Black Laid Low in Delaware Court
Conrad BLACK's grip on one of the world's greatest media empires was severely weakened last week by a Delaware court judge who described the Canadian-born, now British lord as an untrustworthy bully and his actions as "cunning and calculated." Judge Leo Strine ruled that Black had "persistently" breached his duties to Hollinger International Inc., the publishing company he created, and its shareholders.
The case, a pivotal one in the ongoing Black-Hollinger drama, pitted Black against his former fellow board members of Hollinger International, some of whom he had considered friends. In the wake of his ouster last November as CEO, Black secretly agreed to sell International's parent company, Hollinger Inc. The deal, for $605.5 million to the U.K.'s twin Barclay brothers, would have thwarted the board's strategy to look for buyers of International's papers, including the Daily Telegraph and the Jerusalem Post. So the board asked the court to block Black's deal and to approve a poison pill it had adopted as further defence against the twins' bid. Judge Strine also was to rule on a last-minute change Black slipped into the company's bylaws, giving him veto power over the board's potential plans to sell the company's prize newspaper assets.
The judge ruled against him on each count.
This isn't quite the end. Other legal battles include a case that aims to force Black, Hollinger Inc. and other executives to repay US$200 million to Hollinger International. Also, Black is suing International board members, claiming he's been made a "social leper" who's been "mocked mercilessly in the media." He faces investigations by the Ontario Securities Commission and the U.S. Securities and Exchange Commission.
This week, more woes: Hollinger Inc., which Black controls, must come up with an interest payment of US$7.4 million - money a deputy says isn't there.
Quote of the week: 'Black breached his fiduciary and contractual duties persistently and seriously. His conduct threatens grave injury to [Hollinger] International.'
Leo Strine of the Delaware Court of Chancery, ruling against Conrad Black
Maclean's March 8, 2004