Hollinger adviser tells court of Black threats
An adviser to Daily Telegraph owner Hollinger International testified in the US that Conrad Black, the company’s founder, threatened members of a special committee investigating suspect payments he received.
Richard Breeden also testified yesterday that he suspected that Black would probably flee if a private deal he negotiated to sell his stake in Hollinger International’s parent company went through.
Mr Breeden, a former chairman of the US Securities and Exchange Commission, testified on the second day of a trial that will likely determine the fate of Hollinger International, which also publishes the Chicago Sun-Times and Jerusalem Post.
A special committee of Hollinger’s board, which Mr Breeden is advising, has determined that some $32m (€25m) in unauthorised payments were made to Black, his associates and entities he controls.
Black had originally agreed to repay the money, but changed his mind later after uncovering what he said was new evidence proving that the payments had in fact been properly authorised.
Lawyers for the peer argued yesterday that there was evidence that the payments did in fact receive proper approval from the board.
The case is pitting Black against his own hand-picked board of directors for control of the media empire he built.
Black wants to sell control of the company his own way, but the board says he is improperly excluding other shareholders from the process and siphoning money from the company’s coffers.
The company’s directors say Black negotiated behind their back to sell his stake in Hollinger International’s parent company, the Toronto-based holding company Hollinger Inc., to the Barclay brothers of Britain, undermining a separate sale process already under way.
The Barclay brothers run a retailing, hotel and media business from a small island in the English Channel.
Black’s agreement with the Barclays valued his holdings of common stock at Hollinger Inc. at about $178m (€140m).
The company is asking the court, among other things, to temporarily block the deal.
Lawyers for Black suggest that the UK peer acted properly in negotiating the sale because Hollinger Inc. was facing a cash crunch and had no other option for meeting its obligations.
Under a provision of an agreement Black made with his company, he would be allowed to sell his stake under those circumstances.
Asked how many times Black had made threats to members of the special committee, Mr Breeden testified that he was not sure he could remember them all.
“Mr. Black begins many conversations by threatening everybody,” he told the Chancery Court in Wilmington, Delaware.
Mr Breeden testified that Black began a meeting “glaring” at the directors present and threatened to sue them for libel in Canada. The peer later did so.
Black also noted that he knew where two of the members of the special committee lived, and could have one of those houses taken away, Mr Breeden alleged.
He also said he suspected that if Black’s efforts to sell the business were successful, the proceeds of the sale would be put into a bank in “Beirut, Gibraltar, or some such place” where investigators seeking to recover the money would have little chance.
The trial got under way on Wednesday with accusations from the current CEO that Black lined his pockets with improper payments.
Testimony is expected to go through today, when Black was expected to take the stand. A ruling is expected by the end of next week.
Gordon Paris, who is serving as interim CEO after Black was forced to relinquish that post last November, testified on Wednesday that the peer and other top company officials received millions in payments that were never authorised by the company’s independent directors, even though the company said they were.
