Hollinger International's board of directors faced a fresh challenge yesterday from the US-based newspaper publisher's largest institutional shareholder, underscoring how high tensions still run between some investors and directors despite the removal of Mr Conrad Black as chairman and chief executive.
Tweedy Browne, a New York-based money manager that owns 18 per cent of Hollinger shares, is demanding to inspect documents related to Hollinger's acquisition of insurance contracts dated back to January 1st, 2002, according to a filing with the Securities and Exchange Commission.
The order by Tweedy comes at a highly sensitive time for Hollinger, which is preparing to unveil the results of a year-long internal probe into how Lord Black and other top executives allegedly "looted" nearly $400 million (€323.46 million)from the company's coffers.
Lord Black and others accused of wrongdoing have vigorously denied the claims, insisting that the Hollinger board approvedthe payments.
Lord Black, a Canadian-born British peer who has temporarily been stripped of control of Hollinger despite his ownership of nearly 70 per cent of the group's voting shares, has found an unlikely ally in some of Hollinger's shareholders, who also believe that the company's board should share part of the blame.
Tweedy earlier this year threatened to sue Hollinger if it did not take action against former and current board directors, who were believed to be acting under the protection of a $130 million director and officer liability policy.
Some of the company's directors are also understood to be in early-stage settlement discussions with Hollinger and its insurers.
A person familiar with the situation has said that early attempts by Tweedy to unearth details about the Hollinger's insurance policies had been rebuffed.
Mr Robert Curry, an attorney from Kirby McInerney & Squire, who represents Tweedy, said in a letter to Hollinger, filed to the SEC, that the purpose of Tweedy's demand was to determine the impact of insurance contracts on shareholder value; to enable Tweedy to investigate whether any Hollinger directors or employees breached their fiduciary duties; and to evaluate whether the insurance presented a "valid basis" to bring action against the company.
Hollinger yesterday said it would comply with the request. - (Financial Times Service)
