Media tycoon Conrad Black has been removed as chairman of the Hollinger group and is being sued for damages over unauthorised payments to him.
Lord Black resigned when irregularities came to light
He is the subject of a $200m (£108m) lawsuit but denies any wrongdoing.
Lord Black is at the centre of claims he and other executives received millions in unauthorised payments, leaving shareholders furious.
The revelations led Canadian-born Lord Black to quit as chief executive of the group, which owns the Daily Telegraph.
Hollinger International said on Saturday the executive committee of its board of directors had
removed Lord Black as chairman, effective immediately. He
remains a board member and the company's controlling shareholder.
A special committee of the publishing group, which also owns the Jerusalem Post and the Chicago Sun-Times, set up to investigate the unauthorised payments, filed the lawsuit in US District Court for Manhattan South.
It charges that the group's mother company, Hollinger Inc, Lord Black and others "diverted and usurped corporate assets and opportunities from the company through systematic breaches of fiduciary duties".
A lawyer for Lord Black, John Warden, said in a statement that the lawsuit was an attempt by the special committee to cover up contradictions between different board members' evidence.
Lord Black has insisted the unauthorised payments were above board.
Last week Hollinger was reported to have paid its senior executives $3m (£1.62m) in bonuses via an offshore bank.
The money was wired to the Caribbean unit of a Canadian bank in December 2000, according to the New York Times.
Late last year, an internal investigation at Hollinger revealed that Lord Black and other
top executives pocketed payments worth £32.2m without the approval of the firm's audit committee.
The cash came from "non-competition" fees paid by buyers of Hollinger titles in return for undertakings that the firm would not launch new rival products.
This angered shareholders, who argued that the money should have been ploughed back into the company.
Lord Black of Crossharbour - to give him his full title - and other executives involved have agreed to repay the money in full, with interest, by June next year.
Hollinger is considering selling off the Telegraph titles in an effort to shore up its finances, with several potential buyers thought to be lining up bids.