Conrad Black may have dug himself an even deeper hole yesterday.
Black, who resigned in disgrace as Hollinger CEO Monday, was defiant – some might even say in denial – in proclaiming that he remained in control of his company.
“I’m still the chairman of the parent company; I’m still the controlling shareholder and co-director of the strategic process; and I’m chairman of the Telegraph,” Black told reporters, while signing copies in Toronto of his new book on Franklin Delano Roosevelt. “And I made 50 million bucks yesterday. That’s a flame-out I can get used to.”
Black was referring to the $50 million rise in the value of his Hollinger shares on news that he was stepping down.
The comments from Black, who remains Hollinger’s chairman, angered already testy shareholders and prompted more calls for him to step down altogether.
“It was despicable,” one shareholder said. “With him, vanity trumps common sense all the time.”
Another source close to Hollinger predicted Black would be forced to step down from the board soon. “I don’t know how he can survive very long,” this source said. “I assume an SEC investigation is imminent.”
The Securities and Exchange Commission has received Hollinger documents pertaining to the company’s financial problems but has not yet opened a formal probe, sources said. A spokesman for the SEC declined comment.
Hollinger controls the Chicago Sun-Times, the London Daily Telegraph and the Jerusalem Post, among other papers.
Black and his top deputies agreed to return $32 million in payments that were either unauthorized or not disclosed properly.
The company is expected to file its quarterly report with the SEC today, and sources said the filing will include more details on the illicit payments to Black and his top execs.
The company was due to file the report last Friday but sought an extension. Legally, the company has until Friday to make the document public.
Hollinger’s internal investigation, which is being headed by former SEC commissioner Richard Breeden, continues, and sources said it is likely that the probe could unearth more improper payments.
A spokesperson for Hollinger declined comment.
Today’s SEC filing will also include more details on related-party transactions between Hollinger and board member Richard Perle, a member of the U.S. Defense Policy Board, which advises the Pentagon.
These deals, which include a $2.5 million payment to a venture capital firm in which Perle is a managing partner, have come under investor scrutiny.
The company will also provide more details on alleged self-dealing between Hollinger and fellow newspaper company Horizon in which Black and his former top deputy David Radler are shareholders. Hollinger and Horizon papers compete in some markets.
In the past, Horizon has borrowed funds from Hollinger to purchase Hollinger assets.
Dissident minority shareholders are trying to recoup some $300 million in so-called management fees that have been paid to a Black-controlled holding company called Ravelston since 1995.
In an early morning filing on Monday, Hollinger said it had hired the investment bank Lazard to seek a buyer for the company. The company named investment banker and board member Gordon Paris as interim CEO, replacing Black.
The Breeden investigation is expected to last until early next year, and sources close to the company expect the Justice Department to ultimately get involved. These people said Black appears to have violated the Sarbanes-Oxley Act, which holds executive officers liable for approving false financial statements.
In denial
Conrad Black, who stepped down as Hollinger International CEO, thinks he still has the world in the palm of his hand. His comments yesterday, which outraged already testy investors:
“I’m still the chairman; I’m still the controlling shareholder … And I made 50 million bucks yesterday. Thats a flame-out I can get used to.”