By: Mark Fitzgerald
With Hollinger International Inc. CEO Conrad M. Black already gone, and his replacement unprepared to sign its financial results, the media company filed Friday an uncertified 10Q form detailing its third-quarter results with the Securities and Exchange Commission (SEC).
Hollinger’s filing is the latest in a flurry of reports to the SEC since the company revealed Black and three other top executives had collected $32 million in payments that were not authorized or disclosed to independent directors. The filing said Black’s replacement as CEO, Gordon A. Paris, “has not had time to conduct the reviews that are the basis for the required certifications” mandated by the Sarbanes-Oxley Act of 2002. Hollinger said it could not predict when it would file an amended and certified form. When the payments were first publicly revealed last Sunday, Black had said he would resign effective today, Nov. 21. But on Wednesday, he retired effective immediately, apparently to avoid having to sign the third-quarter results.
Hollinger said its independent public accountant, KPMG LLP, also refused to certify the third-quarter results. The firm cited the ongoing investigation by a special directors committee set up this summer after shareholder concerns about a number of issues, including the payments to Black and others.
Hollinger’s filing also blames the payments to Black for what it says was a past overstatement of retained earnings amounting to $17 million that should have gone to taxes. “Based on the recharacterization of such payments, the company currently estimates that its tax provision relating to such payments could be understated by approximately $17 million,” Hollinger said.
This week, the committee said $32.15 million in unauthorized payments characterized as “non-competition payments” were made to top executives and Hollinger Inc., the holding company controlled by Black. The holding company received $16.5 million, while $7.2 million each was paid to Black and David Radler, who resigned as Chicago Sun-Times publisher this week. Former Vice President Peter Atkinson, who resigned, and J.B. Boultbee, who was fired, each received $602,500 in unauthorized payments, the committee disclosed.
Hollinger said in the third quarter it had an operating income of $4.5 million on total operating revenues $253 million. The Chicago group, including Hollinger’s Sun-Times, reported operating income of $9.2 million on operating revenues of $112 million.