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Black resigns after payment probe

Black has angred investors over his company's complicated structure.
Black has angred investors over his company's complicated structure.

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LONDON, England (Reuters) -- Press baron Conrad Black is stepping down as chief executive of publisher Hollinger International after the discovery of $32 million in unauthorized payments to him and other top executives.

Part or all of Black's publishing empire -- which includes London's Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post -- could be put up for sale, with Lazard LLC hired to evaluate strategic alternatives, the company said Monday.

Black, who renounced his Canadian citizenship to join the British House of Lords, has grappled with investors angry about his company's Byzantine ownership structure and business deals with companies controlled by its own executives.

He has fiercely defended his practices, and denied reports that the business is short of funds. However, several recent discussions with private equity groups over a possible cash investment have come to naught.

Also resigning from Hollinger are President and Chief Operating Officer David Radler and corporate counsel Mark Kipnis. The company said the employment of J.A. Boultbee, an executive vice president, had been terminated after the firm failed to reach agreement with him on several matters.

The company was not available for further comment.

Black controls more than three-quarters of Toronto-based Hollinger Inc. through his privately held Ravelston Corp. holding company. Hollinger Inc., in turn, owns only 30 percent of the equity of Hollinger International, but controls the media company through special class B voting shares.

Hollinger International pays large management fees to Ravelston which have been at the center of criticism by shareholders. Ravelston uses some of those fees to maintain payments on Hollinger Inc.'s large debt.

Hollinger said on Monday the management fees will be terminated as of June 2004, which would leave the Hollinger debt payments in doubt. Black could be forced to sell one of his newspapers, or the company's 50 percent stake in West Ferry Printers, Europe's largest news-printing operation.

Unauthorized fees

The company described the unauthorized payments to Black and others as " 'non-competition' payments in connection with sales of U.S. community newspaper properties.''

About $7.2 million in unauthorized or unaccounted-for payments went to both Black and Radler in 2000 and 2001. Black, Radler and another executive have agreed to repay Hollinger the full amount of the unauthorized payments they received, together with interest, the company said.

Hollinger said Black would resign as CEO on November 21 but would remain as non-executive chairman and devote his time to pursuing strategic alternatives for the group.

Non-competition fees have long been a sore point for Hollinger investors. When the company sold the bulk of its Canadian papers to CanWest in 2000, Black and Ravelston reaped millions in such payments, which shareholders argued should have benefited Hollinger.



Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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