Risk Management

Hollinger Inks Deal to Avoid Criminal Charges

Company signs a "cooperation agreement," sparing it any charges for crimes allegedly committed by former executives.
Stephen TaubMay 16, 2006

Toronto-based holding company Hollinger Inc., once controlled by media mogul Conrad Black, has signed a cooperation agreement with U.S. prosecutors in their case against Black and several other former employees.

In return, prosecutors will not pursue charges against the company for any crimes that may have been committed by Black, former chief financial officer Jack Boultbee, former general counsel Peter Atkinson, or former corporate counsel Mark Kipnis regarding $16.55 million in non-compete payments diverted from publisher Hollinger International Inc. to Hollinger Inc.

The holding company has acknowledged that one or more of its former officers, directors or employees acted illegally in connection with the non-compete payments that Hollinger received.

“This cooperation agreement is an important and positive step for Hollinger Inc., since it provides a clear distinction between the company and the actions of its former directors and officers,” said chief restructuring officer Randy Benson, in a statement. “Our shareholders and other stakeholders will welcome that clarity as well as the certainty that the company will not be prosecuted by the U.S. government.”

Hollinger’s principal asset is its approximately 66.8 percent voting and 17.4 percent equity interest in Hollinger International, a newspaper publisher with assets which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area. Hollinger also owns a portfolio of commercial real estate in Canada.

Last September, former Sun-Times publisher David Radler pleaded guilty to federal fraud charges and agreed to cooperate with prosecutors. Black, Boultbee, Atkinson, and Kipnis were arraigned on criminal charges in November; they have pleaded not guilty on all counts.

In December, the Securities and Exchange Commission sent Wells notices to James Thompson, Richard Burt, and Marie-Josee Kravis, who at the time served on Hollinger International’s audit committee, for allowing an alleged fraud to take place on their watch.

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