Stronach suc­ces­sion drama is an all-too-fa­mil­iar story

The Globe and Mail (Prairie Edition) - - REPORT ON BUSINESS - TIM KILADZE ANAL­Y­SIS

Belinda Stronach isn’t the first Cana­dian busi­ness scion who has had trou­ble es­cap­ing her fa­ther’s shadow. When Frank Stronach, the 86year-old founder of auto-parts gi­ant Magna In­ter­na­tional Inc., filed suit against his daugh­ter this month, al­leg­ing that she mis­man­aged his for- tune, he made a point of let­ting her know that in his eyes, she would never mea­sure up.

Paint­ing him­self as a “cor­po­rate vi­sion­ary,” Mr. Stronach char­ac­ter­ized his el­dest child as “dis­re­spect­ful” in court fil­ings.

And worse: The law­suit ac­cuses her of be­ing “en­tirely un­will­ing or in­ca­pable” of run­ning the Stronach Group on a “fair, proper, sen­si­ble and busi­ness-like ba­sis” and of be­ing, at times, an ab­sen­tee ex­ec­u­tive. He picked at her pro­fes­sional his­tory, mak­ing sure to men­tion her un­suc­cess­ful bid for the fed­eral Con­ser­va­tive Party lead­er­ship in 2004, which was shortly af­ter she ended a brief ten­ure as chief ex­ec­u­tive of Magna – the com­pany that, had things turned out dif­fer­ently, could have been hers to lead for a gen­er­a­tion.

He sued her chil­dren, too, who are both in their 20s and are ben­e­fi­cia­ries of the fam­ily trust.

It is a sen­sa­tional drama in­volv­ing one of Canada’s rich­est and most fa­mous busi­ness fam­i­lies − and, un­for­tu­nately, all too pre­dictable and sad.

Bit­ter feuds are a re­cur­ring theme in many dy­nas­ties of wealth, par­tic­u­larly those built by driven, some­times bril­liant, men who just can’t let go.

Among the most fa­mous cases is that of the Bronf­mans, who lost bil­lions of dol­lars be­cause of it.

Sa­muel Bronf­man was a hard­nosed busi­ness­man with a tem­per, and he built Sea­gram into an al­co­hol gi­ant that con­trolled world-fa­mous brands such as Crown Royal and Cap­tain Mor­gan rum. But when it came time to hand the busi­ness to his sons, Edgar and Charles, he could barely walk away. “I watched my fa­ther in his last years strug­gle to main­tain an iron-fisted con­trol of the com­pany,” Edgar later wrote in a book, The Third Act.

The pres­sure nearly de­bil­i­tated Edgar, leav­ing men­tal scars that never healed. “I’ve spent a life­time do­ing things my fa­ther didn’t do, or [do­ing things] the other way around,” he wrote.

It re­sulted in fi­nan­cial catas­tro­phe. When he handed the busi­ness over to his own son Edgar Jr., he over­com­pen­sated and stayed too hands-off, let­ting his son morph Sea­gram’s into a di­ver­si­fied en­ter­tain­ment com­pany that was sold to Vivendi SA, in or­der to cre­ate a global mul­ti­me­dia gi­ant around the time of the tele­com and tech bub­ble.

The re­sult­ing debt nearly sunk the busi­ness, and at the worst of it, the Bronf­man for­tune shrank by more than US$5-bil­lion.

“It was a dis­as­ter, it is a dis­as­ter, it will be a dis­as­ter,” Charles Bronf­man told The Globe and Mail in 2013. “It was a fam­ily tragedy.”

The Irv­ing Oil fam­ily scions have en­dured their own pitched bat­tles, al­beit with less fi­nan­cial ruin. In a re­mark­ably can­did in­ter­view with The Globe last year, Ken­neth Irv­ing, the grand­son of fam­ily pa­tri­arch K.C. Irv­ing, de­tailed the de­pres­sion that came over him be­cause he tried to live up to his fa­ther’s stan­dards. His dad, Arthur, would be­rate him in meet­ings, and while at work, Ken­neth walked “on eggshells,” al­ways “try­ing to please some­one else.”

Ken­neth took to harm­ing him­self, hit­ting his face so hard that he would de­velop black eyes. His de­pres­sion be­came all-con­sum­ing and it re­sulted in sui­ci­dal thoughts. To re­cover, he had to walk away from the fam­ily busi­ness and move to Toronto, far away from the fam­ily’s New Brunswick roots. But his fa­ther had an old-school men­tal­ity and scoffed at men­tal-health is­sues, so Ken­neth had to set­tle mat­ters, in­clud­ing his com­pen­sa­tion for leav­ing the fam­ily com­pany, through the courts.

The list goes on. Izzy Asper handed over his me­dia em­pire, CanWest Global Com­mu­ni­ca­tions Corp., to his son Leonard. At one an­nual meet­ing for CanWest, Leonard fa­mously joked: “I al­ways get the last word in, and it means I will con­tinue to get the last word in, which is ‘Yes, Dad. Yes, Dad. What­ever you say, Dad.’ ” Izzy Asper died in 2003. The fam­ily me­dia busi­ness en­dured a num­ber of rocky years and, by 2010, was in ashes.

Be­cause of this his­tory, some fam­i­lies have un­der­taken huge ef­forts to smooth out the suc­ces­sion process. Ex­am­ples in­clude the Richard­sons in Win­nipeg and the Des­marais clan in Mon­treal.

The Stronachs, though, never quite hashed it out.

There is much more to come in this saga and the story Mr. Stronach tells in his law­suit is an in­com­plete one. His daugh­ter, who could not be reached for an in­ter­view, has said only that she will re­spond through the court process.

When she does, she will surely tell a very dif­fer­ent story. In all like­li­hood, it will be one that de­scribes her need to con­trol her fa­ther’s ac­tiv­i­ties, so that he could not squan­der hun­dreds of mil­lions of dol­lars more on his pas­sion projects to pro­duce grain­fed beef and build golf cour­ses and de­vel­op­ments.

So far, we know this much is true: Frank Stronach was far bet­ter at build­ing an em­pire than at hand­ing it off with grace.

Sa­muel Bronf­man was a hard-nosed busi­ness­man with a tem­per, and he built Sea­gram into an al­co­hol gi­ant. … But when it came time to hand the busi­ness to his sons, Edgar and Charles, he could barely walk away.

PETER JONES/REUTERS

Belinda Stronach is seen with her fa­ther, Frank Stronach, be­fore an­nounc­ing her in­ten­tion to run for the lead­er­ship of the Con­ser­va­tive Party of Canada in Aurora, Ont., in Jan­uary, 2004. Her even­tual un­suc­cess­ful bid was among the points Mr. Stronach men­tioned in his law­suit against his daugh­ter ear­lier this month.

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