Clear Channel buyer accused of fraud

by Mark Taylor-Canfield, KBCS/Free Speech Radio News

Clear Channel Communications, the largest operator of radio stations in the US with over 1,500 stations, has announced it will be sold to a group of investment firms for 18.7 billion dollars. Media activists in Seattle have uncovered allegations of international fraud made against one of the firms involved in the buy out, raising concerns about the future of the media network.

Clear Channel Communications released a statement yesterday officially confirming their plans to sell to a group of international investment firms. In a separate move, the company also says it will sell off 448 radio stations and 42 television stations across the nation.

One of the two major investment groups involved in the purchase of Clear Channel - Thomas H. Lee Partners ­ has been accused of violating Securities and Exchange Commission requirements and is currently on trial for fraud in France.

Thomas H. Lee Partners is the world’s second largest private equity firm, specializing in leveraged buy outs of major corporations. Private-equity firms are currently the target of a U.S. Justice Department investigation into possible antitrust violations involving leveraged buy outs. Shareholders filed a lawsuit filed this week in the Manhattan federal court accusing Thomas H. Lee Partners and the Carlyle Group of illegally conspiring to drive down the prices they paid when taking companies private, and of violating anti-trust laws when they teamed up to make leveraged buyouts.

In June 2005, the Thomas H Lee Partners was hit with a one billion dollar lawsuit filed in Paris which accused them of international fraud. According to the plaintiff’s lead attorney, Maître Frederik-Karel Canoy, Thomas H. Lee and Partners and an independent futures brokerage firm named Refco failed to disclose to the US Securities and Exchange Commission that they had been named in several major international lawsuits, and that they were the subject of criminal proceedings in the Paris High Court.

Thomas H Lee Partners has launched a suit against its former business partner Refco to recover losses suffered when Refco went bankrupt after its CEO Phillip Bennett was arrested for fraud.

Thomas H Lee Partners’ history of litigation for unethical business practices does not bode well for the legal and financial future of the Clear Channel properties which have dominated the US media. The firm may also be subject to two more pending claims totaling over 1.5 billion dollars for "unjust enrichment," currently being heard before the New York Supreme Court. There have been three seperate criminal investigations in that case.

article originally published at .

The media's job is to interest the public in the public interest. -John Dewey