Belinda Stronach spent tens of millions of dollars belonging to her family鈥檚 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鈥檚 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鈥檚 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鈥檚 operations and take control of the businesses for themselves.
鈥淏elinda 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,鈥� the statement of claim reads.
None of the allegations in the filing have been tested in court. Belinda Stronach has called the claims 鈥渦ntrue.鈥�
鈥淔amily relationships within a business can be challenging,鈥� she said in a statement. 鈥淢y 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鈥檚 allegations 鈥渁re not grounded in fact or reality.鈥�
鈥淎lon has always honoured his obligations and acted in good faith to preserve and grow the Stronach family鈥檚 assets and to protect the interests of all members of the family,鈥� the statement said.
鈥淎lon 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鈥檚 wealth at risk. This is a dispute between Stronach family members that should be resolved between family members.鈥�
Legal filing claims family relationship broken
The statement of claim alleges 鈥渁 complete breakdown in the relationship鈥� 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 鈥渞outinely failed to report to work for days or weeks at a time鈥� 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 鈥渃onfrontational, disrespectful and insubordinate鈥� 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鈥檚 knowledge.
Where did the money go?
The filing further claims that Belinda Stronach diverted 鈥渕illions of dollars鈥� in family money to Ossip and his outside business ventures, and that Belinda Stronach has taken more than $70 million in company money 鈥渇or purposes of maintaining her extravagant lifestyle.鈥�
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鈥檚 home.
鈥淭o 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,鈥� the filing reads.
Also alleged in the filing is that Belinda Stronach appointed 鈥渦nqualified鈥� friends to various positions of authority within The Stronach Group and to sell potential development lands in Ontario鈥檚 Greenbelt for less than what the family paid for them.
More recently, the claim alleges, Belinda Stronach moved to sell the Florida golf club 鈥渁t a steep discount鈥� and get rid of the company鈥檚 private jet.
Despite these oft-cited financial pressures, the statement claims, Belinda Stronach 鈥渄emanded鈥� that $19 million in company money be distributed to her and other trust beneficiaries.
鈥淢embers of the Stronach family had strong and legitimate concerns throughout the relevant period concerning Belinda鈥檚 lack of business acumen and experience, including because of her unenviable track record of participating in failed or problematic business investments,鈥� the statement reads.
Ossip鈥檚 spokesperson had a different version of events, saying it was Frank Stronach who was putting the fortune in jeopardy.
鈥淔rank Stronach was a great auto parts entrepreneur, but his recent excessive spending and numerous failed ventures put his family鈥檚 wealth at risk,鈥� 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 鈥渁 full, detailed and proper accounting鈥� of all money Belinda Stronach, Ossip and the others have received from the family business.
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