Those institutional investors who complained so loudly last Friday about Rupert Murdoch's supposed failings in corporate governance at BSkyB can only thank their lucky stars they have a chairman as compliant as Mr Murdoch after yesterday's humdinger of a statement from Hollinger International, owner of The Daily Telegraph and The Sunday Telegraph. The misdemeanours of Lord Black of Crossharbour may not even remotely fall into the same category as Robert Maxwell, who stole hundreds of millions of pounds worth of his pensioners' assets, but they are quite bad enough.

For some years Lord Black has characterised the campaign fought by one of his largest shareholders, Tweedy Browne, over suspect payments to directors, as another "media smear job", just a storm in a teacup whipped up into something more than it was by his newspaper rivals. As yesterday's astonishing revelations make plain, Tweedy Browne was spot on. What we now have is a full on corporate scandal that seems all too likely to end with Lord Black losing the choicest bits of his media empire, if not the whole lot.

Even to veteran observers of corporate scandals, yesterday's disclosures were real shockers. Some $32.15m in outgoings styled as "non-competition payments" were not authorised by the board or the audit committee. Of these payments, $16.55m went to Hollinger Inc, the company through which Lord Black controls Hollinger International, a further $7.2m went directly to Lord Black and the rest to other officers of Hollinger International. The Hollinger Inc payment was never disclosed in Hollinger International's accounts or in SEC filings. The payments to individuals were disclosed, but in a manner which didn't reflect their true purpose and which stated that they had been approved by the independent directors, which was not the case.

Hollinger's board includes such luminaries as Henry Kissinger, the former US Secretary of State, and Richard Perle, chairman of the Defence Policy Board, the Pentagon's advisory panel.

The non-compete payments related to the sale by Hollinger International of a string of community newspaper interests in the US for a total consideration of $760m. Why it was thought necessary to pay company officers money not to compete, rather than the company itself, is not explained. Such payments are apparently tax exempt, which other forms of remuneration, including bonuses, are not.

Whatever the explanation for this mixing up of company and personal finances, all the individuals involved, including Lord Black, have now agreed to pay the money back. Corporate bosses can sometimes survive a scandal, even one as bad as this. Besides, Lord Black still controls the company through a majority of the voting capital, which helps to explain why, having been forced to stand aside as chief executive, he's still there as non-executive chairman.

Yet they tend not to survive a scandal in combination with a credit crunch. One of the reasons why Lord Black has been unable to refinance the company by bringing in a private equity investor is that so long as there's scandal in the air, no one will invest. Already Hollinger promises to sell the private jet. Other assets will follow once the strategic review is complete.

Among rival media players, it is widely assumed the whole lot will go under the hammer, whether piecemeal or as a job lot, which in turn means some of the most highly sought after media assets in Britain, the Telegraph Group, coming up for sale. The wheel of media fortune has turned again. Just 20 years after Lord Black, a virtual unknown in the City at the time, came riding to the rescue of the Telegraph Group, then controlled by the Hartwell family, which naively believed he could be manipulated, it's now Lord Black's turn to cede control.

The list of potential buyers is legion, but already there are two front runners from the trade - Daily Mail & General Trust, where Britain's leading Tory supporting broadsheet would fit hand in glove, and Richard Desmond, owner of the Express titles. The latter would be viewed with absolute horror by The Daily Telegraph's staunchly conservative editorial staff. Mr Desmond's instincts may be Tory, but he's a Labour Party donor, he's a pornographer, and, most wretched of all, he's a vicious cost cutter and a consummate meddler. He would also do almost anything to own The Daily Telegraph, where pre-emption rights over the Telegraph's 50 per cent interest in Westferry Printers give him considerable leverage. Ignore Mr Desmond, and the Telegraph could find itself without a printer.

Would the Government be prepared to tolerate the further concentration of media ownership that either combination would imply? Given Rupert Murdoch's already commanding position in the British national newspaper market, ministers won't find it easy to resist. Nor might it seem terribly important to them who owns such a Tory leaning newspaper. Few Telegraph readers vote Labour.

So it doesn't matter then? Anyone who witnessed Rupert Murdoch's extraordinary remarks on BBC television last Friday night would think it matters quite a lot. Using the royal "we", Mr Murdoch said he might switch the political allegiance of his titles at the next election, depending on how the two main parties conform to his own political and economic prejudices in the meantime, as if it will be he who determines the future of Britain, not the electorate.

Media barons even as powerful as Mr Murdoch have less influence on the outcome of elections than they like to think. Newspapers are more mirrors of political and social development than determinants of them. Yet the fact that politicians believe newspapers to have influence may be as corrupting as the real thing. Mr Murdoch likes to position himself with the winning side, so that it better serves his commercial purpose. Keeping in with Mr Murdoch is seen as one of the basic building blocks of electoral success.

In any case, diversity of ownership is the best safeguard there is against potentially corrupt mutual backscratching between media and political interest. Furthermore, greater concentration of ownership creates economic barriers to entry, that other voices find difficult to surmount. Whatever the resolution of these public policy issues, the forthcoming battle for The Daily Telegraph promises to be an epic and many fronted one. Trophy assets of such quality become available perhaps only once in a generation. Only those with deep pockets need apply.

CBI trade fears

The Confederation of British Industry national conference was all in a ferment yesterday over the possibility of a trade war with the US and a tit for tat of protectionist measures on both sides of the Atlantic. Digby Jones, the director-general, mischievously stirred the pot by saying he knew of a number of US multinationals that had been offered incentives to relocate British jobs back to the US. Only he wouldn't say which ones.

It all makes for a good headline from what's turning out to be the usual dull old mix of whingeing and lecturing from those of Britain's business leaders who can be bothered to turn up. But truth it almost certainly ain't. President George Bush is widely expected to use his visit to Britain this week formally to abandon the steel tariffs, which are the root cause of complaint. The tariffs have for long been an acute source of embarrassment to John Snow, the US Treasury Secretary, a free trader by instinct who inherited the policy. Mr Snow will be at the CBI conference today, and he'd make the announcement himself were it not Mr Bush's perogative.

None of this means we can afford to be relaxed about trade. As Cordell Hull, a former US Secretary of State, once said, "when goods cannot cross frontiers, armies will". We are not anywhere near that stage yet, thanks largely, it has to be said, to the US, whose ability to soak up the world's overspill of surplus goods seems to know no bounds. Free trade none the less requires eternal vigilance.

jeremy.warner@independent.co.uk