Hollinger starts inquiry into price paid for FDR papers

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The troubled media group Hollinger International paid $12m (£7m) to buy the papers of Franklin D Roosevelt, $4m more than previously disclosed, company sources revealed.

The special committee of independent directors that has been formed to investigate allegations of impropriety at the company is now examining this apparent discrepancy, a person close to the investigation said.

However, Jim Badenhausen, a spokesman for Lord Black of Crossharbour, Hollinger International's chairman and a biographer of Roosevelt, insisted that the $8m previously used by the company and Lord Black was right.

Mr Badenhausen said: "Lord Black is confident that the facts will show that the price paid for the FDR papers was $8m."

Hollinger International, which publishes The Daily Telegraph in the UK, said in a regulatory filing in 2002 that it paid $8m for the archive of private papers and memorabilia that belonged to the former US president. The purchase was controversial with shareholders even before doubts emerged yesterday over the price actually paid.

Lord Black has just published a highly praised biography of Roosevelt, who died in office in 1945. In a letter to the Financial Times, published in August last year, Lord Black said $8m was paid by Hollinger for the papers that had been offered to him.

"I knew the material to be available at a bargain price and suggested it as an investment to our executive committee, and then our directors," Lord Black wrote.

Lord Black has insisted that the papers, which were bought from the estate of Grace Tully, Roosevelt's former secretary, were "not relevant" to the writing of the book, Franklin Delano Roosevelt: Champion of Freedom, which took 15 years to research.

He has said that he did not personally buy the archive because "$8m was not something I was prepared to spend".

A lawsuit from a shareholder, Cardinal Value Equity Partners, accuses Hollinger executives of treating the company "like their private piggy bank".

Hollinger International has now said that it will sell the Roosevelt papers.

A spokesman for the company said that the special committee "continues to do its work". The committee has been charged with investigating fees paid to the group's executive directors, company transactions, levels of disclosure and the board's procedures for approving the company's actions.

Lord Black stepped down as Hollinger International's chief executive in November after it emerged that he and other directors had benefited from fees that were never disclosed to the full board. The directors have agreed to repay the money.

The Conservative peer has until Sunday this week to make the first payment of around $800,000 from the $7.2m that he owes. There is speculation that failure to pay will force him to relinquish his position as chairman.