JERUSALEM
POST OWNERS REMOVED FOR EMBEZZLEMENT
Post To Be Sold, Management Reshuffled
Jerusalem Post
Publisher Tom Rose, Editor Bret Stephens To Be Replaced?
By Israel News Agency
New York-----November 17........ Under heavy pressure from investors, Conrad Black will step down as chief executive of Hollinger International Inc., publisher of the Jerusalem Post and Chicago Sun-Times, and the company may be sold after an internal investigation found that fees had been improperly paid to Black and other senior executives.
Several other executives are also leaving Hollinger as part of a management shakeup the company announced early Monday. David Radler resigned as the company's president and as publisher of the Sun-Times, and Mark Kipnis resigned as general counsel.
Black will officially retire as of Friday and remain non-executive chairman of Hollinger to oversee a sale or other initiatives. He will also continue as chairman of The Telegraph Group Ltd., a wholly owned Hollinger subsidiary, and as head of Hollinger Inc., the Toronto-based parent company of Hollinger International.
Hollinger said it has retained the investment bank Lazard LLC to explore a sale of the company or one or more of its newspapers. In addition to the Sun-Times, the company publishes The Daily Telegraph in London and The Jerusalem Post.
Board member James Thompson, a former Illinois governor, said Lazard will explore whether Hollinger should "sell its assets, recapitalize, sell the whole company or stay as we are." He said no decision is likely for several months.
Hollinger acknowledged that an ongoing internal review revealed that Hollinger's parent company, Black, Radler and two other executives received a total of $32.15 million in unauthorized payments in connection with the sale of several community newspapers.
All of the executives except one have agreed to repay Hollinger what they owe, with interest, the company said. The fourth, executive vice president J.A. Boultbee, was fired, Hollinger said.
According to the company, Black and Radler each received about $7.2 million in unauthorized payments; executive vice presidents Peter Y. Atkinson and Boultbee each received about $600,000. The executives could not be reached for comment.
The company said Black also has agreed to seek the repayment of $16.55 million paid to Hollinger Inc., where he is the majority shareholder.
Black's office in Toronto referred calls to vice chairman Daniel W. Colson, who did not return a call seeking further comment. In a statement, Black said that "the present structure of the group clearly must be renovated." Black said he would cooperate with Hollinger's investigative committee to "resolve corporate governance concerns."
Black has been under pressure from investors for months over the fees, which were described as "non-competition" payments made as part of the sale of several newspapers in the United States and Canada.
Black has defended the fees, which are intended to ensure that a seller will not re-enter the markets of the properties he is selling. But shareholders have questioned why the payments went directly to the executives rather than the company.
Black, who renounced his Canadian citizenship and now holds the title Lord Black of Crossharbour in England, clashed with angry shareholders at the company's annual meeting in May as they criticized Hollinger's management and executive pay.
"Like all fads, corporate governance has its zealots, and its tendency to excess," Black said at the time.
Investors welcomed news of the shakeup, pushing Hollinger International's shares up $2.23 to $15.73 in unusually heavy volume on the New York Stock Exchange.
Gordon A. Paris has been named interim president and CEO of Hollinger, with his election as CEO to take effect Friday. Paris is currently a director of Hollinger. The vice chairman Colson will take on the additional job of chief operating officer.
| When Conrad
Black took over a newspaper, the first step was sending in his long-time
business partner and chief cost-cutter, David Radler.
Black's right-hand man doesn't cringe at his reputation as a corporate slasher. In fact Radler, 63, who hooked up with Black in 1969, is rather proud of his track record. "Do you want to talk about the Jerusalem Post?" he once asked a Montreal Gazette reporter. "The day I walked in the door, there were 480 people. That's a lot for a $20-million operation." By the time he was done, 180 people were left standing. This resulted in a crippled
paper - a skeleton left standing. |
Hollinger also owns The Spectator magazine in Britain and a large number of community newspapers in the Chicago area.
Sun-Times executives met with staff members Monday afternoon and assured them the newspaper is not in danger of folding, according to people who attended the meeting and spoke to the AP on condition of anonymity. A new publisher is expected to be named this week.
Southeastern Asset Management Inc., a major shareholder of Hollinger, declined to comment on the changes, and a call to Tweedy, Browne Co., a shareholder which had pressed for changes, was not returned.
The sell-off of Britain's
Daily Telegraph is "only one of several options" facing embattled
media tycoon Conrad Black as his Hollinger International group undergoes
a shake-up, one of his closest lieutenants said.
Potential buyers named include The Washington Post and Richard Desmond, a porn merchant turned proprietor of the Daily Express, which with Hollinger co-owns Europe's biggest newspaper printing plant, West Ferry Printers, in east London.
In a separate report, the Financial Times said that Canadian-born Black, who sits in Britain's House of Lords, had told the firm's directors that he was considering various strategic options including disposals, although no specific plan had been finalized.
One analyst at Jefferies & Company put the value of all of Hollinger International's papers at $2.05 billion. But the company Hollinger has hired to advise it on its future direction may find that the company would be worth more if its components are sold off in parts.
The Jefferies analyst estimated the value of The Jerusalem Post at $50 million US. No obvious buyer has emerged for that.
Hollinger needs cash to meet a 41-million-pound payment due next spring. If that payment is not made all of Hollinger's papers could close down.
On Friday, Hollinger informed the US Securities and Exchange Commission that it could not file its quarterly report on time because it is investigating questions raised by shareholders.
In its statement, Hollinger said that a pair of committees had found that some of the payments had been unauthorized and that the company's public disclosures about them had been "incomplete or inaccurate in some respects."
The U.S. Securities and Exchange Commission are currently reviewing the findings of a special committee of Hollinger International directors, and will likely seek permission soon to begin a formal probe of the company, reports The Globe and Mail.
"We have over the weekend talked to the SEC several times. So, whatever they want to do, they will do," Hollinger director James Thompson told reporters Monday.
Ontario Securities Commission spokesman Eric Pelletier declined to say whether it would launch its own probe. He would say only that the securities watchdog is aware of the issues.
"In the case of reviewing any company's disclosure, we might move to collecting more information or meeting with company officials to sort of get their view of events, but that's not anything we would comment on relating to any specific company."
AP, AFP, CBC and IHT contributed to the above.
CLICK HERE TO JOIN LIVE CONVERSATION ON THE JERUSALEM POST SCANDAL