Hollinger Inc. has agreed to pay more than $21 million to settle a Securities and Exchange Commission complaint over its role in an alleged deceptive scheme to divert cash and assets from Hollinger International, now called Sun-Times Media Group.
Under the settlement, Hollinger Inc., a Canadian corporation and the controlling shareholder of Sun-Times Media, agreed without admitting or denying the allegations to pay $16.55 million in alleged non-competition payments received by Hollinger Inc., plus prejudgment interest of more than $4.7 million. The SEC said that the $21.3 million paid to Hollinger International to satisfy a judgment against Hollinger Inc. and Conrad Black in an earlier action will be credited toward the disgorgement in this action.
In November 2004, the commission filed its action against Hollinger Inc.; Black, Hollinger International’s former chairman and CEO; and F. David Radler, Hollinger International’s deputy chairman and COO, alleging fraudulently diverted assets through a series of related-party transactions from 1999 through 2003.
The SEC’s complaint alleges, among other things, that Black and Radler diverted to themselves, other corporate insiders, and Hollinger Inc. roughly $85 million of the proceeds from Hollinger International’s sale of newspaper publications through purported “non-competition” payments.
The complaint also alleges that Black and Radler misled Hollinger International’s audit committee and board of directors concerning the related-party transactions, and misrepresented and omitted to state material facts regarding these transactions in Hollinger International’s filings regulatory and during shareholder meetings.
Further, the SEC claims Hollinger Inc. made misstatements and omissions of material fact regarding the purported non-competition payments in its responses to Hollinger International’s proxy questionnaires and in Hollinger Inc.’s filings.
Radler settled with the SEC last March without admitting or denying the charges. Once the publisher of the Chicago Sun-Times and a former business partner of Black, he agreed to pay about $23.7 million in disgorgement and prejudgment interest and a $5 million civil penalty and to be barred from serving as an officer or director of a public company.
Black was convicted in a criminal trial in the matter last summer and in December was sentenced to 6.5 years in prison.