Hollinger Files 1Q Results, Reports Say SEC Targeting Directors

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By: E&P Staff

Hollinger International Inc. — catching up on its required financial reports after alleged looting by former Chairman Conrad Black and others made a mess of its books — on Wednesday said it had filed a 10Q report with the U.S. Securities and Exchange Commission (SEC) for the first quarter of this year, and said it would file results of its second and third quarters by Dec. 31.

Hollinger reported a net loss of $18.5 million, or 20 cents per share, in the first quarter, an improvement over the same period in 2004, when it lost $26.7 million, or 30 cents a share.

Hollinger said its revenue increased to $131.4 million from $128.4 million a year ago.

Separately, Bloomberg reported that the SEC may sue former Hollinger directors who served on its audit committee at the time Black was allegedly defrauding the company, which publishes the Chicago Sun-Times and about a hundred other Chicago-area dailies and community papers.

The Wednesday story by Washington reporter Otis Bilodeau cited two unnamed people “with direct knowledge of the matter” as saying the SEC had sent so-called “Wells notices” to James Thompson, the former Illinois governor who is chairman of the Chicago law firm Winston & Strawn; Richard Burt, the former U.S. ambassador to Germany; and Marie-Josee Kravis, wife of the investor Henry Kravis.

The notice, according to Bloomberg, “indicates that SEC investigators plan to seek authorization from the agency’s commissioners to file a civil suit.”

The SEC has already sued Black for allegedly fraudulently pocketing hundreds of millions in improper fees and payments, much of which was approved by directors on the audit committee. In the past, the directors have asserted information about the payments was hidden from them or misrepresented by Black and others.

Black has been indicted by a federal grand jury for allegedly scheming to defraud Hollinger of some $83 million from the sell-off in the late 1990s of its community papers. His former lieutenant and former Sun-Times Publisher David Radler has pleaded guilty to related charges, and promised to cooperate in the case against Black.

The Bloomberg story said all the parties involved declined to comment on its report.

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