The mystery of who was allowed to use Lord Black's Rolls-Royce is set to engulf the Telegraph Group, and could lead to inquiries by the Inland Revenue.
An internal investigation into the finances of Hollinger International, the owner of the Telegraph as well as The Spectator, the Chicago Sun-Times and The Jerusalem Post, has uncovered millions of pounds of unusual financial payments, which appeared to benefit the group's former chairman, Lord Black of Crossharbour.
These include the bill for Lord Black's monthly account at Le Cirque 2000 restaurant in New York, part of the wages paid to four domestic staff at his London townhouse, the purchase of a collection of letters by President Franklin D Roosevelt, whose biography Lord Black has just completed, and the insurance on Lord Black's 1954 Rolls-Royce Silver Wraith.
The payments for the upkeep of the Rolls-Royce, which Lord Black bought personally some 20 years ago, were justified, according to a spokesman for the Canadian- born peer. He said that Lord Black lent the car out to staff members at the Telegraph. Pressed on the protocol governing who was allowed to use the car, the spokesman said: "Senior executives were allowed to use it for formal occasions." He would not define what constituted formal occasions.
The Telegraph was not able to provide examples of when staff members had used the Rolls-Royce or whether they had used it for personal or professional reasons. The distinction is important. Alastair Kendrick, an expert on motor tax at accountants Ernst & Young, said that unless the car was "said to be generally available" then insurance payments were a taxable benefit to Lord Black. If any staff had used the car for personal engagements, that would be a taxable benefit to them.
The Inland Revenue would be expected to look into whether the correct tax had been paid on all the expenses covered for Lord Black in the UK, including the car.
An investigation was launched by Hollinger International earlier this year after shareholders raised concerns about $200m (£116m) of payments to Lord Black, three other directors and a private company they control. An investigation by a committee advised by Richard Breeden, former chairman of the US Securities and Exchange Commission, found that $32m of these payments were unauthorised.
Lord Black has paid back more than $7m of the money and quit as chairman and chief executive of Hollinger International. But he refused to stand down from Hollinger Inc, the Canadian group that controls Hollinger International, causing four directors to resign from the company.Reuse content