Media baron Conrad Black admitted Monday his reputation has probably suffered some short-term tarnish, but defended his conduct as Hollinger International's CEO a job he will nonetheless give up at week's end as his empire faces a possible sale.
PROFILE: Conrad Black
The stunning resignation following revelations that he and other senior Hollinger executives and parent company Hollinger Inc.received millions in payments that were "not authorized or approved."
Black's resignation, which was termed a "retirement" in a news release, is effective Nov. 21.
He will remain as non-executive chairman of the company and is still the controlling shareholder.
In addition to Black, several other Hollinger executives resigned their positions with the company. David Radler stepped down as president and chief operating officer of Hollinger and as publisher of the Chicago Sun-Times. Mark Kipnis resigned as the company's vice-president and corporate counsel.
Current company director Gordon Paris will become Hollinger's interim president and CEO.
A special committee of Hollinger's board found that $32.15 million in payments "styled as 'non-competition payments' were made that were not authorized or approved by either the audit committee or the full board of directors of Hollinger."
Of that, $7.2 million each went to Black and Radler and $16.6 million went to Black-controlled parent company Hollinger Inc. Two other Hollinger execs received just over $600,000 each.
Hollinger said Black, Radler and another executive have agreed to repay Hollinger "the full amount of the unauthorized payments received by them, together with interest dating from the date of receipt of these funds, not later than June 1, 2004."
The payments to Black and the other executives were detailed in filings to the U.S. Securities and Exchange Commission in march 2002.
"However, this prior disclosure stated that the payments in question had been authorized by the independent directors of the board, which did not occur, and that the payments were made "to satisfy a closing condition," which was not accurate," Hollinger said.
In an interview with CBC Radio News Monday, Black said the payments in question were "underdocumented payments that were commercially justified." Black said the payments were not handled properly and blamed "underlings."
"It is quite clear I have not committed any improprieties," he said. "The tarnish will be temporary."
"We're having a fusion of efforts here in order to emphasize that the corporate governance issues are being addressed and our release this morning makes it clear the special committee is completely satisfied with our response to it," Black said.
Company eyeing possible sale
Hollinger says its board of directors has retained an investment banker to explore options including the possible sale of the company.
The Times of London reported in its Monday edition that the Washington Post and Britain's Daily Mail and General Trust media company are mulling offers for Hollinger International assets.
Last June, following formal complaints from minority shareholders, Hollinger International formed a special committee of independent directors to look into huge management fees and other payments made to Black and other senior Hollinger executives through Black-controlled companies.
Black has also been under pressure to reform the corporate structure of Hollinger.
"The present structure of the group clearly must be renovated," Black said in the announcement of his departure.
Hollinger International is controlled by Hollinger Inc., which is 78 per cent owned by Conrad Black's private company, Ravelston.
Last Friday, Hollinger International told the U.S. Securities and Exchange Commission that it would have to delay the quarterly filing of its financial statements because an independent committee of the board had found "inaccuracies" in previous filings.
- FROM Nov. 14, 2003: Hollinger delays financial filing; 'inaccuracies' uncovered
Hollinger sold most of its Canadian newspaper holdings three years ago to CanWest Global in a deal valued at $3.5 billion.
Hollinger stocks on the rise
Class C shares of Hollinger Inc. shot up more than 42 per cent on the TSX, climbing $1.49 to close at $5.00.
On the NYSE, shares of Hollinger International rose $2.23 US to end the day at $15.73 US.