Former Gov. James R. Thompson, head of the audit committee at Hollinger International Inc., moved to distance himself from ousted Chief Executive Conrad Black the day after the company released a detailed report critical of the committee’s oversight at the “looted” publishing firm.
Thompson, talking to reporters Wednesday at the Illinois delegation breakfast at the Republican National Convention, said he didn’t have a personal relationship or even socialize with Black, who is accused of siphoning millions from the company that owns the Chicago Sun-Times.
“It’s not a matter of being cozy with management or an old boys network,” said Thompson, now chairman of the law firm of Winston & Strawn. “I didn’t have any social relationship with Conrad Black. I never knew him before I went on the board. I never socialized with him outside the board. I’ve never been in his home. We didn’t play golf together.
“We’re not friends.”
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Black did appoint Thompson to Hollinger International’s board in 1994 when Hollinger bought the paper.
A special committee of the Hollinger board of directors led by former Securities and Exchange Commission Chairman Richard Breeden concluded that Black; his chief lieutenant, David Radler; and other executives “looted” the company of $400 million during a seven-year period.
Report also faults directors
The 513-page report made public Tuesday also took aim at independent board members, including the audit committee, which approved tens of millions of dollars in management fees to Toronto-based Ravelston Corp., a private company owned by Black and Radler, without properly checking what Hollinger was getting for its money.
Ravelston controls Toronto-based Hollinger Inc., which in turn is the majority shareholder in Chicago-based Hollinger International.
Thompson on Wednesday defended his role as the head of the audit committee.
“I don’t think it’s fair to say that I wasn’t minding the store,” Thompson said. “The report is careful to say that I carried out my duties there in full accord with my fiduciary duties. And while I accept 99 percent of that report–I think it’s accurate–I don’t agree with some of the criticism of the audit committee.
“That matter is under litigation. It’ll be settled in court. I’ll let the judge figure it out.”
In its document, the special committee repeatedly blamed the audit committee for rubber-stamping aggressive fees and sales of company assets, at less than their fair value, to private companies owned by Black and Radler.
In one instance, the audit committee approved $32 million in non-compete payments to Black and Radler and other associates in connection with the sale of newspapers to CanWest Global Communications in Canada. The audit committee approved the payments even though the purchasing company never asked for individual non-competes.
In other instances, the audit committee approved the sale of company newspapers to private companies controlled by Black and Radler for as little as $1.
Thompson: Panel was misled
Thompson defended the audit committee’s record, saying that it was making decisions based on information from the company’s top officers.
“I don’t think you could serve on a corporate board–and I’ve served on over a dozen over the last 15 years–I don’t think you could start out a service on a corporate board presuming that the CEO is a crook,” Thompson said. “No director in America would start out with that presumption.”
Thompson said that, in many instances, both the board and the audit committee were “lied to or misled or that important documents or information were kept from the board.”
In response to a question Tuesday about whether the report might hurt his chances at getting on another board, Thompson said: “I’m on five boards. I don’t think I’d be looking for another board.”
Radler blasts `diatribe’
Meanwhile, Radler, former publisher of the Sun-Times, broke his silence on the report and issued a statement through a spokesman calling the special committee’s tome a “highly inaccurate and defamatory diatribe written more like a novel than a serious report.”
The spokesman said the report confirms but then disregards that the payments to Ravelston were made with the knowledge and approvals of Hollinger’s audit committee and board.
“Moreover, it continually excuses the conduct of one of the most sophisticated board and audit committees to govern a corporation in history, including an audit committee headed by the chairman of one of the country’s leading law firms,” Radler’s spokesman said.