‘If they’re a minister, it’s a serious matter’

“I have not been involved with Royal Group for over two years now,” Mr. Sorbara said.

Informed that he was named in the warrants, Mr. Sorbara said he had not seen them, and that he was not the focus of the RCMP investigation. He also reiterated his lack of involvement with Royal Group.

But provincial NDP leader Howard Hampton said the allegations swirling around Mr. Sorbara should lead him to leave office.

“I don’t see how Mr. Sorbara can continue as Minister of Finance when everyone who was around him in his former business life is now under investigation,” Mr. Hampton said.

Opposition leader John Tory expressed similar sentiments.

“Somebody who’s named in a criminal investigation if they’re a minister of the Crown, it’s a very serious matter,” he said. “I’ve seen instances over the last 10 years where ministers have resigned over matters that were not criminal investigations.”

The RCMP executed search warrants in and around Toronto yesterday related to the investigation into improper dealings at Royal Group that were made public in February, 2004.

Among the companies raided was The Sorbara Group, a realestate development and investment firm headed by Joseph and Edward Sorbara, Mr. Sorbara’s brothers.

Sources said Royal Group and The Sorbara Group had been involved in at least one transaction in the mid- to late- 1990s.

According to disclosure documents filed by Mr. Sorbara with the Ontario legislature, he also has an ownership interest in The Sorbara Group that is being held in a blind trust while he is in office. Those documents state he owns 25% of a firm that owns 100% of The Sorbara Group Inc. and other related entities.

Officers wearing police jackets could be seen yesterday entering the The Sorbara Group’s offices in Woodbridge, north of Toronto. A 35-foot RCMP mobile field office was parked in the nearby parking lot.

When the investigation into Royal Group was first made public in February, 2004, Mr. McGuinty said he had complete confidence in Mr. Sorbara.

“Remember, he is not the subject of an investigation and the commitment that he has made to me and to the Ontario public is that should he become the subject of an investigation then he will step aside from his ministerial responsibilities,” Mr. McGuinty said at the time.

The Bank of Nova Scotia also was served with a search warrant yesterday — not the first in the Mounties’ probe of Royal Group. A source familiar with the situation said bank records of a number of companies related to Royal Group founder and one-time chairman Vic De Zen were being sought.

Mr. De Zen, along with Royal Group CEO Douglas Dunsmuir and chief financial officer Ron Goegan, were ousted by their company in November, 2004, over a land deal.

Forensic accountants hired by Royal Group found that in 1998, a numbered company partly owned by Messrs. De Zen and Dunsmuir purchased a 75hectare piece of land in Woodbridge for $20.5-million. On the same day that the purchase was completed, the property was sold to Royal Group by the numbered company for $27-million.

The deal was facilitated by Mr. Goegan, who was then Royal Group’s vice-president of corporate finance, the company said.

Messrs. De Zen, Dunsmuir and Goegan have been the subjects of the RCMP’s criminal investigation since at least last October, according to court documents filed at the time. Mr. De Zen has publicly proclaimed he has done nothing wrong.

The RCMP was also looking at transactions between Royal Group and a casino resort in St. Kitts controlled by Mr. De Zen.

Calls for comment to The Sorbara Group were not returned yesterday. The RCMP declined to comment.

Earlier, it had been revealed that Greg Sorbara was given advance warning that the Ontario Securities Commission was also investigating Royal Group in December of 2003, but initially kept silent about what he knew.

When the investigations by the securities commission, Revenue Canada and the RCMP were finally publicly revealed in late February, 2004, Mr. Sorbara immediately asked to be relieved of responsibility for the OSC, which he had overseen until that point.

The job was given to Management Board Chairman Gerry Phillips.