Black and ex-Hollinger president David Radler “freely used the company’s coffers, financed by its public shareholders, to finance their own lifestyles,” said the lawsuit, which was filed in New York federal court on Friday.
Black has said previously that he is innocent of any wrongdoing. His spokesman, Jim Badenhausen, did not respond to requests for comment about the lawsuit on Sunday.
Radler attorney Anton Valukas, of law firm Jenner & Block, said in a statement that the lawsuit “lacks any factual or legal basis” and his client “intends to defend against the lawsuit vigorously.”
Black quit as CEO in November following a special committee’s disclosure of $32 million in unauthorized payments he and several deputies received.
The lawsuit says the improper payments went well beyond the $32 million, and include millions in management fees that the company’s board did authorize but now believes were based on misleading information and “bad faith manipulation.”
The publisher of the UK’s Daily Telegraph and other newspapers accuses Black and Radler of collecting unjustified management fees and then altering company records to conceal their actions. The suit said they had a “sense of proprietor’s entitlement that … carried with it a contempt for the public shareholder majority.”
Black lawyer John Warden issued a statement Saturday saying Black’s lawyers recently provided the special panel with evidence contradicting the special committee’s earlier statements that independent directors had not approved certain payments to Black.
“We believe this lawsuit is an attempt by the special committee now to divert attention from the fallacy of their earlier claims,” he said.