SEC Files Fraud Charges Against Conrad Black, F. David Radler and Hollinger Inc.

FOR IMMEDIATE RELEASE
2004-155

Relief Sought Includes Penalties, Officer and Director Bars, and Imposition of Voting Trust on Hollinger, International Shares Held by Black and Hollinger, Inc.

Washington, D.C., Nov. 15, 2004 - The Securities and Exchange Commission announced today that it has filed an enforcement action in the U.S. District Court, Northern District of Illinois, against Hollinger International's former Chairman and CEO Conrad M. Black, former Deputy Chairman and COO F. David Radler, and Hollinger, Inc., a Canadian public holding company controlled by Black.

The Commission's complaint alleges that from approximately 1999 through 2003, Black, Radler and Hollinger Inc. engaged in a fraudulent and deceptive scheme to divert cash and assets from Hollinger International, Inc., a U. S. public company and a subsidiary of Hollinger, Inc., and concealed their self-dealing from Hollinger International's public shareholders.

The SEC's compliant requests that the Court:

• enjoin the defendants from further violations of the securities laws,
   
• order the defendants to disgorge their ill-gotten gains and pay pre-judgment interest,
   
• order the defendants to pay civil penalties,
   
• bar Black and Radler from serving as an officer or director of a public company, and
   
• impose a voting trust upon the shares of Hollinger International held directly or indirectly by Black and Hollinger, Inc.
   

Stephen M. Cutler, Director of the Commission's Division of Enforcement, said, "Black and Radler abused their control of a public company and treated it as their personal piggy bank. Instead of carrying out their responsibilities to protect the interest of public shareholders, the defendants cheated and defrauded these shareholders through a series of deceptive schemes and misstatements."

Merri Jo Gillette, Regional Director of the Commission's Midwest Regional Office, said, "The Commission is taking action at this time because it has obtained strong evidence to support the charges of serious misconduct by the defendants. We intend to seek tough sanctions against them based on these charges. However, our work is not done. We will continue our investigation into wrongdoing at Hollinger."

In the complaint filed today, the SEC alleges, among other things, that,

• Black, Radler and Hollinger, Inc. engaged in a scheme to defraud Hollinger International shareholders through a series of related party transactions by which Black and Radler diverted to themselves, other corporate insiders and Hollinger, Inc. approximately $85 million of the proceeds from Hollinger International's sale of newspaper publications through purported "non-competition" payments.
   
• Black and Radler further defrauded public shareholders by orchestrating the sale of certain of Hollinger International's newspaper publications at below-market prices to another privately-held company owned and controlled by Black and Radler, including the sale of one publication for $1.00.
   
• In February 2003, Black, without obtaining the necessary approval from Hollinger International's Audit Committee, authorized the investment of $2.5 million of Hollinger International's funds in a venture capital fund with which Black and two other directors of Hollinger International were affiliated.
   
• In order to perpetrate their fraudulent scheme, Black and Radler misled Hollinger International's Audit Committee and Board of Directors concerning the related party transactions. Black and Radler also misrepresented and omitted to state material facts regarding these transactions in Hollinger Internationals filings with the Commission and during Hollinger International shareholder meetings.
   
• In November 2003, Black approved a press release issued by Hollinger International in which he misled the investing public about his intention to devote his time to an effort to sell Hollinger International assets for the benefit of all of Hollinger International shareholders (the "Strategic Process") and not to undermine that process by engaging in transactions for the benefit of himself and Hollinger, Inc.
   

Previously, on Jan. 16, 2004, the SEC obtained a federal court order against the Chicago-based Hollinger International, Inc. alleging that from at least 1999 through 2003, the company's Commission filings contained misstatements and omitted material facts regarding transfers of certain corporate assets to certain of Hollinger International's insiders and related entities (SEC v. Hollinger International, Inc.).

On the same date, the SEC obtained a federal court order to ensure that the work of the Special Committee of Hollinger International's board of directors - including its efforts to recover and preserve corporate assets - continued under the jurisdiction and oversight of the court. Hollinger International consented to the entry of the order, which also permanently enjoined the company from violating the reporting and internal control provisions of the federal securities laws.

Under that order (See SEC Lit. Rel. 18551, Jan. 16, 2004), Hollinger International is required to maintain its Special Committee to, among other things, continue its investigation of alleged misconduct and its efforts to recover and maintain corporate assets. In the event the Special Committee's authority were in any way impaired, including through a change in control of the company, Richard C. Breeden (the current Counsel to the Special Committee) would serve as a court-ordered Special Monitor to protect the interests of Hollinger International shareholders.

The SEC acknowledges the assistance and cooperation of the Ontario Securities Commission in the investigation of this matter.