Express sues Black over 'ex-convicts'

Richard Desmond, the owner of the Express Group, has hit back hard in his battle with Lord Black of Crossharbour, publisher of the Telegraph titles, questioning the financial position of his empire and pressing him to justify claims that ex-cons run the Express.

Lord Black sued Mr Des- mond, Express Newspapers and one of the paper's journalists late last year over two articles questioning the ability of Lord Black's Canadian holding company, Hollinger International, to raise money from the capital markets.

He followed this up with a vitriolic attack on Mr Desmond and the management of his company, which owns the Daily Express, Sunday Express, Daily Star, OK! and a string of other titles.

In an article carried in the Daily Telegraph City pages on Christmas Eve, Lord Black was quoted as saying: "It [the Express] is published by a mutant smut and defamation com- pany, run by a pornographer and a couple of ex-convicts. These people would have trouble raising £10 from any capital market. Merry Christmas to you, Mr Desmond."

Mr Desmond filed a defence to Lord Black's libel action last week and, along with four other directors of Express Newspapers, counter-sued for defamation.

The claim says Lord Black implied that Mr Desmond allowed convicted criminals to sit on the board of the Express, and that two out of the other four board members were convicted criminals. In fact, none is. The Express's lawyers, Theodore Goddard, wrote to Lord Black and the Telegraph last month asking him to identify the two ex-convicts he referred to, but he has declined.

The defence to Lord Black's writ quotes extensively from publicly available documents filed by Hollinger, the ultimate owner of the Telegraph. These appear to show financial stresses within Lord Black's empires. For instance, on 30 September last year "the company [Hollinger] did not meet a financial test set out in the trust indentures for [Hollinger] Publishing's Senior Subordinated Notes. As a result, until and unless the test is met in future, Publishing and its subsidiaries, in general, will be unable to borrow, make restricted investments, make advances, pay dividends or make any other distributions to the Company."

In other words, Hollinger would not be able to get hold of any cash in its subsidiary operating companies.

It is believed this situation has now been resolved thanks to a $610m (£380m) loan raised by Hollinger last December.

No one was available to comment at the Telegraph in London and the relevant executive at Hollinger's head office refused to return The Independent on Sunday's calls.

The dispute between Hollinger and Mr Desmond stems from their joint ownership of a printing company, Westferry Printers, which prints many of the UK's national newspapers.

Mr Desmond also has an ongoing spat with the Daily Mail & General Trust, and has traded verbal blows with its chairman, Viscount Rothermere, and the editor of the Daily Mail, Paul Dacre.