Hollinger Agrees to Pay Some of Boultbee's Legal Fees

Jan. 11 (Bloomberg) -- Hollinger International Inc., the

Chicago Sun-Times' publisher, agreed to pay some legal costs of

former finance chief John Boultbee, who is accused of helping ex-

Chief Executive Officer Conrad Black loot the company.

     The payment will settle Boultbee's lawsuit demanding that

Hollinger International cover more than $5 million in attorney

fees, according to a Delaware Chancery Court filing. A grand jury

indicted Boultbee, 62, on fraud charges in December.

     ``The parties have reached a settlement in principle,'

David Eagle, a lawyer with Wilmington, Delaware-based Klehr,

Harrison, Harvey, Branzburg & Ellers who represents Boultbee,

said in a Jan. 5 letter filed with the court. The accord requires

approval from Chancery Court Judge Leo Strine Jr.

     Black, 61, who built Hollinger International into the third-

largest publisher of English-language newspapers, pleaded not

guilty last month to federal charges of fraud, money laundering

and obstruction of justice. He is accused of stealing

$83.8 million from the Chicago-based company to pay for his

lavish lifestyle.

     William Johnston, a lawyer for Hollinger International with

the Wilmington firm Young Conaway Stargatt & Taylor, didn't

return phone calls for comment. Molly Morse, Hollinger

International's spokeswoman, declined to comment today on the

settlement.

     Hollinger International is suing Black, his holding company,

Boultbee and other former officials to recover $542 million it

says Black and associates stole by collecting bogus non-compete

payments and other fees. Black and Boultbee deny the allegations.

     Toronto-based Hollinger Inc., Black's holding company, owns

18 percent of Hollinger International's regular shares and all of

its voting shares. A Canadian judge has barred Black from

exerting any control over the unit's management.

                    Morvillo Fees

     Boultbee filed a suit in August claiming Hollinger

International is obligated to pay lawyers defending him from

criminal and civil claims in the U.S. and Canada under the

company's insurance for officers and directors.

     The New York-based law firm Morvillo, Abramowitz, Grand,

Iason & Silberberg racked up $5.1 million in fees representing

Boultbee in investigations by federal prosecutors, as well as the

U.S. Securities and Exchange Commission and Canadian securitiesregulators, according to court papers.

     Robert Morvillo, who heads the firm, represented home-

decorating guru Martha Stewart when she was convicted of

obstruction of justice charges in March 2004.

     The Jan. 5 filing doesn't say how much of Boultbee's legal

fees will be covered by the company. In a Dec. 22 letter to

Strine, Johnston said both sides were still negotiating a formula

to decide the figure. The company will pay ``already-submitted

invoices' within 30 days of the final agreement, according to

the letter.

     Black also has sued in Delaware to recoup money on spent on

defense lawyers. That case, filed in May and seeking $6.8

million, is set for trial in March. Hollinger International

officials said last month that as of September 2004, they had

paid $9 million toward Black's total defense costs.

     The case is John A. Boultbee v. Hollinger International

Inc., No. 1585-N, Delaware Chancery Court.

--With reporting by Joe Schneider in Toronto. Editor: Farr.