Investigators Tell Story of Ex-CEO's Looting of Hollinger Millions
Three outside Hollinger directors prepared the dramatic, 500-page report, filed with the Securities and Exchange Commission on Tuesday. "This story is about how Hollinger was systematically manipulated and used by its controlling shareholders for their sole benefit, and in a manner that violated every concept of fiduciary duty,” the committee wrote in its introduction.
The investigation was sparked by shareholder concerns about payments Black and others received, and the probe revealed that they looted 95 percent of the company's earnings from 1997 to 2003, or more than $400 million, the Associated Press reported.
The committee is suing Black, former chief operating officer David Radler and others for $1.25 billion in damages in federal court, where they are accused of racketeering.
The committee said of Black and Radler, "Behind a constant stream of bombast regarding their accomplishments as self-described 'proprietors,' Black and Radler made it their business to line their pockets at the expense of Hollinger almost every day, in almost every way they could devise.”
The report was also critical of the performance of the company's audit committee, which was "ineffective and careless over a prolonged period of time." Richard Perle, a former defense adviser and a member of Hollinger International's board, "repeatedly breached his fiduciary duties” by signing papers without reading them, the report said.
Black retains voting control of Hollinger International through Hollinger Inc., the Toronto-based parent company, which revealed Monday that the SEC's Midwest regional office planned to recommend civil charges be filed for alleged violations of the Securities and Exchange Act.
Hollinger International owns the Chicago Sun-Times and several other newspapers in the Chicago area, where the company is based.