Hey, why should he have to pay? All that matters is that the pledge made him feel good at the time, right?
Posted on 01/17/2004 1:18:13 PM PST by Tumbleweed_Connection
Conrad M. Black, the embattled media baron, has one more overdue bill: he has not made good on a $100,000 pledge to the New York Public Library. Lord Black and his wife, Barbara Amiel Black, were co-chairmen of the Literary Lions benefit dinner on Nov. 3. At that time, he agreed to give the library $100,000, but he has not made the contribution. Instead, Lord Black asked his company, Hollinger International, to make the payment for him. The company refused, according to a person briefed on the situation. Nor did Hollinger take a table at the elegant New York dinner, which was attended by some of New York's top socialites. A spokesman for Lord Black said, "Lord Black informed the chairman of the library that there might be a delay in the contribution but that he would keep his commitment and intends to make it." A spokeswoman for the library said it expected to receive the contribution. The payment to the library is not the only one Lord Black has looming. He faces a deadline on Sunday to make an $850,000 payment to Hollinger, whose holdings include The Jerusalem Post, The Daily Telegraph of London and The Chicago Sun-Times. And his ability to raise money through a sale of his stake in the company appeared to be curbed yesterday under an agreement reached by Hollinger and the Securities and Exchange Commission. Though the $850,000 payment is due by Sunday evening, corporate law allows a weekend payment to be made on the first business day after a holiday. That gives Lord Black until Tuesday because Monday is Martin Luther King's Birthday. The payment is due under an agreement reached by Lord Black and two associates to give back $7.2 million in noncompete payments that Hollinger had paid them without board approval. The company has said that $32 million in unauthorized payments were made to Lord Black and several top associates. In the wake of investor complaints about these payments, a special committee advised by Richard C. Breeden, a former chairman of the S.E.C., was set up to investigate them. The first payment to the company from Lord Black and his associates was due on Dec. 31. His two colleagues - the former president, F. David Radler, and the executive vice president, Peter Atkinson - made their payments, but Lord Black declined, saying that he was still conducting his own inquiry to determine whether the payment was required. That announcement angered Mr. Breeden, who issued a statement reiterating that Lord Black owed the money. A spokesman for Lord Black said yesterday that his legal counsel was still reviewing material relevant to whether he owed the money. After the first deadline passed, Lord Black was given two weeks to pay in exchange for an agreement not to sell the shares of Hollinger International that he effectively owns. Lord Black controls 72 percent of the vote in the company, but the shares are held by another company, Hollinger Inc. There had been concerns that Lord Black might try to fire the special committee or even the board because he remains the controlling shareholder. But his powers appear to have been limited yesterday after the company agreed to a federal court order sought by the S.E.C. aimed at protecting the special committee and its work. If Lord Black were to try to sell his stake and transfer control of the company, or fire the special committee, Mr. Breeden would become a special monitor under the authority of the federal court to protect Hollinger's interests. The S.E.C. sought the order in a suit filed in Chicago that laid out the series of payments to Lord Black and other executives. Hollinger International said it would cooperate with the S.E.C. Several institutional investors and executives close to Hollinger International have been concerned that Lord Black might try to raise money by selling his stake. Any sale would transfer control of the company even as the special committee is conducting its investigation and as Lazard, the investment banking firm hired by the company, seeks to find a way to restructure Hollinger. When Lord Black received the two-week extension on his payment, he agreed not to sell his stake unless Hollinger Inc. itself faced a liquidity crisis. With that possibility looming larger, however, a sale would be more justifiable. In March, Hollinger Inc. must make a $7 million payment on $120 million in debt. It is unclear where it would get the money. Hollinger Inc. had historically received money indirectly from Hollinger International: It paid fees to the Ravelston Management Company, a holding company that was controlled by Lord Black. That money in turn went to Hollinger Inc. But Hollinger International has now stopped making the payments. It was still not clear whether Lord Black has declined to make his payment because he does not have the money or because he has made a tactical decision not to do so. Several people close to the situation said they did not expect Lord Black to pay. They say that he has put his home in Palm Beach, Fla., up for sale, with an asking price of $36 million, as well as his home in London. These people also say they believe that he may not have enough assets, or at least enough liquid assets, to make the payment. As the company faces off with Lord Black, it also faces the ire of investors. Cardinal Value Equity Partners, a hedge fund that owns a stake in Hollinger, filed a lawsuit against Hollinger in December contending that the board had been lax in oversight of the company. And investors are also angered over the use of company money to buy personal items for Lord Black. It had been widely reported that Hollinger spent $8 million to buy memorabilia related to President Franklin D. Roosevelt, the subject of a recently published biography written by Lord Black. This week, The National Post of Canada reported that Hollinger spent $12 million, rather than the $8 million that was initially reported. In a letter to The Post, Lord Black maintained that the company spent only $8 million, but a Hollinger spokeswoman confirmed yesterday that the figure was $12 million. At the same time, it has emerged that Lord Black and his lieutenants transferred compensation to accounts in Barbados that provided favorable tax treatment. They routinely transferred their compensation into Moffatt Management, one of two companies based in Barbados in which Lord Black had a stake, according to a person briefed on the transactions. Under certain conditions, investors in companies in Barbados can take their money out in the form of dividends that are taxable at about 3 percent. Company filings describe Moffatt and Black Amiel Management, another company in which Lord Black had an interest, as affiliates of Ravelston. Transfers of money offshore are not uncommon for Canadian executives living in Britain as a legal means of reducing tax liabilities, according to a top Canadian tax lawyer with no ties to Lord Black or Hollinger. Lord Black is a native of Canada who renounced his citizenship to become a British lord in 2001.
Hey, why should he have to pay? All that matters is that the pledge made him feel good at the time, right?
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