Conrad Black

Hollinger International

A few months ago, Conrad M. Black airily dismissed corporate governance as a "fad" practiced by "terrorists." As the U.S. Securities & Exchange Commission and its Canadian equivalent widen their investigations into Black's media empire, he's learning the hard way that chief executives can no longer brush aside shareholder calls for reform. On Nov. 17, the native Canadian was forced to resign as CEO of Hollinger International Inc. (HLR ), the world's third-largest newspaper group, after an independent probe revealed that Black, 59, and three other executives pocketed $32 million in fees that were never authorized by Hollinger's board. He has denied wrongdoing.

The cloud of scandal looming over Lord Black of Crossharbour just keeps getting darker. An investigation headed by former SEC chief Richard C. Breeden at Hollinger's request found that shareholders may have paid for much of Black's life of luxury. He had previously admitted using $8 million of company money to acquire historical material for his recent biography of Franklin D. Roosevelt. Hoping to pacify its irate shareholders, the company has grounded its two private jets and stopped paying its share of rent -- $110,000 last year -- on Black's Park Avenue digs.

The cost-cutting moves may not be enough to mollify Hollinger's investors. Shareholders say the board -- whose members include such longtime Black pals as former U.S. Secretary of State Henry Kissinger and former Defense Policy Board Chairman Richard Perle -- failed to sufficiently question the company's Byzantine ownership structure and its executive pay. Now they are demanding repayment of up to $310 million in management fees and noncompete payments the company's directors received over the past eight years. With the breakup of Hollinger becoming increasingly likely, Black may have more time to devote to his literary pursuits. At least his tome on FDR is selling well.

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