$3M in bonuses wired to Black; Canadian bank in complex transaction;Hollinger executives rewarded

NEW YORK TIMES ^ | Jan. 12, 2004 | GERALDINE FABRIKANT

[Liz]

A unit of Hollinger International made bonus payments totalling $3 million (U.S.) in December, 2000, to Conrad M. Black, Hollinger's chairman and now former chief executive officer, and two of its other top executives, wiring the money to the Caribbean unit of a Canadian bank.

The complex transaction, recorded in documents described by people close to the company, sheds light on at least one way Hollinger paid Black, through a transfer that also could have reduced taxes on his compensation.

Other recent payments by the company to Black and other top executives were also made through wire transfers to the Caribbean, according to several people with knowledge of the transactions.

Corporate compensation experts and tax lawyers say there does not appear to have been anything illegal about the bonus payments and transfer in December, 2000.

But some corporate government experts say the payments and their handling indicate unusual methods of compensating managers of a public company based in the United States, and another way in which Hollinger executives have been rewarded.

Compensation to Black and his top lieutenants in recent years is the subject of an internal inquiry by Hollinger and the focus of a lawsuit by a big investor, Cardinal Value Equity Partners. The Securities and Exchange Commission is also investigating the company.

Hollinger International, based in Chicago, is a media company; its newspapers include the Chicago Sun-Times, the Daily Telegraph of London and the Jerusalem Post.

Black, who is Hollinger's controlling shareholder, resigned as CEO Nov. 17 after an internal investigation disclosed he and some partners had received millions in unauthorized payments. He remains chairman.

A spokesperson for Black said the bonuses were fully approved, and he disclosed that the board evidently considered them appropriate compensation for the value delivered to shareholders.

The bonuses in late 2000 were paid by Hollinger Digital, a Hollinger unit, because, according to a memorandum accompanying the wire transfer, the unit had completed an initial offering in one business and sold its interests in a second.

The two transactions generated a $27-million pre-tax gain, company filings said.

"It is very aggressive," said Herbert Denton, president of Providence Capital, a New York investment fund, and an informal adviser to Hollinger shareholders. "We looked at over 50 public companies that have spun off pieces of themselves to the public, and in only four cases did the officers get a bonus.''

At the time, Black served as a co-chairman of Hollinger Digital.

A second bonus recipient was Daniel Colson, vice-chairman and a director of Hollinger International and vice-chairman of Hollinger Digital.

The third bonus recipient was F. David Radler, president of Hollinger International at the time, with no official role at Hollinger Digital.

Spokespersons for Radler and Colson said the men declined to comment.

[Liz]

(Hollinger unit wired) money to the Caribbean unit of a Canadian bank. The complex transaction, recorded in documents described by people close to the company, sheds light on at least one way Hollinger paid Black, through a transfer that also could have reduced taxes on his compensation.

Watta shock. The Caribbean......to avoid taxes. Offshore, isn't it (/sarcasm).

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[Liz]

....some corporate government experts say the payments and their handling indicate unusual methods of compensating managers of a public company based in the US......

.....unusual yes, but not to people like, say, Lay, Skilling, Fastow, Koslowski, Gary Winnick, McAuliffe, etc......

[international american]

This doesn't pass the smell test:)

[Liz]

I'll say......magnum-bonuses, tax benefits.....and what else? Looks like the SEC has a new avenue of thievery opening up. Hollinger is most certainly not the only company doing this scam.

[international american]

Nice if you can afford 800 an hour for a top notch international tax atty......:)

[Liz]

Hired guns........ready and waiting.

[endthematrix]

I saw Perle plugging his book on WGN (no less) and asked a softball question on ethics. When asked, the corporations used were Enron and Halliburton, not Hollinger, but did gloss over the Defense Policy Board. His answer was disturbing in that he said that certain ethic violations are a "no-no" as if the penalty is know slap on the wrist, which he had received, IMO. My question is why a WGN interviewer, rival to Sun Times, failed to get specific on the issue (last question of the interview). My guess it is not to spook the big guests from future interviews. Gross negligence in journalism.

[Liz]

(Sniffle), Gosh, the poor guy's a victim (snicker).