Lord Black, the disgraced owner of the Daily Telegraph, faces personal ruin in the wake of one of the largest lawsuits ever filed against an individual. Late on Friday the Telegraph’s parent company, company, Hollinger International, filed a claim which could reach $1.25 billion against its former chairman.
The most serious allegation against the Canadian mogul is for ‘racketeering’ – under US law the charge could force him to pay punitive damages.
The action signals a dramatic escalation in the legal war between Black, whose private company still owns a controlling stake in the media group, and the Hollinger International board, which accuses him of stealing from the group.
The new writ is the result of a probe by former SEC chairman Richard Breeden. It expands on allegations that Black and fellow executives sold some of Hollinger’s newspapers to firms they controlled for a fraction of their value.
It will further complicate the already-delayed auction of the group’s assets, including the Daily Telegraph and its Sunday stablemate. Six bidders, including the billionaire Barclay brothers and Daily Mail owner DMGT, are due to submit third-round bids in the next 10 days.
In a statement, a spokesman for Black said he would fight the writ, an amendment to a filing made by Hollinger earlier this year which claimed damages of just $200m.
‘Hollinger International’s amending its lawsuit to include allegations of racketeering, is tabloid journalism masquerading as law’ said Black’s spokesman.
‘The vast majority of the agreements and transactions to which Hollinger International is apparently objecting were reviewed and approved by its independent directors. We look forward with confidence to litigating this matter.’
Hollinger has appointed investment bank Lazards to auction its assets, which include the Chicago Sun-Times, so that it can meet interest payments on its debts.
A source said last night: ‘This doesn’t help the process.’ Bidders are increasingly worried that they will take on huge legal liabilities if they buy the company.
In a statement rich with invective, Black’s spokesman said: ‘When this complaint is heard in a court of law, the poverty of this case will be plainly demonstrated. Hollinger International’s directors, audit committee members and advisers were all extremely sophisticated professionals.
‘The chairman of the audit committee, for example, is a former US attorney, former governor and current chairman of a major corporate law firm.