In late December, Lord Black exercised his right under America’s constitution not to incriminate himself and refused to testify before the Securities and Exchange Commission. That has prompted some directors of Hollinger International to consider trying to oust him from his position as chairman. (He has already quit as chief executive.)
This week Lord Black failed to produce the first $850,000 installment of the $7.2m he agreed late last year to pay back to Hollinger International. Originally the money had gone to him in the form of “non-compete” fees when the company sold assets—a practice which some shareholders now argue was an abuse. Hollinger International has given Lord Black two more weeks to come up with the $850,000. Its investigation will report its findings within the next three months.
Last week it became clear that people who have served for years on Hollinger International’s board—including Henry Kissinger and Richard Perle, a member of the Pentagon’s Defence Policy Board—may face legal consequences along with Lord Black. Delaware’s chancery court unsealed a lawsuit brought by Cardinal Value Equity Partners, a shareholder, which argues that the board gave Lord Black and his associates “an unfettered licence to line their pockets at shareholder expense.”
In September 2001, for instance, the board retroactively authorised a sale of publications that had already taken place, for $1, to an investment vehicle owned by Lord Black and his colleague David Radler. Board minutes, claims the lawsuit, show that there was no discussion of why the asset was being sold, why it was being sold to people connected to the company rather than to an outside party, or of its fair value.