Stronach succession drama is an all-too-familiar story
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.
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.