Unauthorised payments to media tycoon Conrad Black and former directors of Hollinger International have caused the owner of the Chicago Sun-Times, The Jerusalem Post, the London Daily Telegraph and Sunday Telegraph newspapers to overstate its earnings by $17-million.
In a delayed filing to the United States Securities and Exchange Commission (SEC) Hollinger was also forced to admit that its third-quarter report was ”deficient” because it had not been reviewed by independent accountants or signed off by the CEO and finance director.
The 50-page filing reveals an independent review of Hollinger’s affairs, led by former SEC chairperson Richard Breeden, which discovered the unauthorised payments had cost $3,4-million in the period up to the end of September and would ”exceed” $8-million in the current financial year.
The quarterly report, which was expected a week ago, admits that before November 17 public statements by Hollinger may have been ”incomplete or inaccurate” because of the recently uncovered $32,15-million in payments to Black and former directors. While they had promised to repay the fees, the company warned that there can be ”no assurance” that it would retrieve the amounts. It explained that the discovery of the payments had led it to calculate that it had understated its tax provision by $17-million. But it warned that ”this estimate is subject to change based on further analysis”.
Hollinger reported a net loss in the third quarter of $7-million, down from $32-million in the same period a year ago.
The filing also confirmed that the structure of the company was altering so that a management relationship with a unit of Ravelston, controlled by Black, would no longer have fees payable to it. Black will remain chairperson to oversee a ”strategic process” on which investment bankers Lazards are advising the company.
The bankers are known to have received offers from rival publishing companies for Hollinger newspapers. — Â