Press baron Mr Conrad Black is stepping down as chief executive of publisher Hollinger International after the discovery of $32 million in unauthorised payments to him and other top executives.
Part or all of Black's publishing empire - which includes London's Daily Telegraph, the Chicago Sun-Timesand the Jerusalem Post- could be put up for sale, the company said today.
Mr Black, who renounced his Canadian citizenship to join the British House of Lords, has grappled with investors angry about his company's complicated 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 been unsuccessful..
Also resigning from Hollinger are president and chief operating officer Mr David Radler and corporate counsel Mr Mark Kipnis. The company said the employment of Mr 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. Mr 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 per cent 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 centre of criticism by shareholders. Ravelston uses some of those fees to maintain payments on Hollinger Inc's large debt.
Hollinger said today the management fees will be terminated as of June 2004, which would leave the Hollinger Inc debt payments in doubt. Mr Black could be forced to sell one of his newspapers, or the company's 50 per cent stake in West Ferry Printers, Europe's largest news-printing operation.
The company described the unauthorised payments to Mr Black and others as "'non-competition' payments in connection with sales of US community newspaper properties." About $7.2 million in unauthorised or unaccounted-for payments went to both Mr Black and Mr Radler in 2000 and 2001.
Mr Black, Mr Radler and another executive have agreed to repay Hollinger the full amount of the unauthorised payments they received, together with interest, the company said.
Hollinger said Mr Black would resign as chief executive on November 21st but would remain as non-executive chairman and devote his time to pursuing strategic alternatives for the group.