Hollinger Intl. Picking Up Black’s Legal Bills As He Sues Company

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By: Mark Fitzgerald

In the flood of litigation arising from the financial scandal at Chicago Sun-Times publisher Hollinger International, its former chairman Conrad Black is suing the company, and International is suing him back. Now it’s emerging that International will start picking up most of Black’s legal bills for those and other lawsuits.

In its 2005 annual report, filed recently with the U.S. Securities and Exchange Commission (SEC), International discloses that last month it reached an agreement with Black on payment of his legal fees. The two sides had been fighting for two years in Delaware Chancery Court over who should foot those bills.

According to the settlement agreement, International will pay $4.4 million upfront in payment for legal bills already submitted by Black. International said the amount “reflects an offset for amounts previously advanced to Black that he was required to repay as a result of the rulings against him” in other Chancery Court litigation.

“In connection with future legal bills,” International said, “the company will advance 75% of the legal fees of attorneys representing Black in the criminal case pending against him in the United States District Court for the Northern District of Illinois, and 50% of his legal fees in other matters pending against him.”

Black will be required to repay those fees “if it is ultimately determined that he is not entitled to indemnification,” International said.

International is suing Hollinger Inc., demanding that it provide 50% of the indemnified legal payments. Inc. is the Toronto-based holding company that Black used to control International and his empire of newspapers.

International had argued it no longer needed to indemnify Black because the Delaware court has ruled he breached his fiduciary duties at International. A special company committee accused Black, former Sun-Times Publisher David Radler and other key executives of “looting” the chain of some $400 million, mostly in improper payments or deals relating to the sell-off of its many community dailies.

Black had argued in court that International should pay 100% of his legal bills.

Black will certainly keep his lawyers busy. Trial is scheduled to start next March in Chicago in the federal criminal case accusing him of scheming to steal $84 million from International. Radler has pleaded guilty to a single charge of mail fraud arising from that case, and has agreed to testify against Black and others in exchange for a lesser sentence and the possibility of spending his jail time in his native Canada.

Black has vigorously denied the charges. He is free on $20 million bail secured by proceeds of an apartment sale seized by FBI agents and a lien on his mansion in Palm Beach, Fla.

Black faces separate lawsuits from the SEC and shareholders.

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