Black hit by racketeering claim

LORD Black and other directors of Hollinger International, owner of The Daily Telegraph, face a $1.25 billion (£700 million) claim for damages after being accused of racketeering.

The claim comes in a US district court filing by a committee of the publishing company's directors set up to investigate allegations of wrongdoing.

The committee, appointed last year at the instigation of disgruntled Hollinger shareholders who accused Black and others of taking unauthorised payments, had previously claimed $200 million in damages in its initial complaint filed earlier this year.

Now, in the amended filing, Hollinger seeks to recover $484.5 million in damages, but it also claims that the defendants 'engaged in a pattern of racketeering activities'.

It is seeking treble damages under the provisions of the Racketeer Influenced and Corrupt Organisations (Rico) Act. In its initial filing, the company alleged the money had been taken improperly through the use of 'non-competition' payments and excessive management fees.

The amended filing makes additional claims, alleging breaches of fiduciary duty in connection with the sale of certain newspaper assets at less than fair value to companies controlled by the defendants.

This is believed to refer to the sale of assets to Horizon Publications and Bradford Publishing, both owned by Black, the former chairman and chief executive of Hollinger, and former Hollinger president David Radler.

It also aims to recover bonuses paid in connection with Hollinger Digital, a subsidiary of the company. The new filing alleges violation of Rico by diversion of company funds through improperly obtained non-competition payments, as well as other payments of fees, transfers of newspaper assets at less than fair value and other acts.

Hollinger International, owner of the Chicago Sun-Times and the Jerusalem Post, is for sale with interested parties preparing to submit second-round bids by May 20. Bidders include German publisher Axel Springer and Daily Mail & General Trust, owner of The Daily Mail and Mail on Sunday.