A family feud involving a Canadian auto parts magnate has taken a new turn, with Belinda Stronach accusing her father Frank of squandering the family fortune on vanity projects.
Frank Stronach and his wife Elfriede filed a statement of claim against Belinda, her two adult children and longtime business partner Alon Ossip last October, alleging they conspired to remove Frank Stronach from the family’s business empire so Belinda Stronach and Ossip could have it for themselves.
The Stronach parents said they were seeking a combined $520 million in damages.
Belinda Stronach, her children and Ossip filed their statements of defence Monday in Toronto.
The statements lay out a very different view of the business than the one portrayed by Frank Stronach, in which he alleged his daughter was “unwilling or incapable” of running most of the organization, instead funnelling personal money toward her high-end lifestyle.
In her defence, Belinda Stronach claims that she has run the family’s empire in a “fair, open and even-handed manner” – in contrast to her father, who she claims was interested only in expensive and money-losing passion projects.
In a statement to CTV News, Belinda Stronach said she looks forward to putting this “very unfortunate situation” behind her.
“My focus is on leading a successful racing, gaming and entertainment business, driving its future through innovation, and being a responsible steward of all of our assets at The Stronach Group,” she wrote.
“We have thoroughly responded to false allegations and we will let the court process unfold.”
- Belinda Stronach’s full statement of defence is embedded at the bottom of this article. You can also see the statements of defence from her children, Alon Ossip and the Stronach Consulting Corp.
While the Stronachs are often associated with Magna International, the auto parts giant founded by Frank Stronach, the family also has operations in horse racing, real estate development and other industries. These companies are housed under the umbrella of The Stronach Group (TSG), and it is TSG which is at the centre of the current dispute.
Belinda Stronach’s statement of defence describes Frank Stronach’s non-auto business ventures as “significant failures” and his lawsuit “an attempt to force TSG to fund Frank’s imprudent and, in some cases, fanciful schemes to the detriment of TSG and its stakeholders.”
‘Idiosyncratic passion projects’
The central issue in the legal dispute appears to be Frank Stronach’s decision to remove himself from various corporate and family trustee positions in 2013, when he was running for a seat in the Austrian Parliament.
Although he was successful in that bid, he chose to leave office four months later and return to his business ventures.
Frank Stronach claimed his exit from the TSG companies and trusts was never intended to last past his time in government in Austria. Belinda Stronach’s statement of defence claims otherwise, saying such an arrangement would have been a “sham” meant to keep Stronach from having to reveal TSG financial information due to Austrian public disclosure laws.
When Frank Stronach returned from Austria, his daughter alleges, his focus shifted significantly to Adena Farms – a new, TSG-funded business idea of his focused on grass-fed beef. Included with this was a golf course and retail operation in Florida.
According to the statement of defence, Adena Farms and related initiatives have lost hundreds of millions of dollars, with no end in sight until Ossip and other TSG managers recently took control of the project, selling off the golf course and other assets.
Belinda Stronach further alleges that her father spent $55 million in company money to create two 12-storey-high bronze sculptures, after budgeting $6 million for the project.
The statues depict a Pegasus horse defeating a dragon in combat. One was placed at a TSG-owned facility in Florida, where it is said to be the tallest statue in the U.S. other than the Statue of Liberty, and the other is in storage in China.
“Ultimately, in the arc of Frank’s career, business failures and the pursuit of idiosyncratic passion projects are just as pronounced as his success in the automotive industry,” Belinda Stronach’s defence reads.
The statement of defence also rebuts many of the claims made by Frank Stronach, including that Belinda unnecessarily spent nearly $10 million on an office near her home in Toronto’s trendy Yorkville neighbourhood and tens of millions more to fund limousine service, vacations and expensive parties.
“Belinda is vigilant in ensuring that her personal and business expenses are properly separated, and TSG has appropriate corporate controls in place to review and approve corporate expenses,” the defence reads.
As for the Yorkville office, the statement of defence indicates it was intended to replace a separate TSG facility in the same neighbourhood, the lease for which was about to expire.
Hundreds of millions in losses
Ossip, for his part, claims in his statement of defence that he is “caught in the crossfire of a toxic familial dispute.”
He nonetheless appears to back Belinda Stronach’s version of events, saying she played a “key role in mitigating the damage caused by her father’s projects and ill-advised interventions in the business.”
In Ossip’s version of events, Frank Stronach appeared to be resentful that his daughter was replacing him as the public face of the family business. Belinda Stronach agreed to let her father pursue Adena Farms and his other pet projects, but tensions mounted when she tried to rein in his spending.
“Frank proved to be increasingly unwilling to let go of ill-fated ideas and projects,” Ossip’s defence reads.
“Rather than acknowledging a failure and trying to formulate a rational way to address it, Frank began unilaterally and without legal authority ‘firing individuals’ … whenever they attempted to advise Alon, Belinda or Frank as to how to stem the flow of losses from Frank’s passion projects.”
Ossip estimated that TSG spent US$680 million funding Frank Stronach’s passion projects, with total losses in the neighbourhood of US$380 million.
Belinda Stronach’s filing includes a counterclaim for $32.8 million, to repay funds she claims her father requested of her under false pretenses.
None of the allegations from Frank Stronach, Belinda Stronach, her children or Alon Ossip have been tested in court.
Statement of defence and co... by on Scribd
