Hollinger Inc. said it would set aside its $47.3-million US share of a special dividend being paid out by subsidiary Hollinger International.

The Toronto-based company indirectly controlled by struggling media baron Conrad Black, said it has agreed with the United States Securities and Exchange Commission to voluntarily put the money into an escrow account.

The SEC has filed an enforcement action in U.S. District Court against Black and David Radler, formerly the top two executives of both Hollinger companies, as well as against Hollinger Inc. (TSX:HLG.C).

Conrad Black

Black and Radler have since resigned their management posts at both companies.

The U.S. regulator has accused the two men of a "fraudulent and deceptive scheme" to divert cash and assets worth more than $100 million US from Hollinger International (NYSE:HLR) from 1999 to 2003.

The SEC is seeking to have Black, Radler and Hollinger Inc. give up any money inappropriately received and pay a monetary penalty, in addition to other non-monetary sanctions. Black, Radler and Hollinger have denied the allegations against them.

The funds will remain virtually frozen in escrow until the SEC action against all parties is resolved.

The announcement came after Chicago-based Hollinger International on Thursday published details of a $3 US a share, $273-million US distribution to shareholders of proceeds from the $1.3-billion US sale of the London Telegraph newspaper and related businesses last year.

The dividend is due to be paid on March 1.

A mooted share buy-back for $273 million US was shelved as Hollinger International had not yet completed its accounts for 2004, a precondition for such a move.

Hollinger Inc. owns 17.4 per cent of the equity interest and 66.6 per cent voting interest in Hollinger International, which still owns the Chicago Sun-Times and numerous smaller publications.

Black in turn controls Hollinger Inc. through his holding company Ravelston.

The net proceeds of the Telegraph sale with Britain's billionaire Barclay brothers, agreed to against the wishes of Black, were $500 million US. Hollinger International shareholders had already been allocated $2.50 US per share or $227 million US in total, in a first dividend declaration on Jan. 18.

Hollinger International on Thursday also announced that its acting chief executive and chairman Gordon Paris, who had led the ouster of Black at the company, would henceforth hold his positions, as well as that of president, on a permanent basis.

Hollinger International is suing Black and associates for hundreds of millions of dollars, claiming he looted the company and shareholders of funds. Black is countersuing for defamation.

Making an announcement of its own on Thursday, Hollinger Inc. said it had put in place new corporate governance guidelines among the most stringent in the business, in order to make a fresh start.

Hollinger Inc. shares rose three cents to $6.03 in Toronto, while Hollinger International shares rose 10 cents US to $14.40 US in New York.