The RCMP have charged Vittorio (Vic) De Zen, the founder and former CEO of Royal Group Technologies Ltd., and five other former company executives with defrauding the firm of millions of dollars.
The police said Thursday the charges stem from two transactions: a land deal and the sale of a Royal Group subsidiary.
The RCMP charged De Zen, former Royal president and general counsel Douglas Dunsmuir, former chief financial officer Gary Brown and former vice-president of corporate finance and CFO Ron Goegan with defrauding the firm of more than $27 million.
Those charges stem from a land deal between October 1997 and November 1998 in which police allege Royal Group sold the property to a numbered company held by some of the executives. The land was later sold back to Royal Group "at an inflated cost," the police said.
The second set of charges were laid against De Zen, Dunsmuir, Goegan, former Royal Group vice-president Luciano Galasso and former company director of accounting Gordon Brocklehurst.
Police allege the five men schemed between 1998 and 2003 to defraud Royal Group of slightly more than $2 million as part of the sale of company subsidiary Steelwood Doors to Premdor Inc.
Police said Premdor issued a warrant to Royal Group to buy 200,000 Premdor shares. The RCMP said the warrant was never entered into the company's books, but was later exercised by Royal Group executives and employees and sold into the market at their own benefit.
None of the allegations has been proven in court.
Royal Group, which produces plastic pipe and house products, no longer trades as a public company. It was sold in 2006 for $1.6 billion US to Georgia Gulf Corp. of Atlanta.
De Zen said he "completely stunned" by the charges.
"For five years my name has been dragged through the mud with unfounded, sensational allegations levelled against me," he said in a release, vowing to fight them in court.
The RCMP's probe into activities at the company dates back to early 2004. In mid-October of that year, details emerged that the RCMP was investigating a possible conspiracy to defraud shareholders of Royal Group. One month later, the company dismissed De Zen, Dunsmuir and Goegan in connection with the land deal.
In February 2005, the RCMP conducted a high-profile search of the headquarters of Bank of Nova Scotia as part of its probe into Royal Group.
One of the search warrants named Ontario finance minister Greg Sorbara, a former board member of Royal Group. He resigned his cabinet position in October 2005 but was cleared in May 2006 and returned to the finance post after a judicial ruling removed his name from the warrants.
In March 2005, Royal Group announced that De Zen would resign from the board and repay more than $9.8 million to the company to cover profits made on the land deal.
"These transactions were known to law enforcement for more than three years, and were settled with Royal Group in 2005 to the satisfaction of its shareholders," De Zen said Thursday.