Belinda Stronach billed company for $70M in personal expenses, father's suit alleges
Published Thursday, October 11, 2018 5:40PM EDT
Last Updated Thursday, October 11, 2018 10:15PM EDT
Belinda Stronach spent tens of millions of dollars belonging to her family’s companies on personal expenses, according to a legal filing from her parents.
The allegation is one of many set out in a statement of claim filed Oct. 1 by Frank and Elfriede Stronach against their daughter and several other people, including Belinda’s adult children and family friend Alon Ossip.
The Stronachs are best known for their connection to auto parts behemoth Magna International, which was founded by Frank Stronach.
The legal action relates not to Magna but to The Stronach Group, an umbrella organization for more than 250 of the family’s trusts and businesses in horse racing and other industries.
In the court documents, Frank Stronach alleges that Ossip and his daughter worked to freeze him out of The Stronach Group’s operations and take control of the businesses for themselves.
“Belinda has taken advantage of her close relationship with her father and has wielded inappropriately her relationship with him, including by misleading Frank into believing that he could trust her to run the family enterprise on a fair, proper, sensible and business-like basis when, in fact, she was entirely unwilling or incapable of doing so,” the statement of claim reads.
None of the allegations in the filing have been tested in court. Belinda Stronach has called the claims “untrue.”
“Family relationships within a business can be challenging,” she said in a statement. “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 spokesperson for Ossip echoed that sentiment, saying in a statement that Frank Stronach’s allegations “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,” the statement said.
“Alon created huge wealth for the family, and he has always operated in a prudent and commercially-sensible manner. Frank Stronach was a great auto parts entrepreneur, but his recent excessive spending and numerous failed ventures put his family’s wealth at risk. This is a dispute between Stronach family members that should be resolved between family members.”
Legal filing claims family relationship broken
The statement of claim alleges “a complete breakdown in the relationship” between Belinda Stronach and the rest of the family as a result of a years-long battle waged behind closed doors.
Ossip, a longtime friend and adviser of Frank Stronach, was named CEO of The Stronach Group in 2013 at a base salary of $1 million per year. According to the statement of claim, he was appointed on the understanding that he would look out for the best interests of the entire family.
Instead, the filing alleges, Ossip worked with Belinda Stronach to manoeuvre Frank Stronach out of his control of the family business while hiding their efforts from the rest of the family.
Ossip and Belinda Stronach “routinely failed to report to work for days or weeks at a time” during this time, according to the filing.
Matters apparently came to a head in late 2016, when Ossip and Belinda Stronach told Frank Stronach that their companies were facing cash challenges.
The filing alleges that Ossip and Belinda Stronach were “confrontational, disrespectful and insubordinate” when they approached Frank Stronach with concerns about the amount of money he was spending on an agricultural business and golf club in Florida.
They also informed him, the filing claims, that he was no longer legally in control of the family empire.
Frank Stronach subsequently attempted to have Ossip fired as CEO of The Stronach Group, according to the filing. Ossip was instead suspended from the position, although the claim alleges that Ossip continued to be involved in company-related decisions, without Frank Stronach’s knowledge.
Where did the money go?
The filing further claims that Belinda Stronach diverted “millions of dollars” in family money to Ossip and his outside business ventures, and that Belinda Stronach has taken more than $70 million in company money “for purposes of maintaining her extravagant lifestyle.”
That lifestyle allegedly includes parties, vacations and limousine rides expensed to the company as well as more than $10 million spent on an office near Belinda Stronach’s home.
“To the extent that Belinda uses this office at all, she does so for purposes that are largely unrelated to the business and affairs of The Stronach Group,” the filing reads.
Also alleged in the filing is that Belinda Stronach appointed “unqualified” friends to various positions of authority within The Stronach Group and to sell potential development lands in Ontario’s Greenbelt for less than what the family paid for them.
More recently, the claim alleges, Belinda Stronach moved to sell the Florida golf club “at a steep discount” and get rid of the company’s private jet.
Despite these oft-cited financial pressures, the statement claims, Belinda Stronach “demanded” that $19 million in company money be distributed to her and other trust beneficiaries.
“Members of the Stronach family had strong and legitimate concerns throughout the relevant period concerning Belinda’s lack of business acumen and experience, including because of her unenviable track record of participating in failed or problematic business investments,” the statement reads.
Ossip’s spokesperson had a different version of events, saying it was Frank Stronach who was putting the fortune in jeopardy.
“Frank Stronach was a great auto parts entrepreneur, but his recent excessive spending and numerous failed ventures put his family’s wealth at risk,” the spokesperson said.
The claim also seeks to remove Belinda Stronach, her children and Ossip as trustees of various family trusts and force them all out of various positions they hold within the Stronach empire
Frank and Elfriede Stronach are seeking $520 million in damages, as well as “a full, detailed and proper accounting” of all money Belinda Stronach, Ossip and the others have received from the family business.
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