Black hit by $1.2bn 'racketeer' lawsuit

Conrad Black, the disgraced owner of The Daily Telegraph, will be formally accused of racketeering tomorrow as the newspaper group Hollinger International dramatically raises its claim for damages against him, to $1.2bn.

Conrad Black, the disgraced owner of The Daily Telegraph, will be formally accused of racketeering tomorrow as the newspaper group Hollinger International dramatically raises its claim for damages against him, to $1.2bn.

Lord Black dismissed the proposed action as "tabloid journalism masquerading as law" yesterday. But the claim, to be filed with the US Securities and Exchange Commission, will mark a major escalation in the legal fight between Hollinger and its former chairman. It will also drag his wife - the Telegraph columnist Barbara Amiel - into the fray for the first time.

Lady Black, a director of Hol- linger International, is named in the new lawsuit along with Dan Colson, who used to run the Telegraph Group in the UK. However, neither is accused of racketeering.

Lord Black gave up his Canadian citizenship three years ago to accept the peerage traditionally offered to owners of The Daily Telegraph. He and his wife have grown used to a lavish and high-profile lifestyle, with a £14m house in London, a New York apartment and a beachside property in Florida. But they are currently spending most of their time back in Canada, away from the cameras, at a Georgian mansion in Toronto.

Legal experts described the racketeering claim as "the legal equivalent of a nuclear weapon" and said Lord Black would now face huge pressure to settle out of court. The Racketeer Influenced and Corrupt Organisations (Rico) Act was passed in 1970 to fight the Mafia, but is increasingly used in business disputes. As civil law, it requires less evidence than for criminal prosecutions. The lawsuit will also be filed in Illinois, where juries are not expected to be favourable to rich international businessmen.

But Lord Black will fight the lawsuit. A statement from his holding company, Hollinger Inc, said: "We look forward with confidence to litigating this matter and will respond in full to the complaint through the appropriate legal channels." Hollinger Inc is also expected to launch a counter-suit.

Lord Black, the largest shareholder in Hollinger International, is being sued over allegations that he and his associates made unauthorised payments to themselves from company funds. As well as the Daily and Sunday Telegraph and the Spectator magazine in Britain, Hollinger International owns the Chicago Sun-Times and The Jerusalem Post.

The new civil claim, which revises an original lawsuit filed against Lord Black in January, also accuses him of a "breach of duty" over the sale of local newspapers owned by Hollinger International to companies he controls. Some of the newspapers are thought to have been sold for as little as $1.

Mike Pullen, a partner at the law firm DLA, said: "Rico is the legal equivalent of hitting someone with a nuclear weapon. Accusing someone of racketeering is upping the stakes in a big way."

Successful claimants under Rico automatically receive three times their actual damages - so the $200m originally sought by Hollinger, doubled by new claims and interest on further alleged improper payments, will actually be worth more than $1.2bn.

Hollinger International is currently holding an auction of its assets. Bidders include the Barclay brothers, owners of The Scotsman newspaper, the Daily Mail, German media group Axel Springer and the US buyout firm KKR.