By: Mark Fitzgerald Allowing Hollinger Inc. to add counterclaim to the federal lawsuit over alleged fraud in Conrad Black?s once-global newspaper empire would only add millions in legal costs and drag out the already protracted litigation, the Sun-Times Media Group (STMG) argues in a court filing.
Last month, Hollinger Inc., the Toronto-based holding company that owns a controlling stake in STMG, asked permission to file new counterclaims in U.S. District Court in Chicago. The counterclaims allege that in the 1990s, STMG, then known as Hollinger International, fraudulently stripped assets from Inc., including The Daily Telegraph of London, and a group of Canadian community newspapers. The transfer of assets to International was part of a scheme by Black to take over Inc. and squeeze out minority stockholders, the counterclaims allege.
Inc. wants the counterclaims added to the lawsuit STMG filed against it, Black and other entities once controlled by the disgraced mogul. STMG alleges Inc. allowed Black and other key executives to loot $400 million from International through improper insider deals, payments and other fraudulent methods. STMG, the publisher of the Chicago Sun-Times and dozens of other Chicago-area papers, is seeking $542 million in damages.
In its latest court filing, STMG argues that Inc. has failed to build a case for reopening the litigation to the new counterclaims. For one thing, STMG argues, the deadline to file counterclaims passed 14 months ago.
?How does Inc. tackle its burden of justifying this 14-month delay? By making false excuses,? STMG attorney Mark V. Chester wrote in the motion opposing the counterclaims.
Inc. says its counterclaim is based on recent revelations about alleged Black scheming, but the STMG court filing argues that this information had been available to Inc. for a long time, and that the company?s independent directors actually used some of the evidence in their own legal claims against Black.
STMG also says allowing the counterclaims would drive up its legal cost by ?millions? of dollars. The company estimates that it will cost $1.66 million to ?re-review? documents dated prior to April 2005, and another $1.68 million to review more recent material.
According to STMG?s latest quarterly report to the U.S. Securities and Exchange Commission, it has spent at least $130 million in legal and litigation fees related to the Black scandal, including the investigative work of its special committee of directors.
Comments
No comments on this item Please log in to comment by clicking here