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Last Updated: Friday, 8 October 2004, 18:16 GMT 19:16 UK
Judge dismisses Hollinger case
Former Hollinger International chief executive Conrad Black
Lord Black stepped down as Hollinger chief in November
A US federal judge has dismissed a $1.25bn racketeering lawsuit brought against ex-newspaper tycoon Conrad Black by Hollinger International.

The newspaper group had accused its former boss and other former executives of pocketing millions of dollars of the company's funds.

The judge however left the door open for Hollinger to re-file key charges.

Hollinger International ousted Lord Black as chief executive in November 2003, sparking bitter legal battles.

'Stole millions'

Hollinger International's racketeering charge against Lord Black centred around the accusation that he and other former directors had pocketed millions of dollars in non-competition fees and other payments after they allegedly sold newspapers for less than their market value.

I think this vindicates the defendant's decision to litigate this matter in court rather than in the press
Lawyer for Lord Black

The Chicago-based company said those actions constituted a violation of the US Racketeer Influenced and Corrupt Organizations Act, or RICO; and had been seeking damages of $1.25bn (696m).

But US District Judge Blanche Manning on Friday granted a motion by the defendants to throw out the case.

Hollinger International told the judge that it was now considering whether to appeal.

Not over yet

The newspaper group's legal action against Lord Black is anyway far from over.

The court ruling was made on technical grounds and does not in any way diminish the strength or merits of the claims
Hollinger International chairman Gordon Paris

Rather than throwing out the charges because of any lack of substance either for or against, Judge Manning instead said in her ruling that the allegations should be dealt with under securities law, not anti-racketeering statutes.

Under US anti-racketeering law it was possible for Hollinger International to seek in damages triple the amount it alleged Lord Black to have stolen - $380.6m. Hence the $1.25bn figure.

"This court is not making any determination as to the validity of the fraudulent actions underlying these claims," said Judge Manning.

'Vindication'

Nathan Eimer, a lawyer for Lord Black, said the judge's ruling effectively eliminated two-thirds of Hollinger International's case against his client.

"I think this vindicates the defendant's decision to litigate this matter in court rather than in the press," Mr Eimer said.

Hollinger International's interim chairman and chief executive Gordon Paris said the court ruling was made "on technical grounds" and "does not in any way diminish the strength or merits of the breach of fiduciary duty claims that have been asserted against these defendants".

Mr Paris added that the company "will pursue these claims aggressively and seek restitution".

In an earlier legal case between Hollinger International and Lord Black the newspaper group defeated his bid to sell the Telegraph newspapers at the start of this year.

The London-based Daily and Sunday Telegraph titles were subsequently sold by Hollinger International itself in June to the UK business tycoons the Barclay brothers.


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