Accused of pillaging £118m, removed from head of his media empire - is Conrad Black facing his Moscow retreat?

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The Independent Online

For a biographer of Napoleon Bonaparte and master of the world's third-largest newspaper empire, it was a challenge that Conrad Black treated with all the disdain that the "Little Emperor" showed for unworthy foes.

Faced with gathering shareholder discontent about an extravagant lifestyle that included two private company jets, the Conservative peer made it clear that - like his hero - he considered himself a self-made potentate whose power could not be questioned by what he saw as a rabble corporate body sans culottes.

In a hitherto unseen e-mail to one of his fellow executives in August 2002, published yesterday, he said: "There has not been an occasion for many months when I got on our plane without wondering whether it was really affordable. But I'm not prepared to re-enact the French Revolutionary renunciation of the rights of nobility."

Rather than drawing parallels with Bonaparte's military triumphs at Austerlitz or Marengo, that expression of Napoleonic defiance by Lord Black of Crossharbour is now at the heart of what could become the media mogul's equivalent of the retreat from Moscow.

The e-mail was a central part of a writ issued in the District Court of Southern New York on Saturday night by Hollinger International - the Canadian-listed owner of a global stable of newspaper titles ranging from The Jerusalem Post to The Daily Telegraph - against its largest shareholder, Lord Black, 59, friend of the powerful, abrasive commentator on global affairs, and, now, "Defendant Black", in a case of alleged corporate pillage amounting to more than $200m (£118m).

The writ was issued with a simultaneous statement announcing that the peer, the son of a wealthy Canadian brewing executive, had also been summarily removed from his position as non-executive chairman of Hollinger International, thus removing him from any control of the trans-continental newspaper group that he has built over 20 years.

The peer is also the subject of an internal investigation overseen by America's financial watchdog, Securities and Exchange Commission (SEC) that could see him the subject of criminal charges.

The 45-page court document lays bare for the first time the details of how the peer and his chief operating officer, David Radler, are alleged to have repeatedly raided Hollinger International's coffers to finance their own lavish lifestyles and fund other business ventures between 1993 and last year. The two men, who were forced to step down last summer from their respective roles as chief executive and chief operating officer at Hollinger International, are claimed to have validated a series of payments, including $224m (£132m) in inflated management fees, to pay for luxuries including staff at Lord Black's 11-bedroom Kensington home, where one of his most prized possessions is the chair from which Napoleon directed his armies in battle.

The writ said: "Defendant Black caused [Hollinger International] to pay substantial expenses associated with the staffing and operation of his New York and London homes, complete with personal residence staff and cars with drivers, and two private airplanes for his and Radler's business and personal uses."

The defendants are alleged to have used a complex structure of holding companies to obtain the payments.

The network, headed by Lord Black's Toronto-based corporation Ravelston Ltd, was the recipient of a series of "non-competition" payments worth $90m from the sale of part of his newspaper empire and the management fees at their disposal. It is alleged to have taken place by altering Hollinger International's records and failing to disclose details of the deals to the company's independent directors and shareholders.

The writ says Lord Black - who counts among his friends the former US secretary of state Henry Kissinger, the White House adviser Richard Perle, the PR guru Lord Bell and the former foreign secretary Lord Carrington - is personally liable for the repayment of at least $21.3m in "non-competition" payments, of which he had already admitted $7.2m was unauthorised and should be repaid.

The first $800,000 instalment was due to be paid by last night but the peer's representatives declined to comment on whether it would be made.

Lord Black, a fervent Anglophile, who renounced his Canadian citizenship to accept his peerage and whose purchase of the Telegraph group in 1992 pitted him against Rupert Murdoch as the voice of the Conservative establishment, claims the allegations are part of a conspiracy by "ingrates" to oust him from control of his creation.

John Warden, the peer's lawyer, said the New York lawsuit, had been issued as a distraction from claims given to a special Hollinger International committee set up under Richard Breeden, the former chairman of the SEC, to investigate the claims against Lord Black and Mr Radler.

Mr Warden said: "We believe this lawsuit is an attempt by the special committee now to divert attention from the fallacy of their earlier claims."

According to the writ, the peer has been forthright in his view of his fellow shareholders in Hollinger International, a company which he said in another e-mail two years ago served no purpose other than the "relatively cheap use of other people's capital".

Writing to two of his executives about the struggle with shareholders over the company's falling share price before the dispute became public knowledge, the peer again showed his talent for Napoleonic invective.

He wrote: "Some ... think that we are running a gravy train and a gerrymandered share structure, and we think they are a bunch of self-righteous hypocrites and ingrates, who give us no credit for what has been a skilful job of building and pruning a company in difficult circumstances."

For those who know the peer, such robust language is an intrinsic part of a man whose stewardship of the Telegraph titles has not been without controversy, including the appointment as a star columnist of his wife, Barbara Amiel, the proud owner of 100 pairs of Manolo Blahnik shoes.

As the mogul builds up a war chest for the forthcoming legal battles, including the sale of his 17,000sq ft Californian mansion for £20m, it seems he may soon not even have his collection of historical artefacts to fall back on.

Hollinger International said earlier this month that it was putting up for sale a collection of documents belonging to Franklin D Roosevelt, another of Lord Black's biography subjects. The memorabilia was bought for £8m using the company's money.

With the two corporate jets grounded and his tab at the chic New York restaurant Le Cirque closed, Lord Black may be about to meet his Waterloo.

The accusations

Extracts from the writ issued by Hollinger International against Lord Black, former Hollinger executive David Radler and the peer's two holding companies, Ravelston Corporation and Hollinger Inc.

Reason for the lawsuit: "This is an action to recover more than $200m that the defendants ... took from the company through various improper means, including making unauthorised transfers of funds to themselves, altering the company's books and records to provide a pretext for those payments or to conceal such actions"

On the system used by Ravelston and Hollinger to demand management fees of $90m from Hollinger: "The 'Ravelston structure' resulted in tens or hundreds of millions of dollars in excessive, unreasonable and unjustifiable fees."

On how Mr Radler allegedly came up with a "back of the envelope" figure to set the $224m of management fees charged to Hollinger International over a 10-year period: "Radler used no 'scientific' approach for calculating the fee but simply came up with a proposed fee in consultation with Defendant Black ... The starting point for determining what management fee Ravelston would seek was not the cost of providing services but rather the amounts 'needed' by Ravelston to support its activities."

Lord Black, in a memo, on why directors' "comfortable enjoyment of their position" was important: "Care must be taken not to allow this to degenerate into decadence. But nor should we allow the agitations of shareholders ... to force us into a hair shirt, the corporate equivalent of sackcloth and ashes."