The Vultures in Hollinger International

The Vultures in

HOLLINGER INTERNATIONAL

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November 18, 2005

Black, Hollinger Execs Indicted for Fraud

By MIKE ROBINSON, Associated Press

CHICAGO - An arrest warrant has been issued for former press baron Conrad Black following a federal fraud indictment charging that he and three other executives swindled the Hollinger International media empire he once controlled out of millions of dollars.

Black, 61, a former Canadian citizen who is a member of the British House of Lords, was also charged Thursday with siphoning off thousands of corporate dollars to pay for a vacation in Bora Bora, a surprise birthday party for his wife and apartments on Park Avenue in New York.

"For years, Conrad Black lived large on millions of shareholder dollars," U.S. Attorney Patrick J. Fitzgerald told reporters in unveiling the charges at a news conference. "A federal grand jury has returned an indictment that says he did so by means of criminal fraud."

Fitzgerald said that if Black — who has homes in Toronto, London and Palm Springs, Calif. — fails to turn himself in, the government will start extradition proceedings to bring him to Chicago.

Hollinger International Inc. owns the Chicago Sun-Times and other publications in the United States and Canada and formerly controlled the Daily Telegraph of London and the Jerusalem Post.

Black's attorney, Edward Greenspan, issued a statement Thursday night saying that Black is confident that he will be acquitted "if given a full and fair opportunity to defend himself."

"Conrad Black asserts his innocence without qualification with respect to each and every one of the charges set forth in the indictment," Greenspan said. "It will be shown that he has, at all times, acted within the law."...

According to the indictment, Hollinger's $2.1 billion sale of several hundred U.S. and Canadian publishing properties was awash in fraud.

Millions of dollars were paid by the buyers to Black and his co-defendants through what was called noncompete agreements but really were just ways of skimming cash, prosecutors said.

Newspaper companies often get payments for agreeing not to compete in the same circulation area after they sell their papers, prosecutors said. But they said that in normal sales such payments ordinarily go to the shareholders, not to individual executives of the company.

Former Sun-Times publisher David Radler pleaded guilty plea in September to charges of taking part in a scheme to siphon off $32 million in proceeds from the sale of newspaper properties in the United States and Canada through bogus contracts with purchasers.

Radler agreed to cooperate in the government's ongoing investigation.

According to the indictment Black used a similar bogus agreement to siphon $51.8 million out of Hollinger International's multi-billion-dollar sale of assets in 2000 to CanWestGlobal Communications Corp.

Black was also charged with using Hollinger International funds to bankroll a lifestyle that included Park Avenue apartments in New York and a vacation in Bora Bora in French Polynesia....

According to the indictment, he used $42,000 in Hollinger International funds to pay for a $62,000 surprise birthday party for his wife in December 2000 at a New York restaurant. The tab included 80 dinners at $195 each and $13,935 for champagne and other wine.

The indictment said another defendant, John A. "Jack" Boultbee, 62, of Toronto swindled Hollinger International out of millions of dollars by having the company pay for the renovation of one Park Avenue apartment for Black's servants and buying another Park Avenue apartment from the company at far below the fair price.

Also charged in the indictment were Peter Y. Atkinson, 58, a Canadian attorney, and Mark S. Kipnis, 58, of suburban Northbrook, who served as secretary to Hollinger International's board of directors when the board was approving some of the agreements.

Kipnis was charged with fraud in August. He has pleaded innocent and was reindicted Thursday. His lawyer Ronald Safer, did not return calls seeking comment.

Atkinson's attorney, Benito Romano, declined to comment, saying he hadn't seen the indictment. It was unclear who represents Boultbee.

Also charged was the Ravelston Corp. Ltd, a Canadian company that Black used to gain control of Hollinger International. It held 30 percent of the shares but 70 percent of the voting rights on the International board.

Black is charged in eight counts of the indictment, each of which carries a maximum five-year prison sentence. But any sentence would more likely be governed by sentencing guidelines that would be unlikely to call for a term as long as four decades.

Corporate Research E-Letter No. 49, September-October 2004

A KLEPTOCRAT IN THE BOARDROOM?

CONRAD BLACK AND THE LOOTING OF HOLLINGER INTERNATIONAL

by Philip Mattera

In the past, the word kleptocracy – rule by thieves – was typically used to describe corrupt third world despots such as Papa Doc Duvalier in Haiti and Ferdinand Marcos in the Philippines who plundered their own country’s wealth. In recent weeks, the word has gained new currency on the business pages of Western newspapers following its use in an extraordinary report issued by a special board committee at Hollinger International, owner of the Chicago Sun-Times and other major newspapers.

The special committee, headed by former Securities and Exchange Commission chairman Richard Breeden, accused Conrad Black, former chairman and chief executive of Hollinger, and F. David Radler, former deputy chairman and president, of “aggressive looting” during their time running the company. The report charged that “self dealing, misrepresentation and other abusive and unethical practices had become so ingrained in the corporate culture [of Hollinger] that they became commonplace.”

Whereas most greedy corporate executives are content to skim some of a company’s cream, Breeden accused Black and his associates of appropriating nearly the whole dairy. The report describes “a myriad of schemes, fiduciary abuses and fraudulent acts that were used to transfer essentially the entire earnings output of Hollinger” into the pockets of the Black group. The take was estimated at several hundred million dollars.

The Breeden report is a rare example of an official document in which executive greed and corruption are described in blunt terms. The story is even more tantalizing given that Conrad Black is not just another businessman. His background as an arrogant press baron with a right-wing agenda is second only to that of Rupert Murdoch. He has been a major funder of the neoconservative movement that is now under attack for its role in fomenting the invasion of Iraq. Moreover, Black filled his board of directors with the likes of Henry Kissinger and Richard Perle, whose reputations have now been tainted by their dismal performance as overseers of Hollinger’s affairs.

USING THE COMPANY AS A “PIGGY BANK”

Breeden’s 500-page report describes an array of methods by which Black and his associates appropriated vast sums of Hollinger corporate funds. Among these were:

“Excessive and unjustifiable management fees.” In addition to running Hollinger, Black was the company’s majority shareholder. He arranged for Hollinger to pay large management fees to private entities controlled by him and Radler. Breeden reported that these fees, which had not been disclosed to minority shareholders, amounted to more than $200 million since 1997.

Questionable payments. Black and his associates arranged to receive personal compensation in connection with various transactions undertaken by Hollinger. “In one case,” the Breeden report states, “Radler simply ordered Hollinger employees to pay himself, Black and two others $9.5 million in cash at the closing of a transaction, even though the related agreement didn’t provide for any such payment. He then authorized the employee who helped implement the cash transfer to pay himself a $100,000 special bonus.”

Company payments for personal expenses. Like Dennis Kozlowski at Tyco International, Black is accused of using corporate funds to support his lavish lifestyle. The Breeden report cites cases of questionable real estate transactions and use of a company jet for personal trips as well as social events such as a birthday party for Black’s wife that cost Hollinger $42,870. Among the 80 guests at the event, the report notes, were media superstars Peter Jennings, Barbara Walters and Charlie Rose.

There are many more allegations, including charges that Black arranged for his wife to get a “no show” corporate post with a $1.1 million salary and that he frequently saw to it that Hollinger made charitable contributions that he had committed to personally and for which he and his wife took credit.

According to Breeden, “Hollinger was used as a piggy bank for the Blacks.”

www.ctj.org/itep/crp/archives/sep-oct04.htm

January 18, 2004

Hollinger sues Conrad Black,
strips him of chairmanship

NEW YORK (AP) — Newspaper publisher Hollinger International Inc. removed Conrad Black as its chairman Saturday, hours after announcing a lawsuit alleging that he and an associate improperly took more than $200 million from the company.

Hollinger International, publisher of newspapers including the Chicago Sun-Times and The Daily Telegraph in London, said the executive committee of its board of directors removed Black as chairman, effective immediately. He remains the company's controlling shareholder.

The lawsuit was filed in federal court in New York Friday but announced by the company Saturday. It accuses Black and David Radler, the company's former president and chief operating officer, of "repeated and systematic schemes to divert corporate assets and opportunities to themselves."

Hollinger International is seeking recovery of the money, which includes fees paid to both men as part of asset sales. It also wants the return of fees paid to Hollinger International's Toronto-based parent company Hollinger Inc., which is controlled by Black, as well as two privately held companies also controlled by Black.

The lawsuit accuses Black and Radler of altering the company's books to provide a pretext for the payments or to conceal their actions. It also accused them of lying in public and failing to disclose important information to shareholders and the company's independent directors.

The lawsuit marks the latest escalation of tensions between the company and Black, who was forced out as chief executive in November following a shareholder revolt over millions in fees that he and other senior executives collected. Shareholders say the money should have gone straight to the company...

Hollinger International's board includes several prominent public figures, including Henry Kissinger, defense adviser Richard Perle and former Illinois Gov. James R. Thompson.

www.usatoday.com/money/media/2004-01-18-hollinger-black_x.htm#

November 22, 2003

Carlyle Group May Bail
Out Conrad Black

'Ex-Presidents Club' Ready To Throw Lifeline
To Embattled Telegraph Owner

By Jamie Doward and Jessica Hodgson , The Observer - UK

A powerful banking group with close links to the Pentagon, which has also invested money on behalf of the Bin Laden family, is in talks to bail out beleaguered Daily Telegraph owner Conrad Black.

The revelation suggests that Britain's bestselling broadsheet - coveted by rival newspaper barons because of its political influence - may not go under the hammer after all, as Lord Black tries to quell a shareholder rebellion in the face of allegations that he and several acolytes pocketed millions of dollars that was not theirs to take.

Daily Express owner Richard Desmond and the Daily Mail & General Trust, which owns the Daily Mail, are keen to buy the Telegraph titles, despite the fact that questions over the concentration of media ownership would be raised.

The Carlyle Group, known as the Ex-Presidents Club because of the number of former world leaders it employs, is considering taking a stake in Hollinger International, which owns the Telegraph titles, the Jerusalem Post and the Chicago Sun-Times, according to those close to the firm.

'It's unusual for a group of assets to come to the market like this. We would look to sell off the Jerusalem Post and Hollinger's stake in the New York Sun. Conrad [Black] would have to step out of management, but that does not mean he would have to let go of his equity stake,' said a Carlyle source. 'Ideally, we would look to take a 25-40 per cent stake. That would allow us to put people on the board,' the source added.

The move would represent a coup for Black, who is desperate not to sell the Telegraph titles, which have given him considerable influence within British politics and earned him a close friendship with Margaret Thatcher.

Carlyle - which employs former Prime Minister John Major as a director, boasts George Bush Snr and his Secretary of State, James Baker, as advisers, and is headed by Frank Carlucci, Ronald Reagan's Defence Secretary - has invested in media firms previously. The group once owned 40 per cent of France's Le Figaro, and more recently acquired part of French conglomerate Vivendi's publishing assets.

It also part-owns Qinetiq, the Government's privatised defence research laboratories, and CSX Lines, a logistics firm that specialises in shipping heavy equipment for the military. In the past, Carlyle has owned Vinnell, a company that trained the Saudi army.

If Carlyle - which, despite being only 15 years old, manages more than $14 billion in funds on behalf of investors such as George Soros and the Bin Laden family (who are estranged from their son Osama) - does take a stake in Hollinger, questions are bound to be asked over the links between the two firms, both of which have powerful links to the military.

Leading foreign policy hawks Richard Perle and Henry Kissinger sit on the Hollinger board. Black himself is a member of the secretive Bilderberg group, an organisation comprising the world's leading businessmen and politicians, which some have accused of being an alternative world government.

In a separate move, it has emerged that Wall Street fund manager Tweedy Browne will take legal action against the Hollinger board if it is not satisfied with the company's actions.

Shareholders are angry that tens of millions of dollars that Black and fellow directors took in 'non-compete' fees did not go to Hollinger.

'I want to know how this board came to pay out a red cent to these people,' said Tweedy Browne analyst Laura Jeresky.

Hollinger is the subject of an inquiry by the US Securities and Exchange Commission. Investigators are keen to understand the company's relationship with Ravelston Corporation, which is privately owned by Black and has been the beneficiary of millions of dollars which shareholders say should be returned to them.

Toronto-based Ravelston pays millions of dollars in management fees to Ravelston Management Inc (RMI). There are suggestions that RMI may be based in a tax haven. Hollinger spokesman Paul Healy declined to comment.

Guardian Unlimited © Guardian Newspapers Limited 2003

http://www.rense.com/general45/qwe.htm

January 11, 2000

Hollinger International Invests in News Alert LLC

Hollinger Press Release

NEW YORK -- Privately-held News Alert LLC, a leading domestic and international content and application service provider (ASP) for finance Web sites, announces that a consortium of international investors has acquired a controlling interest in the New York-based company.

The $22.5 million buyout was led by New Media Capital LLC, a partnership of Howard and Edward Milstein, from the real estate and banking family, and venture capitalist Laurent Ohana. Also participating in the transaction are the Phoenix-based Pivotal Group; Hollinger Digital, the venture capital arm of publishing giant Hollinger International; Mondadori.com USA, an affiliate of Italy's largest publisher; Arnoldo Mondadori Editore SpA; and RAF Net Ventures, LP, a leading Internet venture capital fund. The company's founder, Sol Menche, a successful Internet entrepreneur, will retain a minority interest in the company.

"News Alert's goal is to become the premier content and applications resource for Web sites that provide financial news and market data worldwide and across multiple vertical industry segments. By powering financial and business-to-business portals with all the content and applications they need, we enable them to focus on their core business, whether it is transactions or content creation," said Mr. Ohana, News Alert's new chairman and chief executive officer and managing partner of New Media Capital LLC.

News Alert powers world-class Web sites with private labeled, targeted, real-time financial and business news, stock quotes, charts and other client-driven, customized applications. Current clients include Dow Jones & Company, Datek Online, Charles Schwab International, Hoovers, Inc., Canada.com, Waterhouse Securities, CBS Marketwatch, Data Broadcasting Corp., PricewaterhouseCoopers and many others....

About New Media Capital, LLC

New Media Capital, LLC, a new York-based merchant banking firm, is a partnership
between veteran New York Internet venture capitalist Laurent Ohana and Howard and Edward Milstein, prominent investors in real estate, professional sports, banking and technology ventures. The company invests exclusively in Internet ventures on behalf of private and institutional U.S. and European investors. New Media Capital's portfolio includes Snickelways Interactive, LookSmart, Quadrian and Cybersites, Inc.

For more information, contact Laurent Ohana at lohana@newsalert.com.

About Pivotal Group

Pivotal Group is an investment company with a 20-year history. It has diverse interests primarily in real estate assets as well as operating companies. Its investments in operating companies include Internet-related businesses and sports franchising concepts. Real estate investments include large, luxury hotels, office buildings, business parks and master planned communities.

Examples of recent transactions include Pivotal's first level investment in messageblaster.com, an e-commerce startup, and its purchase of the world-renowned Century Plaza Hotel & Tower in Los Angeles.

For more information, please contact Jahm Najafi, Chief Operating Officer at jnajafi@pivotalgroup.com.

About Mondadori.com

Mondadori.com was established in 1999 as an Internet company combining all the various interactive activities of the Mondadori Group, one of Europe's largest publishing companies, and Italy's leading publisher of books and magazines. The Group is comprised of more than 50 subsidiaries and affiliated companies, both in Italy and abroad, in addition to the Arnoldo Mondadori Editore publishing company. With a staff of 5,100 and revenues of $1.4 billion, the group also has a significant presence in the advertising, direct marketing, computer publishing and online services industries.

Mondadori.com's most recent transactions include the acquisition of VolFTP, Italy's largest FTP site for free downloads of software, and a partnership agreement with the Bertelsman Company in BOL Italia, an online destination that is becoming Italy's largest e-commerce Web site.

For more information, contact Gualtiero Rudella at rudella@mondadori.it.

About RAF Net Ventures, LP

RAF Net Ventures is an innovative early stage venture fund focusing on Internet-based e-commerce and technology companies operating in the business-to-business sector. Pennsylvania-based, with offices in New York, RAF Net Ventures was recently formed by RAF Industries, a private investment company founded in 1979. The company is engaged in acquisitions as well as selected venture capital opportunities. Past and current investments include, but are not limited to, US Interactive, Internet Capital Group and Zanybrainy.com.

For more information, contact Jim Coane at jcoa@aol.com,

About News Alert

News Alert LLC is an industry-leading provider of financial news and information for business-focused Web sites. Since 1991, News Alert has been providing content and applications to Web sites for prominent blue-chip and middle-market brokerages, mutual funds, insurance companies, financial publishers and vertical business-to-business portals.

The company's clients include Dow Jones & Company, Datek Online, Charles Schwab International, Hoovers, Inc., CBS Marketwatch, Data Broadcasting Corp., PricewaterhouseCoopers, PaperExchange and many others. Since 1996, the company has operated one of the leading business news portals at (http://www.newsalert.com), which provides the most comprehensive suite of search tools, technical analysis and financial data on the Internet.

About Hollinger International

Hollinger International Inc. is a global newspaper publishing company with English language newspapers in the United States, United Kingdom, Canada and Israel. Included among its 74 paid daily newspapers are The Daily Telegraph, Chicago Sun-Times,The Ottawa Citizen and Canada's National Post.

In addition, the company owns 222 non-daily periodicals, numerous magazines, other leading publications and operates Web sites for all its major newspapers and a variety of other specialized Internet sites. Through its subsidiary Hollinger Digital, the company has made significant investments in various Internet-based companies.

Contact:

Tracy H. Krumme
Director, Investor Relations
Hollinger International Inc.
(212) 586-5666

Philip Kunsberg
Executive VP & General Counsel
Hollinger Digital
(973) 762-1505

www.hollingerinternational.com/release.asp?articleid=80

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