Perle, Ex-Pentagon Aide, Dropped From SEC's Probe of Hollinger by Otis Bilodeau for Bloomberg

(Oct 23/Bloomberg)-- Richard Perle, a former Pentagon aide and onetime adviser to President George W. Bush, was notified by the U.S. Securities and Exchange Commission that the agency dropped its probe into his role at Hollinger International Inc.

Perle, 65, was as a director at Hollinger while then- Chairman and Chief Executive Officer Conrad Black allegedly looted the newspaper company. More than a year after warning Perle in a so-called Wells notice that he might face civil charges for failing to police Black, the SEC this month told him it won't be filing a lawsuit, his lawyer, Dennis Block, said.

``There was absolutely no basis for it,'' Block, a partner at Cadwalalder, Wickersham & Taft LLP in New York, said today in a telephone interview.

The SEC hoped to make Hollinger an example of its three- year-old effort to hold corporate boards more responsible for failing to detect and thwart fraud. This month, the agency also abandoned efforts to sue three other ex-directors, James Thompson, Richard Burt and Marie-Josee Kravis.

John Heine, an SEC spokesman in Washington, declined to comment.

Hollinger, shareholders and the SEC alleged that Black and former President David Radler wrongfully diverted proceeds from sales of company newspapers for their personal use. Hollinger later sued Black, saying in a 513-page report that he and other top executives looted the company of more than $400 million over seven years. Black was ousted as chairman in 2004.

Executive Committee

At its peak, Hollinger published newspapers including London's Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post. The Chicago-based company, now called Sun-Times Media Group Inc., has sold the Telegraph and the Post.

Radler pleaded guilty in September 2005 to a criminal fraud charge and is cooperating with the Justice Department's case against Black. The SEC filed a civil suit against Black, 62, and Radler, 64, in 2004, accusing them of fraud. That case is pending. Black pleaded not guilty last year in federal court in Chicago to criminal fraud charges.

Perle was a member of Hollinger's three-member executive committee, together with Black and Radler, from 1996 to 2003. He stepped down from the company's board this year.

The leading architect of U.S. nuclear arms policy during the administration of President Ronald Reagan, Perle served on the Pentagon's advisory Defense Policy Board for 17 years until he quit in 2004. He's a resident fellow at the American Enterprise Institute, a conservative think tank in Washington, and advised Bush on foreign policy during the 2000 U.S. presidential campaign.

Perle didn't return calls and an e-mail seeking comment.

`Blown Away'

Black's alleged wrongdoing was investigated internally by former SEC Chairman Richard Breeden and detailed in report filed with the SEC in 2004. In an interview last year, Perle said he was ``blown away'' by the accusations in the report.

Perle received $3.1 million in undisclosed bonuses at Hollinger for running an Internet investment arm called Hollinger Digital, according to Breeden's probe. The unit had lost $49.6 million as of 2003.

The report also said Perle helped convince Black to put $2.5 million of Hollinger's cash into Trireme Partners LP, a venture- capital fund in which Perle and Black participated. Black didn't seek board approval for the related-party transaction, according to the report.