Accounting & Tax

Hollinger to Restate Financials

Errors in tax returns for 1998 and 1999 lead to a restatement for 2000 through 2003.
Stephen TaubSeptember 6, 2005

Hollinger International Inc., which is embroiled in a corporate fraud scandal, announced in a regulatory filing that it will restate its financials for the four years ending December 31, 2003, due to errors in tax returns.

The tax returns, for 1998 and 1999, contained errors related to gains on sale of assets as well as foreign exchange calculations, according to Hollinger. The company added that revisions in its balance sheets will decrease stockholders’ equity and increase total income tax liabilities by approximately $29.9 million for 2000 and about $31.9 million for 2001, 2002, and 2003. The restatement will also cut net income by about $1.7 million for 2000 and increase the net loss by about $1.9 million for 2001.

The embattled publishing company added that it will publish the restated financials for the fiscal year ended December 31, 2004, on September 15. That also happens to be the day that F. David Radler, the former publisher of the Chicago Sun-Times, plans to plead guilty to federal fraud charges, according to Bloomberg, citing comments by his attorney, Anton Valukas.

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Last month, federal prosecutors charged Radler; Mark S. Kipnis, the top in-house lawyer for Hollinger International; and The Ravelston Corp., a privately held Canadian company, with fraudulently diverting more than $32 million through a complex series of self-dealing transactions.

Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, accused the defendants of engaging in a series of secret transactions, in connection with the sale of various newspaper publishing groups in the United States, “designed to enrich certain corporate officers by funneling payments disguised as non-competition fees to a company they controlled, as well as to themselves individually, at the expense of Hollinger’s public shareholders and corporate assets.”

Meanwhile, according to Bloomberg, a grand jury is looking into Hollinger’s charge that Radler and former chief executive officer Conrad Black looted more than $425 million from the company. Last November, the Securities and Exchange Commission filed a fraud complaint against Radler, Black, and Hollinger Inc. alleging that from 1999 through 2003, they illegally diverted roughly $85 million of the proceeds from Hollinger International’s sale of newspaper publications through purported “non-competition” payments.

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