The son of Magna founder Frank Stronach has joined his parents’ $520-million lawsuit with his own court filing, accusing his sister Belinda of “a range of serious misconduct” and mismanagement of the family business since 2013, when the former Liberal cabinet minister took over after her father stepped down as head of global auto parts giant Magna International.
Andrew Stronach, who owns a 23 per cent stake in The Stronach Group (TSG), accuses his sister of concealing information about the family’s business, conspiring to seize control of operations, and alleges her extravagant lifestyle comes at the expense of the family trust, which as a result, faces “significant financial losses and (an) ongoing liquidity crisis.”
The suit names Stronach, her children Nicole Walker (Nikki) and Frank Walker (Frankie), and CEO Alon Ossip, referred to in court documents as the “Belinda Trustees” of the Andrew Stronach 445 Family Trust.
“The filing on behalf of my brother is an extension of my father’s legal proceedings against me and my children, and the allegations remain just as untrue,” Belinda Stronach said in a statement.
“We will be responding formally in due course. It saddens me greatly that we have reached this juncture in our family,” she added.
“This is a Stronach family dispute that should be resolved by the family,” he added.
Andrew Stronach’s brother, 50, is involved in thoroughbred horse racing and owns and operates farms in Ontario. The Stronach Group is valued at about $1.6-billion, which includes horse racing circuits, simulcasting and off-track betting venues, thoroughbred training facilities in conjunction with its racetracks and a firm that manufactures straw-based bedding products called StreuFex.
The parents’ initial lawsuit described TSG as having 253 Stronach family-owned corporations, trusts, and other entities established in various jurisdictions around the world.
Andrew and his daughter, Selena Stronach, are beneficiaries of the Andrew 455 Trust, which is part of TSG.
“Since early 2018, Andrew has attempted to obtain from the trustees a proper and detailed accounting regarding the administration and management of the Andrew 445 Trust,” the suit claims. It adds the trustees have “failed or refused to respond to reasonable requests for information” regarding use of the trust’s funds, and refused to attend meetings, or be interviewed regarding the family business operations.
“Andrew has no confidence in the willingness or ability of the Belinda Trustees to discharge properly, or at all, their duties,” states the claim, which describes Belinda, 52, as “trustee, director and officer of various other trusts, corporations and other entities that form part of TSG.”
The lawsuit claims Ossip, a former Magna employee and former CEO of TSG’s Stronach Consulting Corp., was suspended from the position of CEO by Belinda Stronach, at Frank Stronach’s insistence in 2017, but has “continued to play an active but covert role in the direction and management of TSG.”
Belinda’s children, Nikki and Frankie, “have no meaningful professional or business experience, and lack the experience and expertise necessary to comprehend and discharge their duties as trustees of the Andrew 445 Trust,” the lawsuit claims.
The suit alleges the Belinda Trustees “actively concealed from Frank any potential concerns pertaining to his position and authority” and that “Belinda and Alon conspired to seize control of TSG by failing or refusing to recognize the temporary nature of Frank’s departure from the position of trustee,” which he took in order to run for political office in Austria.
Belinda and Alon failed to carry out their duties to the TSG, looked after their own interests, and made “costly investments that have resulted in significant financial losses” to the family business, the suit alleges, and it adds: “Belinda’s decision to take herself and her children significant funds from TSG to fund, among other things, her extravagant lifestyle and her failing or failed investments in other matters, projects and enterprises.”
It cites a $10-million purchase and renovation of an “unnecessary and secondary” TSG office in Yorkville, despite an “ongoing liquidity crisis” in the family business.
A machinist in his native Austria, Frank Stronach emigrated to Canada in the early 1950s with a few hundred dollars in his pocket and built the Ontario-based Magna, Canada’s biggest auto parts manufacturer, boasting a revenue of $28.7 billion (U.S.) and net income of $1.1 billion (U.S.) by 2011, the year he stepped down as chairman. Magna had sales of about $40 billion (U.S.) in 2017.
Stronach ranked 31st on Canadian Business magazine’s list of the richest Canadians last year, with an estimated net worth of about $3.1 billion.
Henry Stancu is a Toronto-based business reporter. Reach him on email: firstname.lastname@example.org