Lord Black of Crossharbour, the former chief executive of the publishing giant Hollinger International, and his associates ransacked more than $400m (£220m) from his former empire in an astonishing display of "corporate kleptocracy", according to a report published yesterday.
Lord Black, whose downfall forced Hollinger to sell its prized asset, The Daily Telegraph, to the Barclay brothers last month, illegally took the money to fund lavish parties, expensive possessions and massive salaries for himself and his friends, the report says.
The findings, compiled by a former chairman of America's Securities and Exchange Commission, Richard Breeden, will further damage the reputation of Lord Black.
Until recently, he was one of the world's most powerful media barons, with an empire including the Chicago Sun-Times and the Jerusalem Post.
He was ousted as chairman of Hollinger in January and is already being sued by his former company for $1.25bn through Chicago's courts based on an initial internal inquiry into the way the Canadian-born publisher, its controlling shareholder, ran the business.
Yesterday's far more detailed report, also commissioned by Hollinger, says Lord Black and his chief operating officer, David Radler, engaged in "self-righteous and aggressive looting" of Hollinger so extensive there are few parallels in corporate history.
Such was their "ravenous" desire to strip the company of its profits for their own personal gain, Lord Black and his circle "aggressively manipulated" the other major shareholders in Hollinger during a number of years from the late 1990s, Mr Breeden and his team found.
Most shocking is likely to be the way Lord Black, who was already a multi-millionaire, put the considerable living expenses for himself and his wife, the media commentator Barbara Amiel Black, on the company account.
Bills that Hollinger ended up paying included $1.4m for private staff for the Blacks' residences, plus the cost of running a Rolls-Royce and a private jet. The couple also pulled off an extraordinary property deal where they swapped their apartment in New York's well-to-do Upper East Side for one owned by Hollinger.
Without apparently giving an explanation, the deal saw the Blacks' flat valued at its current market price - more than they had paid for it - while the Hollinger apartment was frozen at the price the company had paid for it six years before. The transaction, in effect, netted the Blacks $2.5m, the report says.
Another example of the Blacks' seemingly endless desire to plunder Hollinger's coffers was their direction that the company should donate about $6m to charitable causes of their choosing. Yet it was the Blacks who were credited with the donations, with a wing of a Toronto children's hospital being named after them in recognition of their generosity.
While Hollinger's finances weakened, Lord Black and his lieutenant Mr Radler masterminded an extraordinary strategy for running Hollinger which enabled them to collect millions of dollars in illegal management fees and other bonuses when Hollinger agreed deals with rivals, known as "non-compete fees", the report alleges.
The existence of the non-compete fees, amounting to $32m for Lord Black and his allies, have caused particular outrage because they were frequently paid to Lord Black and his allies personally, rather than to Hollinger.
The conclusion of Mr Breeden's year-long investigation was that Lord Black and his circle had transferred to themselves more than $400m in the past seven years, dramatically up on initial suspicions that they had helped themselves to just over $30m in illegitimate fees from the company. In fact, the report says, the culture of "corporate kleptocracy" created by Lord Black was such that the total cash taken by him and his friends was equal to 95 per cent of Hollinger's profits between 1997 and 2003.
While the existing lawsuit launched in May in America, where Hollinger is headquartered, exposed some details of Lord Black's attitude to Hollinger as his personal fiefdom, the latest document spells out in detail how he thought "there was no need to distinguish between what belonged to the company and what belonged to the Blacks". "In Hollinger's world, everything belonged to the Blacks", the report says.
Based on the new details unearthed by Mr Breeden, Hollinger may increase the sum it is suing Lord Black for through Chicago's courts, the report notes. Lord Black denies any wrongdoing and is challenging the company in the courts. Mr Breeden will continue to investigate the myriad of complex financial transactions of Lord Black, and is likely to try to force the man himself to give evidence to his committee.
CORPORATE PERKS OF THE BLACK FAMILY
* Much of the $6.5m donated by Hollinger to charities was attributed to the Blacks. The donations helped the Blacks to attend lavish events. Black directed Hollinger and its subsidiaries to donate $445,000 to Toronto's Hospital for Sick Children. In return, the hospital named a major wing of its building the "Black Family Foundation Wing".
* $23m running costs for Gulfstream jet for the Blacks, and Challenger aircraft for Hollinger's president, David Radler, to fly to Hollinger's far-flung business assets, but also to transport the executives round their collection of homes.
* $2.5m for the Blacks by swapping one of their apartments with one owned by Hollinger. Despite the apartments being in the same block, Black's was valued at current market values, while Hollinger's was valued at the price it was bought for six years earlier.
* $1.8m paid by Hollinger to improve, maintain and pay taxes on apartments for Black and Radler.
* $1.4m for private staff in Black's residences.
* Lady Black received a $1.1m salary from Hollinger even though the corporate work she did was minimal. She received an additional fee for the columns she contributed to Hollinger's newspapers. The company also paid for her pens, pencils and other office equipment.
* $90,000 to refurbish a Rolls-Royce, owned by Black's company Ravelston, for his personal use.
* $43,000 on "Happy Birthday Barbara" celebration for Black's wife at New York's fashionable La Grenouille restaurant.
* $3,500 for silverware for Blacks' jet.
* A string of gifts for Lady Black, including $140 on a jogging outfit and $2,500 on handbags for "Mrs BB".
* $828 for stereo equipment for the New York apartment.Reuse content