[A-List] Conrad Black

["Michael Keaney" <michael.keaney@xxxxxx>]

Investor seeks to sue Lord Black

Dan Milmo, media business correspondent
Wednesday December 10, 2003
The Guardian

A major shareholder in Hollinger International, owner of the Daily and
Sunday Telegraph, has begun legal proceedings against directors at the
newspaper publisher including former chief executive, Lord Black.

Cardinal Capital Management, a US investment fund, has asked a judge in
Delaware, where Hollinger is incorporated, to give the go-ahead for a
lawsuit which is expected to allege that company directors neglected their
duties.

Cardinal, which controls 2.6% of Hollinger, sued the company this year for
access to documents detailing how nearly $300m (£170m) was paid to Lord
Black and fellow executives in non-compete fees and management service
agreements. The fund is expected to file a derivative lawsuit, by which
investors sue on behalf of a company, if the judge approves the legal
action.

Hollinger board members include former US secretary of state Henry Kissinger
and foreign policy adviser Richard Perle. The lawsuit names the entire
Hollinger board, Lord Black, several former Hollinger executives and two
newspaper companies part-owned by the Tory peer.

According to reports in Canada yesterday, documents filed in Delaware by
Cardinal at the beginning of the week do not make specific allegations
because the firm signed a confidentiality deal with Hollinger after winning
access to the company's files.

The damages claim is expected to be extensive. Tweedy Browne, the New York
fund manager which controls 18% of Hollinger and is also threatening legal
action, is demanding that Lord Black and his associates return all the
payments to the company.

The newspaper tycoon resigned last month after it emerged that he received
$7.2m in unauthorised payments, with a further $25m going to fellow
executives and his Canadian holding company, Hollinger Inc.

It also emerged yesterday that a former senior executive at Hollinger
International is suing the company for wrongful dismissal after he was fired
for refusing to hand back an unauthorised $600,000 payment.

Jack Boultbee, who was ousted as executive vice-president last month, is
expected to demand more than C$1m (£440,000) in damages from the newspaper
publisher. He has lodged a "notice of action" in Ontario.

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Black in rescue talks with NY mogul
By Stephanie Kirchgaessner and Peter Thal Larsen in New York
Financial Times; Dec 09, 2003

Conrad Black has held preliminary discussions with potential investors,
including Mortimer Zuckerman, the New York real estate and publishing mogul,
in a bid to avert a liquidity crisis at Hollinger Incorporated, the
Toronto-listed holding company he controls.

But people familiar with the matter yesterday warned that any deal could
face substantial financial and legal obstacles.

Mr Zuckerman, publisher of the Daily News in New York, is the latest
potential investor to be linked with a financial rescue at Hollinger Inc,
which has held inconclusive talks with other financial groups, including
Bain Capital and Nelson Peltz, the New York financier. No comments was
forthcoming from Lord Black or Mr Zuckerman.

Hollinger Inc is majority owned and controlled by Lord Black's private
company, Ravelston. Hollinger Inc, in turn, owns a 30 per cent equity and 73
per cent voting share of Hollinger International, publisher of the Telegraph
titles in the UK, the Chicago Sun-Times and the Jerusalem Post.

Last month, Lord Black resigned as CEO of Hollinger International after an
internal probe revealed that he and other executives received payments that
were not approved by the board. Both Hollinger Inc and Hollinger
International are under investigation by the Securities and Exchange
Commission.

Hollinger International last month said it retained advisers to explore a
possible sale of the company or some of its assets.

Some people familiar with the matter warned that any buyer of Hollinger Inc
was at risk of being hit by investor lawsuits if more information about
potential liabilities emerged.

A deal between Lord Black and Mr Zuckerman could bring to a close a
long-standing rivalry between the newspaper executives that stretches back
to 1992, when Mr Zuckerman won the battle to buy the New York Daily News out
of bankruptcy.

-----

US seeks British help over Hollinger
By Tim Burt, Adrian Michaels and Stephanie Kirchgaessner in New,York
Financial Times; Dec 10, 2003

US financial regulators have requested assistance from Britain in their
investigation into $32.2m (£18.6m) of misreported or unauthorised management
payments at Hollinger International, the publishing group chaired by Conrad
Black.

The Department of Trade and Industry has received a request for information
about Hollinger International from the US Securities and Exchange
Commission. Part of the investigation concerns inter-company loans and
management payments by the Telegraph Group, the Hollinger subsidiary that
publishes The Daily Telegraph and The Sunday Telegraph.

The SEC is the chief US financial regulator and brings civil cases against
companies and individuals. US criminal authorities at the Department of
Justice are also monitoring the situation. The DoJ is leaving matters to the
SEC and not launching its own criminal investigation at present. The request
for UK participation widens inquiries into Hollinger International, where
Lord Black resigned as chief executive after disclosure of the unauthorised
payments. The DTI is weighing whether to pass the US request to the
Financial Services Authority or the department's internal investigations
branch.

Over three years, the Telegraph Group paid more than £4m in management fees
to Hollinger Inc, the holding company, also chaired by Lord Black, behind
Hollinger International.

The subsidiary has also guaranteed several hundred million dollars of loans
to the parent companies. Managers at the Telegraph Group defended the
inter-company loan guarantees as normal.

The DTI yesterday declined to comment on the details of the US approach
concerning Hollinger International.

Officials said that in such cases the department would respond to whatever
information was requested. But one government insider, familiar with the DTI
investigations branch, described the move as "highly significant".

Hollinger declined to comment.

It is normal for the DoJ to let the SEC carry out initial inquiries at
companies. If enough wrongdoing is uncovered to suggest criminality, the DoJ
will step up its activities and assume control for the investigations.

There have not been, and may never be, suggestions of wrongdoing at that
level at Hollinger. Hollinger International is seeking to recover the $32.2m
in unauthorised or misreported payments that had been styled as non-compete
fees.

Lord Black, who denies any wrongdoing, has vowed to repay $7.2m that he
received by June next year.

Hollinger Inc has warned its liquidity could be imperilled if it was
required to pay back money to International. It also has said such a payment
could result in a debt default.

-----

Minority investor to file lawsuit against Hollinger
By Stephanie Kirchgaessner in New York
Financial Times; Dec 10, 2003

A minority investor at Hollinger International, the newspaper publisher, is
taking steps to file a lawsuit against the company's management and former
and current board members following a review of confidential company
documents.

Cardinal Value Equity Partners, a Connecticut-based investor holding about 2
per cent of Hollinger shares, said in a Delaware Court filing that it had
concluded it was "appropriate" to commence a suit, based, in part, on
information Hollinger made available to it.

Hollinger, publisher of the Telegraph titles in the UK and the Chicago
Sun-Times, is under investigation by the Securities and Exchange Commission,
the chief US financial regulator, following the company's admission last
month that four executives, including non-executive chairman Conrad Black,
received $15.6m in fees that were not approved by the board and improperly
disclosed in SEC filings.

Cardinal has in the past few months quietly worked to obtain documents from
Hollinger under the restraints of a confidentiality agreement with the
company. Hollinger had earlier said that documents requested by Cardinal
were "consistent" with the issues that had been raised by another investor,
New York-based Tweedy Browne.

Investors' concerns have so far been centred on nearly $300m in management
and other fees paid to Lord Black and other executives since 1995.

Tweedy Browne, which owns about 18 per cent of Hollinger shares, has -
unlike Cardinal - taken a more public stance against the company and its
board. The money manager threatened to sue Hollinger's directors this year
if it did not create a special committee to review compensation and other
management fees.

Late on Monday night Cardinal filed a request to Judge Leo Strine that it be
permitted to file its suit under seal in order to comply with the
confidentiality agreement it previously agreed with Hollinger.

Judge Strine is expected to either rule in favour of keeping the suit
confidential or making the information public - in which case documents such
as board minutes and other confidential information could be made public.

Cardinal is technically filing the suit on behalf of all Hollinger
shareholders against management and current and former board members,
including former Illinois governor James Thompson, former US secretary of
state Henry Kissinger and Richard Perle, the defence adviser.

Hollinger declined to comment.