Much has been written in the popular and trade press about the recent conviction in Chicago of Lord Black in connection with his Hollinger entities. Here is a report of the conviction by The Wall Street Journal Law Blog. Though not mentioned in most of the recent reports about the Chicago trial, Lord Black lost important civil cases in Delaware. Here is a summary of the Delaware Supreme Court’s decision affirming the Chancery Court’s ruling. Courtesy of ProfessorBainbridge.com, here are a few excerpts from the Chancery Court’s findings of fact:
- "Conrad M. Black, the ultimate controlling stockholder of Hollinger International, Inc. (“International”), a Delaware public company, has repeatedly behaved in a manner inconsistent with the duty of loyalty he owed the company." (1028-29)
- "During the course of his dealings, Black misrepresented facts to the International board, used confidential company information for his own purposes without permission, and made threats, as he would put it, of “multifaceted dimensions” towards International’s independent directors." (1029)
- "By late October 2003, the Special Committee had come to a troubling conclusion; namely, that $15.6 million in so-called “non-competition” payments had been made by International to Black, Radler, Atkinson, and Boultbee-i.e., the International management team-without proper authorization. Furthermore, another $16.55 million in “non-competition” payments had been made by International to Inc.-even though Inc. had no operational capacity to compete with anyone. Of these amounts, Black had received $7.2 million personally, as had Radler." (1036) In other words, Black paid himself $7.2 million of the shareholders’ money (remember that his economic stake was only 15%) with no – nada, zilch, nil – independent authorization. Hollinger was not Black’s personal piggybank, but he treated it as such.
- "After performing its own inquiry into the non-compete payments, the [Hollinger] Inc. audit committee presented a report to the full Inc. board on November 19, 2003 that included various recommendations. Among other things, the Inc. audit committee recommended that Black, Radler, and Boultbee immediately resign from their management positions at Inc., and that Atkinson, Boultbee, and Radler resign from Inc.’s board of directors. On November 21, 2003, the five non-independent directors voted against taking these actions, over the objection of all four independent directors. The independent directors promptly resigned from the Inc. board." (1044)
- In violation of contractual obligations he had undertaken, Black interfered extensively with efforts to undertake a financial restructuring of Hollinger. (1045ff)
- "In late December, Black was questioned by the SEC about matters within the scope of the Special Committee’s investigation, including the non-competes. He invoked the Federal Constitution’s privilege against self-incrimination and refused to cooperate. Specifically, Black refused to answer any questions regarding the non-competes on the ground that his answers might incriminate him. By doing so, he denied the SEC the full cooperation of International that had been promised when the Restructuring Proposal was announced in November." (1049)
- "Black also began steps to repudiate his commitment to repay the monies due back to International under the Restructuring Proposal." (1049)