Details emerge on RCMP probe of Royal Group
It has recently been revealed that two executives of building products manufacturer Royal Group Technologies Ltd. (...
It has recently been revealed that two executives of building products manufacturer Royal Group Technologies Ltd. (Vaughan, ON) are the target of an RCMP investigation into transactions between Royal Group and a luxury resort on the Caribbean island of St. Kitts.
Royal Group stated in February that the company’s dealings with the resort were under investigation by both the Ontario Securities Commission and the RCMP, but it was only when a court order was unsealed earlier this month that accusations against Royal Group chairman and co-founder Vic De Zen became known.
The court order requires that Scotiabank produce documents relating to the activities of Royal Building Systems, a subsidiary of Royal Group, and Royal St. Kitts Beach Resort Ltd., plus two of the resort’s affiliates. The order contains allegations of actions contrary to the Criminal Code, and specifically names De Zen and Royal Group chief executive officer Doug Dunsmuir, plus a former chief financial officer of the company.
The allegations include an intent to defraud shareholders and creditors of the company, and to deceive the shareholders and other by circulating a false prospectus.
These are only allegations, being investigated by the police, not criminal charges. Several newspapers have reported that De Zen denies any wrongdoing.
According to Royal Group, the St. Kitts resort purchased products and services from the company for an approximate value of $32 million during the period under investigation (1996 to July 2004). De Zen holds a majority interest in the resort, while Dunsmuir holds a 5% interest.
Royal Group conducted an independent investigation earlier this year and found no evidence of conduct or actions calculated to improperly shift costs from the resort to Royal Group.
In a press statement, Royal Group said its independent directors “continue to support Dunsmuir’s efforts to improve the company’s performance and enhance shareholder value.”