically quit as Hollinger ceo after the committee unearthed $32.2m of fees that had not been approved by the board or fully disclosed to shareholders [WAMN: 18-Nov-03].
The latest payments to come under scrutiny relate to Hollinger's $1.8 billion sale of Canadian newspapers to CanWest in 2000. As part of this deal, $27.8m was handed to Black and three other Hollinger executives, and $25.2m went to Ravelston.
These payouts were described as 'non-compete fees' to ensure that Hollinger and its directors did not set up rival titles in the same market -- even though Hollinger itself saw none of the $53m.
But when asked about the payments, CanWest declared that it had agreed only an overall price for the deal (including competition gurantees), with no specific amount set for non-compete agreements with individual directors.
Now the special committee is investigating whether the nature of these fees was accurately portrayed to the board.
Many Hollinger shareholders argue that at least some of the non-compete cash ought to have been paid to the company. US investment firm Tweedy Browne -- whose campaigning led to the formation of the special committee -- is calling for Black and other Hollinger directors to pay back an estimated $200m gained through similar payments and management fees.
"If the special committee concludes that all these payments were justified then we'll go to the courts," vowed Tweedy Browne managing director Chris Browne. "Conrad Black may live like a billionaire but anyone who thinks he's a billionaire hasn't done their maths."
As for Black himself, he insists that he has done nothing wrong. "There has been no concealment," he declared on Thursday. "And I am convinced that when all of the inquiries are over, it will be seen that what happened was essentially an inadvertency and in any case does not imply any impropriety on my part."
Data sourced from: multiple sources; additional content by WARC staff