By: Jennifer Saba Belo Chairman, President, and CEO Robert Decherd sent a letter to employees today explaining developments in a shareholder class-action lawsuit filed last summer after the company revealed circulation inflation at its flagship paper, The Dallas Morning News.
The letter recapped remarks Decherd made during the company's annual meeting of shareholders last week.
The lawsuit, which was filed in U.S. District Court in Dallas, was amended last month alleging that Decherd knew the Morning News had been misstating its circulation for more than a year before the announcement was made public in August 2004.
In the memo, Decherd said that in January 2003 he received a letter and a tape from an independent contractor working in an area outside of Dallas. The contractor's letter said that their supervisor told the contractor to lie about the number of papers sold.
Decherd explained that he handed the materials over to Belo's legal department, which in turn, coordinated an investigation. As a result, several circulation managers at the paper were fired.
"The investigation from January 2003 to February 2003 made us certain at that time that the issues raised had been comprehensively addressed and there wasn't a larger problem with respect to circulation at the Morning News," Decherd wrote in the memo.
The claims from the contractor and Belo's responses were reviewed again last August and September when Belo conducted an investigation of the summer scandal. "The 2004 independent investigation did not dispute or contradict the 2003 internal report on this matter," he wrote.
Decherd also addressed allegations made in a story by the Fort Worth Star-Telegram that he dumped shares of Belo stock in 2003 and 2004. "What the story and the complaint did not say is that these sales were part of a formal trading plan that was publicly disclosed in a press release in November 2001," Decherd wrote.
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