Catalyst execs deny allegations of defaming West Face and its CEO

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 claims and filed a counterclaim alleging that it — and CEO Boland — had been the victim of a defamation campaign.

The countersuit alleged that Catalyst and its agents, and companies it hired or “caused to be hired” — including Israel-based in- telligence 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” and that the counterclaim “ought to be dismissed.”

None of the allegations have been proven.

In a statement, West Face said the 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. It said “the principal aim of Catalyst’s latest pleading is to tarnish West Face’s reputation.”