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8/9/2019 Group 6 MCS

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Copyright Wondershare Software

Hollinger International : The LordHollinger International : The Lord

Black SagaBlack Saga

Presented by:Mayank AdvaniManishaMasoodPurushothamManish R


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C ontentsC ontents

About Conrad Moffat BlackIntroductionHollinger Expansion spree and Its Going PublicDownfall of Lord BlackAllegationsCorporate Governance/ Business Ethics

Conclusion


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


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Ab out Lord Black Ab out Lord Black


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IntroductionIntroduction

Hollinger Inc.

1985 Argcen Holdings & Labmin Resource Ltd.

Formation of Hollinger Inc.

1978 &1985 Hollinger Mines, Hollinger Argus Ltd.

Death of Black s Father

1976 Took over Ravelston & Argus with 70% Stake

Formation of Ravelston Corp

1969 50% Voting Rights of Argus


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BL ACK S WEB OF C ONTROLBL ACK S WEB OF C ONTROL

Ravelston

Hollinger Inc

HII

RMI A rgus


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Hollinger s Expansion SpreeHollinger s Expansion Spree

Income of Iron Ore Royalty was used to fundacquisition of 57% of The Telegraph.1985- 288 News paper in rural areas of US.The Jerusalem PostJohn FairfaxSydney Morning Herald

The National PostChicago Sun Time HII

USA

Australia

Israel

Canada


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HII Went Pu b licHII Went Pu b lic

1994Black Controlled majority of Voting Rights &Influenced the DecisionsBlack wished to be Inducted into the Lords inEnglandLeft his Canadian citizenship

In 2001 formally inducted as Lord Black of Crossharbour


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The Downfall of Lord Black 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

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SEC

Compliant Against HII :

SEC

Compliant Against HII :Disclosure of Information-1999-2001

HII tampered with the books to misrepresent transfers as

non compete payments.

No suitable internal control to avoid misappropriation of

funds

Amount transferred to Hollinger as non compete fees were

not disclosed.

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A llegations A gainst Black A llegations A gainst Black

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Management Fees

NonC

ompete A

greements

Personal Extravagance

Tax Avoidance/Unauthorized T ransfer of Cash

D omination over a Weak Board

Failure of A udit System


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S tructure of a control system Of S tructure of a control system Of AuditingAuditing

InfrastructureO perational Audit

S tyle and C ultureFinancial statement auditAutocratic

Reward S ystemInternal Audit


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C oordination and IntegrationFraud Auditing

Forensic Accounting

C ontrolsInformation system auditManagement Audit


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Flash b ackFlash b ack

High management feesRMI using HII s fundsNon-compete paymentbeing made by HII toblack.No difference between

management andcompany.

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C orporate StanceC orporate Stance

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C orporate GovernanceC orporate GovernanceFrameworkFramework

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C orporate Governance A t Hollinger InternationalC orporate Governance A t Hollinger International

Introduction of new Corporate Governance and code of Business Conduct andnew policies in the organization

New Policies on Related Party Transactions and Whistle Blowing PoliciesComprehensive Charters Audit Committee ,Compensation Committee andthe new Corporate Governance CommitteeFormal Job Description were set in place for Chairman of Board and its Variouscommittees

Creating Openness and Transparency for the Company.

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RecommendationsRecommendations

Audit performance of board.Schedule regular meeting of Non-executives.Disclosure on corporate websites and annualreportsLead by exampleYoung Blood

Explain fully how discretion has been exercised

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Thank You!Thank You!

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