Hollinger International : The Lord Blac

k Saga

Presented by:
Mayank Advani
Manisha
Masood
Purushotham
Manish R
Copyright © Wondershare Software
 Contents
• About Conrad Moffat Black
• Introduction
• Hollinger Expansion spree and Its Going Public
• Downfall of Lord Black
• Allegations
• Corporate Governance/ Business Ethics
• Conclusion

Copyright © Wondershare Software

Black is currently serving a 6 1/2-year s
entence at a jail in central Florida.

Copyright © Wondershare Software

 Copyright © Wondershare Software
Black’s Corporate
• Bought Sherbooke Record ( With Radler & White) Introduction
• Co founded Sterling Newspapers in Canada
• President Canadian Breweries Black’s Father
• Board member Argus Corp.
Conrad Moffat
• Wealthy family Black
• Toronto, Canada
About Lord Black
 Introduction
Formation of Ravelston Corp
1969 50% Voting Rights of Argus

Death of Black’s Father

1976 Took over Ravelston & Argus with 70% Stake

Formation of Hollinger Inc.

1978 &1985 Hollinger Mines, Hollinger Argus Ltd.

Hollinger Inc.

1985 Argcen Holdings & Labmin Resource Ltd.

Copyright © Wondershare Software
 BLACK’S WEB OF CONTROL

Ravelston

RMI Hollinger Inc Argus

HII

Copyright © Wondershare Software

 Hollinger’s Expansion Spree
• Income of Iron Ore Royalty was used to fund acqui
sition of 57% of The Telegraph.
• 1985- 288 News paper in rural areas of US.
• The Jerusalem Post
USA
• John Fairfax
• Sydney Morning Herald
• The National Post
• Chicago Sun Time
Canada
HII Australia

Israel
Copyright © Wondershare Software
 HII Went Public
• 1994
• Black Controlled majority of Voting Rights & Influe
nced the Decisions
• Black wished to be Inducted into the Lords in Engla
nd
• Left his Canadian citizenship
• In 2001 formally inducted as Lord Black of Crossha
rbour

Copyright © Wondershare Software

 The Downfall of Lord Black

• Twin Towers Disaster

• Questioned by Browne for high Management fees

• Special Committee Set to Investigate

• Hired an investment banking firm Lazard LLC

• Cardinal Value Equity Partners LP filed Lawsuit

9
Copyright © Wondershare Software
 SEC Compliant Against HII :
 Disclosure of Information-1999-2001
 HII tampered with the books to misrepresent transfers as no
n compete payments.
 No suitable internal control to avoid misappropriation of fu
nds
 Amount transferred to Hollinger as non compete fees were
not disclosed.

10
Copyright © Wondershare Software
 Allegations Against Black

Management Fees

Non Compete Agreements

Personal Extravagance

Tax Avoidance/Unauthorized Transfer of Cash

Domination over a Weak Board

Failure of Audit System

11
Copyright © Wondershare Software
Structure of a control system Of Auditing

Infrastructure
Operational Audit

Style and Culture

Financial statement audit
Autocratic

Reward System
Internal Audit

Copyright © Wondershare Software

Coordination and Integration
Fraud Auditing
Forensic Accounting

Controls
Information system audit
Management Audit
Copyright © Wondershare Software
Flashback
• High management fees
• RMI using HII’s funds
• Non-compete payment bei
ng made by HII to black.
• No difference between ma
nagement and company.

14
Copyright © Wondershare Software
Corporate Stance

15
Copyright © Wondershare Software
 Corporate Governance
Corporate governance is the set of processes,
customs, policies, laws, and institutions affecting t
he way a corporation (or company) is directed, ad
ministered or controlled.

16
Copyright © Wondershare Software
Corporate Governance Framework

17
Copyright © Wondershare Software
 Corporate Governance At Hollinger International

• Introduction of new Corporate Governance and code of Business Conduct and

new policies in the organization
• New Policies on Related Party Transactions and Whistle –Blowing Policies
• Comprehensive Charters –Audit Committee ,Compensation Committee and th
e new Corporate Governance Committee
• Formal Job Description were set in place for Chairman of Board and its Various
committees

“ Creating Openness and Transparency for the Company.”

18
Copyright © Wondershare Software
 Recommendations
• Audit performance of board.
• Schedule regular meeting of Non-executives.
• Disclosure on corporate websites and annual rep
orts
• Lead by example
• Young Blood
• Explain fully how discretion has been exercised

19
Copyright © Wondershare Software
Thank You!

Copyright © Wondershare Software