Hollick resigns in MGN power struggle: Labour peer voices concern over the direction of the newspaper group under David Montgomery

THE ROW between David Montgomery, the chief executive of Mirror Group Newspapers, and his erstwhile supporter, the Labour peer Lord Hollick, came to a head yesterday when Lord Hollick resigned as a non-executive director of MGN.

The resignation comes after nearly two months of in-fighting between Lord Hollick and Mr Montgomery, the Ulster-born former editor of Today and the News of the World, over the future direction of the left-leaning newspaper group.

By coincidence, Paul Foot, the long-standing Daily Mirror columnist and Socialist Workers Party supporter, also resigned from the company. This follows the decision by the editor of the Daily Mirror, David Banks, not to publish Mr Foot's column attacking MGN's board. The two resignations are not believed to be related.

Lord Hollick, who is also chief executive of the media and finance group MAI and a non-executive director of British Aerospace, was left in an untenable position a month ago after he declined to sign a board motion expressing full support for Mr Montgomery. This followed an early day motion in the House of Commons by Labour MPs angry at the departure of Alastair Campbell, the Daily Mirror's political editor.

The MPs, led by the former Labour leader Neil Kinnock, claimed to have the full support of Lord Hollick and said that Mr Montgomery was destroying the traditionally close relationship between the Labour Party and MGN's newspapers.

The peer had been expected to resign from the board after he failed to turn up for a board meeting last week. In the end it was prompted by an administrative nicety. MGN produces its full-year results on Monday and wanted to publish its accounts shortly afterwards. Lord Hollick was contacted to see whether he would have his photograph taken for the page introducing the directors of the company.

Lord Hollick said that his resignation had been over worries about the direction of the group. He said: 'I have for several months voiced my concerns about a number of governance and policy matters which I believe to be important to the long-term commercial and editorial success of MGN. Unfortunately, it has not been possible to resolve these matters and I have therefore tendered my resignation.'

The peer communicated his concerns to Sir Robert Clark, MGN's chairman, after the board meeting in late February when the other 10 board members voted to support a motion of confidence in Mr Montgomery. However, it is understood that Sir Robert said there was no cause for concern and that MGN already complied with the standard of corporate governance as set by last year's Cadbury Committee report into the running of companies.

Lord Hollick declined to comment further on the matter. In a letter to the Sunday Times recently he said that he believed in the sanctity of the boardroom and would not discuss in public matters that went on behind closed doors.

The row between Lord Hollick and Mr Montgomery has been simmering since January, less than three months after Lord Hollick was instrumental in the boardroom coup that brought Mr Montgomery to the helm of MGN in November.

Lord Hollick and Mr Montgomery previously worked together with a consortium backed by Hambros, the merchant bank, which hoped to gain control of MGN by buying the 54 per cent of the company's shares that are in the hands of the administrators of the Maxwell private companies.

Mr Montgomery co-opted two other directors on to the board and a third director, Sir Gordon Borrie, the former Director General of Fair Trading and Labour parliamentary candidate, was persuaded to join MGN by Lord Hollick.

The row erupted after a series of rumours emerged saying that Lord Hollick wanted to buy a shareholding in MGN and become the chairman of the company. He denied this. However a source within MGN said that Lord Hollick has been pressing to be chairman of MGN and had been rebutted by Mr Montgomery.

(Photograph omitted)