Black Eye For Conrad Black

Conrad Black was doing his best last week to promote his just-released book--a massive tome, "Franklin Delano Roosevelt: Champion of Freedom," that he penned as a sideline to his day job. But for all his efforts to talk up FDR's New Deal, the only deals people wanted to know about were Black's. The Securities and Exchange Commission has some pointed questions about $15.6 million in unauthorized payments to Black and other top executives of his company, Hollinger, a media empire with newspapers stretching from Chicago and Canada to London and Israel. Those payments came from buyers of newspapers that Black divested between 1999 and 2001, and those millions weren't for the assets--they went directly to Black and other Hollinger brass for guarantees that they wouldn't compete directly with the papers they had just sold.

Black is a famously controlling and determined personality with little patience for anyone who complains about how he runs Hollinger, the publicly traded media empire that he dominates with 70 percent voting control. The media baron, who realized his ambition of buying up many small U.S. papers, has dismissed some corporate-governance activists as "zealots.'' Despite the questions raised about the noncompete payments, Black has held on as chairman, giving up only his CEO title. At a book signing last week in Toronto, he boasted about the 16 percent jump in Hollinger's stock on the news that he would no longer be CEO. "I made 50 million bucks yesterday," he said. "That's a flameout I could get used to."

But the flames aren't likely to die down. The recent mutual-fund scandals have put the SEC on the defensive, and Black's is a high-profile case. The SEC has a running start, too. The investment firm Tweedy, Browne raised questions months ago about the payments and certain arrangements that looked like self-dealing. Hollinger's board formed a committee of independent directors, advised by former SEC chairman Richard Breeden, to investigate. The big shareholders see the latest moves as progress. "I'm satisfied with the way things are unfolding now," says Chris Browne of Tweedy, Browne, which owns 15 to 20 percent of Hollinger. Hollinger officials say only that they are cooperating with the SEC's request for documents. Black is apparently telling associates that he realizes he's in for a long fight. "What he said to me when I spoke to him on the phone was that 'it will take some time for me to get my good name back'," says Taki Theodoracopulos, the archconservative columnist for Black's Spectator.

Black is no doubt taking the long view, considering he's such a student of history. He recently came into possession of FDR papers that cost $8 million. SEC filings state they were paid for by Hollinger as investments.