Stronach law­suit ex­poses fight over con­trol of firm

The Standard (St. Catharines) - - Canada & World - IAN BICKIS

TORONTO — A law­suit by busi­ness mag­nate Frank Stronach seek­ing $520 mil­lion in com­pen­sa­tion and dam­ages against his daugh­ter, two grand­chil­dren and oth­ers has laid bare a two-year old dis­pute about con­trol and di­rec­tion of the fam­ily firm.

Stronach, who cre­ated Magna In­ter­na­tional and built it into a global au­toparts giant, al­leges in the law­suit filed in On­tario Su­pe­rior Court that his daugh­ter Belinda Stronach and for­mer busi­ness as­so­ciate Alon Os­sip mis­man­aged the fam­ily’s as­sets and con­spired to take con­trol of them.

“At the heart of this pro­ceed­ing lies a se­ries of un­law­ful ac­tions un­der­taken by Belinda, to­gether with Alon and oth­ers as­so­ci­ated with them, to ap­pro­pri­ate Stronach fam­ily as­sets for their own per­sonal ben­e­fit,” reads the law­suit.

The dis­pute fo­cuses on con­trol of The Stronach Group, the cen­tre of a num­ber of busi­nesses fo­cused on thor­ough­bred horse rac­ing and gam­ing that Frank ex­panded to farm­ing and golf course de­vel­op­ment.

The suit, which has yet to be chal­lenged in court and which the de­fen­dants dis­pute, paints a pic­ture of a trust­ing fa­ther who gave up con­trol of fam­ily trusts in 2013 to serve in the Na­tional Par­lia­ment of his na­tive Aus­tria, with the un­der­stand­ing that he was still in de facto con­trol and could re­take his po­si­tion when wanted.

Frank gave up his po­lit­i­cal seat in 2014 to re­turn to the fam­ily busi­ness where he fo­cused on Adena Farms, the grass-fed beef op­er­a­tion in Florida that the com­pany had al­ready spent US$300 mil­lion de­vel­op­ing.

The law­suit says that in Novem­ber 2016 Belinda and Alon moved to cut off fund­ing for Frank’s projects, in­clud­ing the farm­ing busi­ness, as the com­pany faced cash­flow is­sues. It says they also took the po­si­tion that he had no au­thor­ity to act of be­half of any Stronach Group busi­nesses nor have ac­cess to cor­po­rate funds.

The loss of fund­ing for the farm came at a crit­i­cal time for growth and has meant lost busi­ness, the law­suit says, while steps taken to sell the com­pany’s golf de­vel­op­ment at a steep dis­count this past July also showed fi­nan­cial mis­man­age­ment, it al­leges.

The law­suit also says that de­spite cash­flow is­sues Belinda would rou­tinely sub­mit hun­dreds of thou­sands of dol­lars in ex­penses for par­ties, fam­ily va­ca­tions and ex­pen­sive meals that were not busi­ness-re­lated. It al­leges she also spent $10 mil­lion buy­ing and re­fur­bish­ing an of­fice in Toronto’s Yorkville neigh­bour­hood near her home with the in­tent to avoid in­ter­act­ing with fam­ily mem­bers in­clud­ing her fa­ther.

The law­suit al­leges that “cor­po­rate doc­u­ments were fal­si­fied as part of a scheme ... to limit or elim­i­nate Frank’s role in run­ning the Stronach fam­ily busi­ness,” and that there has been a com­plete break­down in the re­la­tion­ship be­tween Belinda and fam­ily mem­bers be­cause of the re­peated breaches of trust.

Belinda Stronach, 52, has de­nied the al­le­ga­tions in the suit.

“Fam­ily re­la­tion­ships within a busi­ness can be chal­leng­ing,” she said in a state­ment Wed­nes­day night.

“My chil­dren and I love my fa­ther. How­ever, his al­le­ga­tions are un­true and we will be re­spond­ing for­mally to the state­ment of claim in the nor­mal course of the court process.”

A spokesman for Alon Os­sip said the al­le­ga­tions were “base­less and are not grounded in fact or re­al­ity.”

“Alon has al­ways hon­oured his obli­ga­tions and acted in good faith to pre­serve and grow the Stronach fam­ily’s as­sets and to pro­tect the in­ter­ests of all mem­bers of the fam­ily,” Paul Dee­gan said in a state­ment.

“This is a dis­pute be­tween Stronach fam­ily mem­bers that should be re­solved be­tween fam­ily mem­bers.”

A lawyer for Nicole and Frank Walker, Belinda’s chil­dren named in the suit, dis­puted the claims.

“Our clients view as re­gret­table the de­ci­sion of their grand­par­ents to in­clude them in this ac­tion, and con­sider the claims against them to be un­jus­ti­fied,” said Ben­jamin Zar­nett at Good­mans LLP.


Magna In­ter­na­tional Inc. chair­man Frank Stronach (right) and ex­ec­u­tive vice-chair Belinda Stronach chat at the com­pany’s AGM in 2010.

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