Hollinger International Inc., publisher of the Chicago Sun-Times, said its former chief executive, Conrad Black, and controlling shareholders “victimized” the company by siphoning away $400 million in cash, 95% of its net income over a seven-year period, according to a special board panel.

The panel also said the company’s audit committee, led by former Illinois Governor James Thompson, was “ineffective and careless.” It said another director, Richard Perle, should return $5.4 million in pay after “putting his own interests above those of Hollinger’s shareholders.”

The panel’s 513-page report, summarized under the title “A Corporate Kleptocracy,” gives the Chicago-based company more ammunition as it pursues a lawsuit against Mr. Black and tries to hold directors accountable, said Laura Jereski, an analyst with Tweedy Browne Co., Hollinger’s largest institutional investor. The board ousted Mr. Black as chairman in January and sued him in federal court in Chicago, seeking $1.25 billion in damages.

Mr. Black, 60, denies the allegations.

“The special committee’s report is recycling the same exaggerated claims laced with outright lies that have been peddled in leaks to the media and overreaching lawsuits,” according to a statement by Ravelston Corp., one of two holding companies Mr. Black uses to control Hollinger International.

A Canadian native who later became a British lord, Mr. Black started his company with a pair of Quebec weeklies in 1966 and acquired newspapers such as London’s Daily Telegraph and the Jerusalem Post. He took the company that became Hollinger International public in 1994.

“Over the years success or failure at Hollinger was measured largely by how much cash – and even chunks of the company – could be transferred from Hollinger to Black,” former Chief Operating Officer David Radler, and their affiliates, according to the board panel’s report.

The report, which was filed with the U.S. Securities and Exchange Commission and the court in Chicago, culminates a 14-month investigation that included interviews with 60 witnesses and a review of 750,000 pages of documents.

Mr. Black declined to be interviewed by the panel, which was led by interim Chief Executive Gordon Paris and advised by former SEC Chairman Richard Breeden. The panel was appointed by the board after Tweedy Browne filed a complaint with the SEC seeking an investigation of Black’s pay.

Relying in part on allegations disclosed in the Chicago lawsuit, the panel also revealed new details about Mr. Black’s spending. Among them are personal expenses submitted by him and his wife, Barbara Amiel Black, a former Telegraph columnist.

These included $2,463 for handbags, $2,785 in opera tickets, $2,083 on exercise equipment, “summer drinks” which cost $24,950, and a $42,870 “Happy Birthday Barbara dinner party” at New York’s La Grenouille restaurant attended by designer Oscar de la Renta and television broadcasters Peter Jennings, Charlie Rose, and Barbara Walters.

The $212-per-plate meal, given for 80 guests, included beluga caviar, lobster ceviche, and 69 bottles of wine.

The Blacks swapped Park Avenue apartments with the company, moving into a more lavish Hollinger-owned apartment for $2.5 million less than market value, according to the report. Hollinger got their apartment on a lower floor of the same building, and the Blacks continued to use it to house the family’s domestic staff and personal friends, the report said.

“The intensity of the pressure for tens of millions in cash payments to Black, irrespective of corporate performance or the fairness of transactions to shareholders, led to a series of abusive transactions,” the report said.

For the first time Hollinger International singled out for criticism certain members of Black’s board, which was studded with Black’s friends and political figures including Messrs. Thompson and Perle, former U.S. Secretary of State Henry Kissinger, former American Ambassador to Germany Richard Burt, and Marie-Josee Kravis, the wife of financier Henry Kravis.

The report said the audit committee, comprised of Messrs. Thompson, Burt and Kravis, never asked for the business rationale of an annual management fee paid to Ravelston that spiraled to $31 million in 2001 from $4.1 million in 1995. Messrs. Black and Radler are Ravelston’s primary shareholders.

The audit committee “passively acceded to Black and Radler’s demands” when it authorized $60 million in compensation for reaching noncompetition agreements with buyers of newspapers Hollinger was selling.

Messrs. Thompson, Burt, and Kravis “should all have known these payments were highly unusual from the numerous boards on which they had served,” the report said.

In an interview, Mr. Thompson said he disagrees with the criticism of the audit committee and noted that none of its members were charged with violating their fiduciary duties. The report shows that “the audit committee and the board were repeatedly lied to or kept in the dark,” he said.

Mr. Burt also said he disagrees. He said he offered to meet with the special committee a month ago and was rebuffed.

Mr. Perle, 62, got his own chapter in the report. He was on an executive committee with Messrs. Black and Radler that “rubber-stamped” some of the transactions at the same time that he ran a money-losing Internet investment arm for Black, garnering $3.1 million in bonuses, according to the report.

“His executive committee performance falls squarely into the ‘head-in-the-sand’ behavior that breaches a director’s duty of good faith and renders him liable for damages under Delaware law,” the report said. Mr. Perle did not return calls to his home and office.

Without seeking audit committee approval, Messrs. Perle and Black also had Hollinger make a $2.5 million investment in Trireme, a fund co-managed by Mr. Perle that invests in defense and security businesses. The investment is now worth $1.5 million, an unrealized loss of $1 million, according to the report.

[Hollinger International is a minority investor in The New York Sun.]