Posted on 12/05/2003 3:35:21 AM PST by endthematrix
NEW YORK - Hollinger International Inc., a newspaper publisher caught up in a widening financial scandal, is looking into an investment the company made to a venture capital fund with links to defense adviser Richard Perle and Henry Kissinger, both directors of the company.
The investigation is part of a wider probe at the company which has already resulted in the resignation of several senior executives, including Canadian-born press baron Conrad Black as Hollinger International's CEO. However, Black remains chairman and controlling shareholder of the Chicago-based company, which publishes the Chicago Sun-Times, The Daily Telegraph in London and The Jerusalem Post.
Molly Morse, a spokeswoman for the company, said Wednesday that a "primary focus" of the internal probe was "related-party transactions," including a $2.5 million investment that the company made earlier this year to Trireme Partners, a venture capital fund where Perle is a managing partner. Black and Kissinger also sit on an advisory board to Trireme.
The committee, which is being advised by Richard Breeden, a former chairman of the Securities and Exchange Commission (news - web sites), was formed in June after a major institutional shareholder, Tweedy, Browne, raised concerns about a variety of transactions and payments that the firm says may not have been conducted at arm's length.
Separately, Hollinger International is also reviewing its annual contribution of some $200,000 to The National Interest, a conservative quarterly magazine that also has links to Perle and Kissinger. Black is listed as the chairman of the magazine's editorial board, Kissinger as the co-chairman, and Perle as a member of the editorial board.
Morse said the company was "carefully reviewing all corporate costs as part of its efforts to improve profitability and shareholder value as well as to ensure that all expenditures have an appropriate and valid business purpose."
The company had not previously disclosed its connection to the journal, which was reported in Wednesday editions of The Wall Street Journal.
A spokeswoman for Perle said he was traveling out of the country and couldn't be reached. A message left at Kissinger's office was not immediately returned.
Black stepped down as CEO of Hollinger International last month after the internal investigation found that the company made $32.2 million in unauthorized payments to him, other senior company executives and to the company's Toronto-based parent entity, Hollinger Inc. Black has promised to repay the $7 million payment he received.
Hollinger Inc., a holding company whose main asset is its controlling interest in Hollinger International, is having troubles of its own as a result of the scandal at its main subsidiary.
The Toronto-based parent company disclosed in securities filings this week that it could face a serious cash crunch because the subsidiary plans to cut management fees that the parent company depends upon. Also, all four outside directors of Hollinger Inc. resigned en masse last month after their proposal to revamp the parent company's management was voted down.
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