CanWest filing accuses Israeli firm of extortion - Deal to co-own Jerusalem Post is at issue (THE GLOBE AND MAIL) By RICHARD BLACKWELL With files from Shawn McCarthy in New York and Matthew Kalman in Jerusalem 01/26/05 Page B4)
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CanWest Global Communications Corp. has accused an Israeli company of
extortion in demanding changes to an agreement that would have given
the Canadian firm a 50-per-cent interest in the Jerusalem Post
newspaper along with control of its board.
In an affidavit filed in a New York court, CanWest lawyer Richard
Leipsic said it was a shock to the company´s executives when
representatives of Mirkaei Tikshoret Ltd. said they would not live up
to a binding agreement to share ownership of the Post.
CanWest got a temporary restraining order from the Supreme Court of
New York stopping MTL from changing the Post while the dispute is
In Mr. Leipsic´s affidavit, CanWest outlines how the deal to share
the Post came about. The two companies negotiated the purchase last
year with the paper´s then-owner Hollinger International Inc. MTL was
to buy the Post from Hollinger, then transfer it to a new entity that
would be owned 50-50 by CanWest and MTL.
MTL paid Hollinger $13.2-million (U.S.) for the Post, and CanWest was
to pay MTL $6.6-million after the new company was set up.
Other court documents filed in New York indicate that MTL and CanWest
had planned to eventually take the Post public through an initial
However, according to Mr. Leipsic´s affidavit, MTL did not set up the
new company as expected in December after the deal with Hollinger
At meetings earlier this month in Tel Aviv, MTL executives told
CanWest executives -- including chief executive officer Leonard
Asper -- that the Israeli company wanted to own between 51 per cent
and 75 per cent of the company holding the Post.
It also wanted a change to the portion of the arrangement that said
CanWest would appoint four of seven board members, including the
chairman, and control the editorial policy of the paper.
The "repudiation of the agreements was a complete shock to me and
other CanWest executives present," Mr. Leipsic said in the
affidavit. "This was not good faith negotiation. This was, plain and
MTL had to be constrained under an injunction, CanWest said in its
filing, because the Israeli firm has already begun making changes at
the Post, such as firing senior managers and hiring new executives.
MTL will also likely try to sell presses and the Post´s office
building and printing plant in Jerusalem, the affidavit says. While
CanWest had earlier agreed that the sales made sense, it is now
concerned selling those assets could "do irreparable harm to the
business, as well as pay out the proceeds beyond the reach of
MTL´s lawyer in New York did not return calls yesterday. Senior
executives at the Jerusalem Post said last night they
were "completely in the dark" about the legal dispute.
Post staff said Aviv Bushinsky, former adviser to Israel´s right-wing
finance minister and former prime minister Benjamin Netanyahu,
introduced himself last Sunday as the paper´s new publisher. He
reportedly told Post staff that the paper´s ageing building in
Jerusalem would be sold. He said the editorial offices would remain
in Jerusalem, where most Post editorial staff live, but the printing
plant, business and administration offices would move to Tel Aviv
where MTL has extensive property. (© 2005 Bell Globemedia Interactive
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