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Unauthorised payments to Lord Black and former directors of Hollinger International have caused the owner of the Daily and Sunday Telegraph, Chicago Sun Times and Jerusalem Post to overstate its earnings by $17m (10m). In a delayed filing to American regulator the securities and exchange commission, Hollinger was also forced to admit its third-quarter report was "deficient" because it had not been reviewed by independent accountants or signed off by the chief executive and finance director.

Lord Black brought forward his resignation as chief executive by two days to avoid signing off the accounts; Gordon Paris, the new chief executive, has had insufficient time to give his personal certification, as required under the new Sarbanes-Oxley rules introduced after the collapse of Enron.

The 50-page filing reveals an independent review of Hollinger's affairs led by former SEC chairman Richard Breeden, which discovered the unauthorised payments, had cost $3.4m in the period up to the end of September and would "exceed" $8m in the current financial year.

The quarterly report, which was expected a week ago, admits that before November 17 public statements by Hollinger may have been "incomplete or inaccurate" because of the recently uncovered $32.15m of payments to Lord Black and former directors.

While they have promised to repay the fees, the company warned there can be "no assurance" that it would retrieve the amounts.

The company explained that the discovery of the payments - largely the result of "non-compete" clauses - had led it to calculate that it had understated its tax provision by $17m. But warned that "this estimate is subject to change based on further analysis".

The regulatory filing also disclosed that Hollinger made a $2.5m investment in Trireme, a venture capital firm with links to Hollinger directors Lord Black, Henry Kissinger and Richard Perle.

The company reported a net loss in the third quarter of $7m, down from $32m in the same period a year ago.

Although Canadian-born Lord Black has resigned as chief executive of Hollinger, he is remaining as chairman in order to oversee a "strategic process" on which investment bankers Lazards are advising the company.

The bankers are known to have received offers from rival publishing companies for the Telegraph titles and other Hollinger newspapers.

Lord Black, who has issued strongly worded defences of his position, is now reported to have hired high profile lawyer David Boies to advise him.

Mr Boies, who has represented US presidential candidate Al Gore in the Florida election case and former Enron finance director Andrew Fastow, is reported to have advised Lord Black to tone down his public comments.

In the regulatory filing, Hollinger promised to cooperate with an SEC investigation into the unauthorised payments. The SEC has asked for documents from Hollinger, its audit committee and KPMG, which was unable to sign off the accounts because of the continuing investigation by the special committee led by Mr Breeden.

The filing also confirmed that the structure of the company was altering so that a management relationship with a unit of Ravelston, which is controlled by Lord Black, would no longer have fees payable to it.

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