Hollinger International Inc., publisher of the Chicago Sun-Times and other newspapers, said last night that it filed a new lawsuit against former chairman and chief executive Conrad M. Black and added director and former Pentagon official Richard N. Perle as a defendant, accusing them of breaches of "fiduciary duty."
Hollinger did not release a copy of the lawsuit, which it said was filed in federal court in Chicago. However, in a report filed with the Securities and Exchange Commission in August, a special committee of Hollinger's board accused Black of looting the company and Perle of " 'head-in-the-sand' behavior" as a member of Hollinger's executive committee.
A federal judge recently dismissed an earlier suit against Black, saying racketeering charges didn't apply. The new suit seeks damages of $542 million, including $117 million of prejudgment interest, from Black and others. Black has denied the charges.
The special committee report said Perle should be required to give up the $5.4 million of compensation he received from Hollinger from 1998 to 2003, including director's fees as well as salary and bonuses he received as head of a subsidiary that made investments in Internet ventures.
"By putting his own interests above those of Hollinger's shareholders, Perle has violated his duties of good faith and loyalty," the report said.
Perle said in an interview last night that the allegations in the report were "factually wrong" and "legally wrong" and that he will defend himself against the lawsuit. "I think the report is so full of error that I'm confident about the outcome and so is my counsel," he said.
Perle, who served as an adviser to the Pentagon during the Bush administration and as an assistant secretary of Defense during the Reagan administration, joined such luminaries as former secretary of state Henry A. Kissinger on the Hollinger board.
The report also alleged that Perle's compensation at Hollinger, including $3.1 million in bonuses, gave him "a motive to abdicate his fiduciary duties" and accommodate Black.
The special committee alleged that, as a member of Hollinger's executive committee, Perle signed authorization forms that Black used to enrich himself through self-dealing transactions.
The report on the special committee's investigation said Perle "admitted that he generally did not even read them or understand the transactions to which they applied." Perle said the report misquoted him.
"The Special Committee believes that Perle's repeated failure to read, evaluate, discuss or attempt to understand the Executive Committee Consents before signing them evidences a complete absence of good faith, a breach of loyalty and an abject failure to fulfill his fiduciary duties as an Executive Committee member," the report said.
Perle said last night that he read and understood the forms granting management authority to conclude transactions. He said the forms did not authorize Hollinger's management to enrich itself in the process.