Catalyst execs deny allegations of defaming West Face and its CEO

TORONTO Catalyst Capital Group Inc. executives including founder Newton Glassman are denying having participated in a scheme to defame business rival West Face Capital Inc. and its chief executive, Greg Boland.

The denial came in a court filing this week, the latest move in a long-running series of legal battles between the two firms.

Catalyst initiated the most recent legal action last November, alleging West Face was part of an elaborate short-selling “conspiracy.” In December, West Face denied those allegations and filed a counterclaim alleging that it — and CEO Boland in particular — had been the victim of an orchestrated defamation campaign in the weeks and months leading up to the filing of Catalyst’s suit.

The countersuit alleged that Catalyst and its agents, and companies it hired or “caused to be hired” — including Israel-based intelligence firm Black Cube — took part in “an insidious, co-ordinated and systemic campaign of defamation and economic interference” against West Face and Boland.

Tuesday ’s filing was a reply and defence to that counterclaim.

In the 40-page document filed at the Ontario Superior Court of Justice, Catalyst and three top executives including Glassman say they “did not on their own (or in concert with the other defendants by counterclaim) engage in any of the activities described as the alleged ‘Defamation Campaign.’”

They further “deny that they authored, created, published, directed or instructed any party to draft, create or publish the Internet postings complained about by West Face and Boland.”

In the document, they suggest the counterclaim was filed as “a smokescreen” to cloud the legal issues between the two investment companies, and to distract from business problems at West Face.

“It is an improper attempt by West Face and Boland to distract the market from West Face’s poor fund management and deteriorating financial performance,” Catalyst alleges in the document.

Catalyst’s defence also claims that “West Face and Boland have not suffered any harm or damages as a result of the alleged wrongful conduct on the part of the Catalyst Defendants” and that the counterclaim “ought to be dismissed.”

None of the allegations have been proven.

In a statement, West Face said the latest legal filing “rehashes allegations previously advanced by Catalyst in its four prior lawsuits against West Face,” which have either been decided against Catalyst or which Catalyst has taken “no steps” to advance.

“Consistent with its prior litigation … West Face believes that the principal aim of Catalyst’s latest pleading is to tarnish West Face’s reputation,” the statement said, adding that the firm “is fully committed to meeting — and disproving — Catalyst’s allegations in court at the earliest possible date.” Financial Post