Belinda Alleges Frank’s `Fanciful Schemes’ Eroded Stronach Family Empire

[Wandering Eyes]

Belinda Stronach, the chairman and president of The Stronach Group (TSG) and the primary defendant in a bombshell October lawsuit initiated by her father, Frank Stronach, has chosen the week of the racing company’s highest profile race, the GI Pegasus World Cup, to fire back with her own allegations of financial mismanagement by her dad that she claims have cost the family empire some $800 million (CDN).

In a statement of defense and counter-suit filed Jan. 21 in the Ontario Superior Court of Justice, Belinda Stronach’s legal team is arguing that “The conflict that underlies this lawsuit is a fundamental disagreement over the proper test to be applied to managing the business and affairs of TSG. Frank Stronach firmly believes that, having been the principal creator of the family wealth, he may direct the business and affairs of TSG as he sees fit. Belinda and other TSG management firmly believe that their obligation is to manage the business and affairs of TSG in a prudent manner that is in the best interests of TSG and its stakeholders.”

The 217 pages of court documents obtained by TDN paint a picture of ill-advised “passion projects” initiated by Frank Stronach, the 86-year-old family patriarch, including $55 million for two bronze statues of a 12-story high Pegasus horse. One statue is the signature focal point of Gulfstream Park, while the other is crated up in storage in China and has never been publicly displayed.

“While Frank had great success in creating one of the world’s largest automotive suppliers, he has also experienced significant failures in nearly all of his other non-auto parts ventures and his political affairs,” Belinda Stronach’s filing contends. “[Frank’s] lawsuit is an attempt to force TSG to fund Frank’s imprudent, and, in some cases, fanciful schemes to the detriment of TSG and its stakeholders.

“Belinda has engaged in no unlawful conduct. To the contrary she has taken steps to rectify the irregular affairs of TSG she inherited from Frank,” the documents allege.

“Over time…Frank began to engage in activities, many unauthorized, which placed the business and assets of TSG at considerable risk. These activities escalated to a point where they became a significant distraction for the management of TSG,” the documents allege.

TDN will be updating this story through the day on Tuesday.

(This story was reported and written collaboratively by Bill Finley, Perry Lefko, and T.D. Thornton)

 

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