- Lord Black, former owner of The Daily Telegraph, won
a temporary reprieve yesterday when a US judge dismissed a lawsuit by his
former company, which was seeking $1.25bn (£700m).
-
- The ruling by a federal judge, which still allows
Hollinger
International to sue in a state court for a lesser amount, is the latest
development in a complex legal battle between Lord Black and the newspaper
company.
-
- Hollinger International claimed "a pattern of
racketeering"
was behind deals in which Lord Black and his associates, including former
chief operating officer David Radler, sold Hollinger newspapers for less
than a fair value to private companies they controlled.
-
- Hollinger International, which owns The Chicago
Sun-Times,
Jerusalem Post and until recently the Telegraph, said it was considering
an appeal against the ruling by Judge Blanche Manning of the US District
Court in northern Illinois.
-
- In a 20-page ruling, Ms Manning said the heart of the
suit's claims should be considered under securities fraud laws rather than
racketeering.
-
- The judge's ruling does not signal an end to the legal
case against Lord Black, who is married to the former Telegraph columnist
Barbara Amiel. He and his associates, who were accused in a detailed report
compiled by a special company committee of systematically looting the
publishing
firm of more than $400m - nearly all of its profits from 1997 to 2003.
In her ruling, the judge said: "This court is not making any
determination
as to validity of the fraudulent actions underlying these
claims."
-
- She dismissed the non-racketeering claims without
prejudice,
meaning Hollinger International could still prevail on those points if
it refiles.
-
- Gordon Paris, Hollinger International's interim chairman
and CEO, said that the company was not deterred by the ruling. Mr Paris
said: "The court's dismissal of the special committee's claims on
technical grounds does not in any way diminish the strength or merits of
the breach of fiduciary duty claims that have been asserted against these
defendants.
-
- "In the interest of the company and its
shareholders,
the special committee will pursue these claims aggressively and seek
restitution
for funds diverted by the defendants from the company."
-
- Nathan Eimer, Hollinger Inc. attorney, said that even
if the lawsuit is refiled, the judge's ruling in effect eliminates
two-thirds
of the total sought by determining that the case cannot be considered under
racketeering laws.
-
- Under a federal racketeering law originally designed
to fight organised crime, Hollinger had sought triple the $381m in damages
it claimed under the lawsuit. It also asked for $104m in interest. The
company filed the lawsuit in January and amended it in May with the
racketeering
allegations.
-
- Hollinger Inc, a Toronto-based holding company controlled
by Lord Black, had argued its US affiliate should not be able to bring
its case under the Racketeer Influenced and Corrupt Organisations Act,
the so-called RICO act. A spokes-man for Lord Black called the decision
a "stinging setback to Hollinger International's campaign against
Conrad Black and the rest of the former management" of Chicago-based
Hollinger International.
-
- The spokesman said: "We always believed that
Hollinger
International's racketeering claim highlighted the overreaching and
exaggerated
nature of this lawsuit, and by dismissing the racketeering claim with
prejudice,
the judge has ruled that this is not and cannot be a racketeering
case."
-
- Many federal courts have shunned RICO claims in private
commercial disputes, said former federal prosecutor Randy Mastro, now a
partner at law firm Gibson, Dunn & Crutcher in New York.
-
- Mr Mastro said: "It doesn't mean this matter is
over. It does mean that there can't be a federal racketeering claim under
these circumstances. It means that the case going forward won't be in
federal
court."
-
- Black has repeatedly denied any wrongdoing. His spokesman
said last week that Lord Black would sue a Hollinger International special
committee for $878m over a report that accused him and other former
executives
of operating a "corporate kleptocracy" that drained the publisher
of hundreds of millions of dollars.
-
- Hollinger Inc. holds about 18.2 per cent of Hollinger
International and controls 68 per cent of its votes through a special share
class. The holding company's shares jumped more than 6 per cent in
afternoon
trade in Toronto yesterday. Hollinger International stock slipped 10 cents
to $17.64 on the New York Stock Exchange.
-
- HOLLINGER VS BLACK
-
- Between 1999 & 2002: Lord Black and three other
directors
of Hollinger receive unauthorised payments following the sale of various
newspapers including several in the US and Canada. Money is described as
"non-competition payments"
-
- November 2003: All the executives involved are forced
to resign posts. Lord Black loses his job as Chief Executive but stays
on as non-executive chairman
-
- November 2003: Launch of investigation by US regulators
into Black's financial affairs
-
- Details of the suspect payments also reported to the
US financial regulator
-
- End of 2003: Hollinger considers selling its main asset
- the world's third largest group of titles including The Daily Telegraph
and its sister Sunday title and the Spectator magazine
-
- January: Black launches secret bid to sell his
shareholding
in Hollinger
-
- 17 January: Hollinger International announces it is to
sue Black for the payments and he is sacked as non-executive chairman (to
be replaced by Gordon Paris, pictured, as interim chairman and CEO). A
few hours later, he infuriates Hollinger by announcing planned sale of
the Telegraph titles to the Barclay Brothers
-
- June: The Barclay Brothers £665m bid for the
Telegraph
papers accepted
-
- July: Black's Hollinger Inc files lawsuit in an attempt
to force a shareholder vote on the Telegraph sale
-
- July: Ruling from a Delaware court states that Black
will not get to vote on the decision to sell
-
- August: Hollinger report states that Black and his
associates
ransacked more than £220m from his former empire
-
- October: Black announces he is suing the special board
committee of Hollinger International for "defamatory statementsabout
him, throughout the committee's recently published report".
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