Lord Black isolated as directors desert him

Lord Black faces a deepening crisis across his media empire this week as his Hollinger Inc holding company begins an urgent search for new directors to replace members of its audit committee, who have resigned en masse.

Support for the peer was ebbing away after the committee apparently attempted to have him ousted as chief executive and several of his supporters removed as directors.

Hollinger Inc is the Toronto-based holding company that controls the publicly quoted Hollinger International, through which Lord Black owns the Telegraph newspaper group, the Chicago Sun-Times and the Jerusalem Post.

The audit committee's showdown with the rest of the board failed, and Maureen Sabia, Fredrick Eaton, Allan Gotlieb and Douglas Bassett, all independent directors, said they could no longer hold their posts in the company.

The committee had been investigating payments of $16.5m (£9.7m) to Hollinger Inc in connection with sales of local newspapers by its subsidiary, Hollinger International. It put forward a report detailing its findings to the board last week but its recommendations for management changes were dismissed at the board meeting on Friday.

The audit committee, however, stood by its recommendations as being in "the best interests of Hollinger and its shareholders in the current circumstances". A statement from the resigning directors said: "Accordingly, the members of the audit committee believe they are no longer in a position to serve Hollinger."

Lord Black said it was "regrettable" that the members of the committee felt compelled to resign. "While the board agreed with a number of recommendations made by the committee, it was not prepared to accept them all," Lord Black said, describing the recommendations on management and board changes as "not appropriate".

While the company did not say who the committee had targeted, it is thought it wanted three directors to stand down along with Lord Black.

Lord Black resigned as chief executive of Hollinger International last week after a special committee of the company found that he and other directors collected multimillion-pound payments without approval from the board. Filings to the Securities and Exchange Commission (SEC), the US regulator, have also been found to be inaccurate, perhaps overstating profits by as much as $17m. Lord Black has refused, however, to cede control of Hollinger Inc. The SEC is investigating the affair.

As a result of the mass resignation, Hollinger Inc is now in breach of US corporate laws, which require companies to maintain audit committees that are composed solely of independent board members. The company has said it will endeavour to hire new board members as soon as possible, but it was unclear who might be willing to join a company in crisis.

The four former directors were all long-standing members of the Hollinger board. Mr Gotlieb, a former Canadian ambassador to the US, has been on the board since 1989. Mr Eaton has served since 1979, Mr Bassett is understood to be a long-standing friend of Lord Black's, and Ms Sabia, the chair of the audit committee, joined the board in 1996.

Hollinger International has hired Lazards, the investment bank, to look at a possible sale of its newspapers, and a number of UK media players are already circling the Telegraph group. Carlyle Group, a US private equity firm that had been tipped as interested in as much as 40 per cent of Hollinger, yesterday ruled itself out of the running for any part of the company, but there were reports that Richard Desmond, owner of the Daily Express, had won the support of his banks for a bid.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks