| Free Republic! |
|---|
 |
| It's a wonderful site! |
| Please help keep it that way. Make a donation! |
Posted on 01/05/2004 12:39:58 PM PST by JohnGalt
Hollinger scandal engulfs great and the good
By Stephanie Kirchgaessner in New York Published: January 5 2004 4:00 | Last Updated: January 5 2004 4:00
This week, a cast of political and business luminaries will find themselves in the Hollinger hot seat, after the unsealing of a law suit filed by an investor that contains new information about how the newspaper publisher's independent directors allegedly routinely approved millions of dollars in payments to executives and other related party transactions.
The lawsuit, filed by Connecticut-based Cardinal Capital, paints a picture of a group of highly respected former politicians, including former Illinois Governor James Thompson, Richard Perle, the defence adviser and Marie-Josee Kravis, wife of financier Henry Kravis, allegedly approving requests by Hollinger executives - including the sale of some of the company's assets for $1 - without seeking independent opinions on the propriety of the transactions or discussing the matters outside the presence of the executives.
The suit contains a virtual laundry list of instances in which four directors allegedly failed to question arguments presented to them by executives, as well as auditors KPMG, to justify the payments of millions of dollars in so-called "non-compete" fees, or payments made to the executives following sales of newspaper assets to third parties.
The lawsuit is based in part on boardroom minutes that were previously confidential. The suit also sheds new light on how increases in executives' pay were approved by directors without directors seeking any independent reports on whether the increases were consistent with industry standards.
Cardinal's claims are particularly critical of how directors failed to question the sale of company assets to outside companies that were controlled by Lord Black and David Radler, another executive. According to Cardinal, a memo outlining the deal "acknowledges that Hollinger would be exchanging profitable newspapers for less profitable newspapers." The memo further stated that this was "a good idea" because it gave Hollinger the opportunity to improve the performance of the less profitable papers.
Hollinger and Cardinal have agreed to stay the litigation until the conclusion of an internal investigation. The company had no further comment on the suit.
| Free Republic! |
|---|
|
| It's a wonderful site! |
| Please help keep it that way. Make a donation! |
Who the heck did they think they were? Enron?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.