Perle an 'abject failure' as outside director, report says

FinanceEconomy, Business and FinanceSun-Times Media GroupCompanies and CorporationsGovernmentAccounting and AuditingHeads of State

In the report of financial escapades at Hollinger International Inc., some of the harshest criticism is leveled at Richard Perle, a member of the company's board of directors.

A one-time assistant U.S. defense secretary and a leading proponent of the neo-conservative movement, Perle is widely considered to have wielded significant policy influence in the Pentagon during the administration of President George W. Bush.

But Perle was an "abject failure" as an outside director at Hollinger International, where he had a responsibility to protect the interests of company shareholders, according to the report, commissioned by Hollinger International and prepared by a committee headed by Richard Breeden, a former chairman of the Securities and Exchange Commission.

Perle had a key role at the company, the committee noted, because he was the only independent voice on Hollinger International's powerful, three-member executive committee. The two other members of the committee were the company's controlling stockholders, Chief Executive Conrad Black and his longtime lieutenant, David Radler. Radler also was publisher of the Chicago Sun-Times.

Black and Radler improperly siphoned off hundreds of millions of dollars from Hollinger International, the report said. And Perle, the Beltway insider, made it easy for them to do so, Breeden's investigation found.

Perle told investigators that he considered the executive committee reports simply a way to push through paperwork that would end up being reviewed by Hollinger International's full board of directors. In fact, the board signed off on a variety of financial misdeeds by Black and Radler, relying on assurances from the executive committee that all was well, the Breeden report said.

Perle "admitted that he generally did not even read [the documents he was signing] or understand the transactions to which they applied," the report said.

"It is difficult to imagine a more flagrant abdication of duty than a director rubber-stamping transactions that directly benefit a controlling shareholder without any thought, comprehension or analysis."

And while Perle was listed as an outside director, the report said, he actually wasn't independent of Black and Radler at all. Beginning in 1996, it said, Perle was an officer of Hollinger Digital, a venture-capital subsidiary of Hollinger International. In that role, he received millions of dollars in incentive payments.

As a result of those lucrative payments, the report found that "Perle clearly had a motive to abdicate his fiduciary duties as an Executive Committee member so as to accommodate the persons responsible for his huge Hollinger compensation, Black and Radler."

Because he was a "faithless fiduciary," the report said, Hollinger International's new managers intend to demand that Perle repay the $5.4 million he received from the company in director fees, salary and incentive payments.

In his role as an official with the venture-capital group, the report also said, Perle successfully pushed Hollinger International into putting $2.5 million into an investing fund in which he had a significant financial interest. The investment required clearance from Hollinger International's audit committee, the report said, but "no such approval was ever sought or obtained."

Neither Perle nor his attorney could be reached for comment Tuesday. Perle has previously said he did nothing improper at Hollinger International.

Copyright © 2014, Los Angeles Times
Comments
Loading