Hollinger International's independent directors have been accused of presenting a misleading picture of their involvement in approving millions of dollars in fees to former chief executive Conrad Black and other former executives.
Investor Cardinal Capital, in a lawsuit, said non-executive directors appeared "to be attempting to engage in an effort to present an inaccurate representation that all the wrongs alleged were perpetrated by those who profited through concealing their actions and activities from the board".
Until now, the focus on alleged improper behaviour at the firm has been on executives, particularly Lord Black. But Cardinal's suit paints a picture of a board that, since the late 1990s, "rubber stamped" transactions, including millions of dollars in compensation and the sale of some company assets to Hollinger executives. "In short, the board never said no," the suit alleges.
Hollinger said yesterday that it had agreed with Cardinal to delay any litigation pending the outcome of an internal inquiry. Hollinger has been embroiled in a scandal since last summer, when shareholder, Tweedy Browne, accused executives of improperly receiving nearly $300 million since the mid-1990s.
Cardinal's suit provides greater detail about how many of those fees were allegedly approved by the board without any outside opinion and virtually no discussion about the propriety of the payments.
Cardinal's lawsuit was filed against executives, including Lord Black and past and current directors, including former Illinois governor Mr James Thompson; economist Ms Marie-Josee Kravist; former Sotheby's chairman Mr Alfred Taubman; and US defence adviser Mr Richard Perle.
Cardinal is suing directors, except for three recent appointments, for breach of fiduciary duty on behalf of all shareholders.
- (Financial Times Service)
