Volume Nine, Number Four   September 2004    www.columbiajournal.ca

Report Hammers Media Big Boss for Theft


Marco Procaccini

Conrad Black, David Radler and other senior bureaucrats and executives of the Hollinger media empire are named in a damning report by an auditing committee showing how the firm was defrauded of hundreds of millions of dollars over an seven-year period.

The committee, set up by the US Securities Commission, released its findings Monday saying “…this story is about how Hollinger was systematically manipulated and used by its controlling shareholders for their sole benefit, and in a manner that violated every concept of fiduciary duty.”

The report outlines in detail the looting of over $400 hundred million dollars from the company and its minor shareholders. “Not once or twice, but on dozens of occasions Hollinger was victimized by its controlling shareholders as they transferred to themselves and their affiliates more than $400 million in the last seven years,” it said. “The aggregate cash taken by Hollinger’s former CEO Conrad M. Black and its former COO F. David Radler and their associates represented 95.2 per cent of Hollinger’s entire adjusted net income during 1997-2003.”

While the Global Canwest Corporation, which inherited Black’s media empire after he gave up his Canadian citizenship to become a member of the British House of Lords, has been low key about the report, journalists across the country are celebrating the news as a form of “poetic justice.”

“It’s (the report) is inexorably a move toward justice for a megalomaniac who should be barred from operating any business in Canada,” said Murray Dobbin, a freelance journalist and activist with the Council of Canadians, which challenged the merger of Canwest and the formerly Black-owned Southam newspaper chain in court. “He took journalism to an ultimate extreme by using newspapers for an ideological attack on what Canada represents and undermining what is essential for any democracy, and that is a free press.”

Representatives for Black and Radler claim the report is “full of inaccuracies and mis-representations” and plan to challenge its findings.

The Revelston Corporation, Black’s holding company, insists that none of the named parties has done anything illegal and has announced it will take the issue up in civil court.

"These issues will ultimately be resolved in courts of justice where the facts and the evidence will exonerate the men and women who are being attacked in this report," it said in an official press release on Tuesday.

Meanwhile, Black, Radler and other senior Hollinger bosses are already in court answering to a $1.35 billion lawsuit by minor Hollinger shareholders, and the US Securities Commission has hinted it may be filing charges against the whole firm for numerous violations, including those listed in the report.

Ravelston Inc. plans to issue a letter urging the SEC not to proceed. But SEC officials say they are taking the severity of the report’s findings very seriously.

“Black and Radler made it their business to line their pockets at the expense of Hollinger almost every day, in almost every way they could devise, the report said. “The Special Committee knows of few parallels to Black and Radler’s brand of self-righteous, and aggressive looting of Hollinger to the exclusion of all other concerns or interests, and irrespective of whether their actions were remotely fair to shareholders.”

The committee also charges that the motivation for the fraud is the “insatiable pressure from Black for fee income from Hollinger to prop up the highly levered corporate structure of Ravelston and HLG, and to satisfy the liquidity needs he had arising from the personal lifestyle Black and his wife had chosen to lead.”

BC Media Union Local 2000 representative Harold Funk says while the report is damning, he is not surprised by its findings, given Black’s reputation, both as a media mogul and as a corporate capitalist in general.

“Clearly the report shows what happened at Hollinger was not in good stead with the shareholders,” he said. “We all know about what happened with the Dominion Store chain in Ontario, where Conrad Black was accused of scooping into the pension fund.”

He also says Hollinger has left a legacy of shady practices in BC, including a cross-ownership scandal at two Okanagan newspapers in 2000. “While Hollinger officially owned 49 per cent, Black and Radler had set up a series of private companies which owned an additional 24 per cent without the knowledge of the shareholder of Hollinger International.”

Funk is also an elected trustee on the union’s pension plan board. Employee pension funds are among the shareholders who were defrauded by Black and the others, according to the report.

“As a pension trustee, I think shareholders should start looking more carefully at where they invest their money,” he said, adding that he especially concerned with the structure of multiple voting shares, and common feature in corporate capitalist ventures, and how they are used, since this is a means listed in the report as to how money was mis-appropriated. “I intend to raise this issue with our pension plan.”

Copyright 2004
Columbia Pacific