(AP) A board committee investigating more than $30 million in disputed payments to former Hollinger International senior executives contradicted comments by its former CEO Monday but also gave him more time to repay his share.
Richard C. Breeden, a former chairman of the U.S. Securities and Exchange Commission who is advising the committee, declared there was no doubt “whatsoever” that the payments were unauthorized.
Breeden was responding to comments by a spokesman for former Hollinger International CEO Conrad Black that he was still trying to determine if in fact the payments went ahead without board approval.
John L. Warden, a lawyer representing Black, released a statement Monday saying that “substantial additional material” had become available since questions about the payments were raised in November, and that there were a “range of issues” yet to be discussed between Black and the committee.
The repayment extension gives Black an additional two weeks to repay his first installment on a $7.2 million payment he received in connection with Hollinger International’s $500 million sale of U.S. newspapers in 1999 and 2000, according to a restitution agreement signed in November.
Black stepped down as Hollinger International’s chief executive in November after the committee discovered $32.2 million in unauthorized or unreported payments paid to Black, chief operating officer David Radler and two other senior executives as well as to Hollinger Inc., a Canadian holding company that Black controls.
Black, Radler and others have until June 1 to repay all $32.2 million, according to the restitution agreement.
Also on Monday, a suit alleging that Hollinger International’s top executives “looted” the publisher of at least $300 million was stayed by a Delaware court pending the results of the special committee’s investigation.
Both Cardinal Value Equity Partners, which launched the suit, and Chicago-based Hollinger International requested the stay, a spokeswoman for Hollinger International said.
Breeden disputed comments by a spokesman for Black in Monday’s New York Times that he was yet to finish carrying out his own investigation as to whether the payments were authorized.
“In the view of the Special Committee, there is not any doubt whatsoever that the payments in connection with these supposed ‘noncompete’ agreements relating to sales of U.S. community newspapers were not authorized by Hollinger International’s Board,” Breeden said.
He added that the “issue is not the subject of further review, inquiry or negotiation.”
Breeden said investigations had found that the buyers of the newspapers had not sought noncompete clauses and that they appeared to have been arranged by Black’s subordinates, although he stopped short of saying Black had orchestrated it.
“We have not reached any conclusion with respect to Lord Black’s knowledge of these arrangements,” Breeden said.
But he said the deals appeared suspect because at least one involved promises not to compete against a wholly owned subsidiary and documents that were backdated.
Radler has also agreed to repay $7.2 million he received and resigned his seat on Hollinger International’s board and resigned his executive positions there. However, he remains a director and officer of Hollinger Inc., as does Black, who also remains chairman and controlling shareholder of the U.S. company.
The Cardinal Value Equity Partners lawsuit, filed late last year and unsealed Friday, says Hollinger International’s board and its audit committee, headed by former Illinois Gov. James R. Thompson, often granted approval for transactions relying only on assurances from executives who stood to personally benefit from the deals.
“In short, the board never said no,” the lawsuit said.
The lawsuit said Hollinger’s audit committee approved the sale of newspapers at least twice to Horizon Publications, a private company owned by Black and Radler, for only $1.
Cardinal Value Equity Partners alleges that the noncompete agreements, bargain sales and excessive management fees cost Hollinger International at least $300 million.
Hollinger International Inc.’s assets include The Daily Telegraph newspaper and The Spectator magazine in Great Britain, the Chicago Sun-Times and The Jerusalem Post.