A report prepared for a US court and regulators has said tycoon Conrad Black and his allies looted more than $400m from the company he created to manage a global media empire.
The report submitted to the Securities and Exchange Commission and a federal court for a lawsuit against Black and his associates painted a sordid picture of Black, who until last year was chief executive of Hollinger International, and the firm's chief operating officer, David Radler.
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', said the report prepared by a committee headed by Richard Breeden, a former SEC chairman.
The committee 'knows of few parallels to Black and Radler's brand of self-righteous, and aggressive looting of Hollinger to the exclusion of all other concerns or interests, and irrespective of whether their actions were remotely fair to shareholders'.
The report said the amount skimmed by Black and Radler and their associates 'represented 95.2% of Hollinger's entire adjusted net income during 1997-2003.
It said Hollinger went from being an expanding business - which at the time controlled Britain's Daily Telegraph as well as the Jerusalem Post and Chicago Sun-Times - to 'becoming a company whose sole preoccupation was generating current cash for the controlling shareholders, with no concern for building future enterprise value or wealth for all shareholders'.
The report is 'an important step forward in our pursuit of restitution for funds and assets inappropriately taken from the company's coffers,' said interim chairman Gordon Paris.
But Black, in a statement issued by his Ravelston holding company in Canada, denounced the report as 'recycling the same exaggerated claims laced with outright lies that have been peddled in leaks to the media and over-reaching lawsuits since Richard Breeden first began his campaign against the founders of Hollinger International'.
Black's statement said Mr Breeden and the committee had squandered more than $25m of shareholders' money in a 'futile' 14-month investigation.
The media empire created by Black has been in turmoil for the past year, since Chicago-based Hollinger International dumped him as chief executive and removed him from the board in January 2004.
Among the many lawsuits in the dispute, the US-based board is suing Black for $1.25 billion for taking improper payments and for failing in his fiduciary duties to other shareholders.
The board blocked Black's attempt to sell his stake in the holding company, and then worked out a deal to sell the Telegraph Group.
The committee report said that since the US operating firm was established as a public firm in 1994, Black manipulated it through a 'layered control pyramid' involving his private finance company, Ravelston, which in turn controlled the Canadian holding company, Hollinger Inc.
The report had harsh words for members of Hollinger's audit committee, especially Richard Perle, a former US Defense Department official who has also headed the Defense Policy Board, an advisory group to the US military.
It noted that Perle received more than $3m in bonuses while approving unusual payments to Black and his
associates.
