Hollinger seeks $1.3 bil. from Black :: Namibia Internet Gateway cc ::

Articles: Hollinger seeks $1.3 bil. from Black

Posted by admin on Monday, May 10, 2004 - 06:12 AM

Hollinger International, the company that owns the Chicago Sun-Times, has raised the stakes in its battle with former chairman and controlling shareholder Conrad Black, slapping him with a $1.3 billion racketeering lawsuit.
In a complaint filed in Chicago federal court late Friday, Hollinger International leveled new allegations against Black and other former executives, adding to an earlier suit filed in January. That suit charged Black with taking millions from the Sun-Times' parent company through schemes masquerading as legitimate payments. Black denied the charges, and countersued for defamation in a Canadian court. Copies of the new complaint were expected to be available today. In a statement, Hollinger International said the defendants "engaged in a pattern of racketeering activities." The original defendants included Black and former Sun-Times publisher David Radler, and the new suit adds Black's wife Barbara Amiel and former executive Daniel Colson as defendants, according to a source familiar with the matter. In the new suit, the company alleges "breaches of fiduciary duty in connection with the sale of certain newspaper assets at less than fair value," the statement said. The charges involve Black and Radler buying Hollinger International newspapers without competitive bidding, sometimes for as little as $1. Other allegations involved Hollinger Digital LLC, a subsidiary that invested company funds in outside ventures, and paid undisclosed bonuses to top executives. Hollinger International now alleges the defendants took $380.6 million from the company and seeks $103.9 million in interest. Its claim under the Racketeer Influenced and Corrupt Organizations Act, allows it to seek triple damages, raising the overall claim to $1.25 billion. "Hollinger International's amending its lawsuit to include allegations of racketeering is tabloid journalism masquerading as law," Black's personal holding company, Ravelston Corp., said in statement. "Overreaching use of the Racketeer Influenced and Corrupt Organizations Act has been frowned upon in virtually every circuit court in the United States." Black owns about 30 percent of Hollinger International's stock. But his shares account for 73 percent of the votes on corporate matters, giving him control. The company owns the Daily Telegraph of London and the Jerusalem Post, as well as the Sun-Times and numerous smaller newspapers. Last year, outside shareholders questioned Black's financial dealings. In November 2003, an investigation revealed he and others received $32 million in unauthorized funds. Under pressure from shareholders, Black stepped down as chief executive. The company's new management said it would explore putting the Sun-Times and other papers up for sale -- a process that is ongoing. That marked the beginning of a long battle between Black and the "special committee" of company directors directing the investigation. Black now finds himself aligned against virtually the entire board, which includes former governor Jim Thompson. The new claims filed Friday arise from an internal probe led by Richard Breeden, a former SEC chairman hired by the special committee. To date, Hollinger International has spent about $18 million investigating Black. Black has said repeatedly that many of the directors now suing him approved the payments they are attacking. "Hollinger International's directors, audit committee members and advisors were all extremely sophisticated professionals," the statement said. Radler's lawyer, Anton Valukas, said, "At this point, all we have seen is what appears to be a pretty sensational press release." Radler would rebut the claims "vigorously," he said. Radler issued a statement Sunday saying that the amended lawsuit had some ''curious omissions,'' the Associated Press reported. Radler said he plans to ''vigorously defend'' his actions, the AP reported.

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