Frank Stronach sues daughter Belinda for allegedly mismanaging family fortune
Ian Bickis, The Canadian Press
Published Thursday, October 11, 2018 8:46AM EDT
Last Updated Thursday, October 11, 2018 7:23PM EDT
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.
Despite allegations of financial issues at the firm and the lawsuit, company vice president of communications Tiffani Steer said day-to-day operations remain the same.
"While we regret the tension that exists within the Stronach family, it remains business as usual for The Stronach Group," she said in a statement.
"The Stronach Group has been performing very well in a number of its core businesses, including our largest business, Racing & Gaming, which has seen revenue increase from US$600 million in 2013 to over US$1.1 billion in 2017."
Frank Stronach said in a statement Wednesday that the couple has made "considerable efforts" over the last two years to resolve the matter and filed the lawsuit only as a last resort.