Conrad Black's troubled media empire has been thrown into fresh turmoil following the sudden resignation of four high-profile directors from the parent company, Hollinger Incorporated.
The directors, who made up the audit committee of the Toronto-based company, quit after the board refused to support their calls for Lord Black of Crossharbour and another key executive to resign.
Lord Black stepped down from the company's subsidiary, Hollinger International, which owns the Daily and Sunday Telegraph, last week after he and three other executives received unauthorised payments totalling £20m.
Hollinger International also received unauthorised payments from its parent company. The scandal has thrown the future of the Telegraph group into doubt. Hollinger International also owns The Jerusalem Post and the Chicago Sun Times.
The audit committee had recommended that Lord Black, the chairman and chief executive of Hollinger Inc, and his president and deputy chief executive, David Radler, who also received payments, resign. But the rest of the board, which includes Lord Black, his wife, Barbara Amiel Black, Mr Radler and the two other executives who received unauthorised payments, rejected the recommendation.
Lord Black, a Tory peer, said: "It is regrettable that the members of the Hollinger audit committee felt compelled to resign ... The recommendations, with respect to management and board changes, were not appropriate and not in the best interests of Hollinger."
Although Lord Black has stepped down as chief executive of Hollinger International he is still non-executive chairman of the board, despite pressure from shareholders that he relinquish that post.
Friday's board meeting in Toronto lasted 90 minutes, was attended by directors in person and chaired by Lord Black by phone from New York. "It was all very civil and very professional and there was no animosity," one director told the Toronto Star newspaper.Other sources said that Lord Black "stated his case brilliantly".
The audit committee members included the former Canadian ambassador to the US, Allan Gotlieb, and Maureen Sabia, a lawyer who co-wrote a book called Integrity in the Spotlight, published by the Canadian Institute of Chartered Accountants.
Lord Black and the other executives, Mr Radler, Peter Atkinson and Jack Boultbee, have pledged to repay the payments, which are being investigated by the US and Canadian regulators.