Canadian police charge Royal Group Tech executives

Thu Jun 19, 2008 11:29am EDT
 
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TORONTO (Reuters) - Canadian police said on Thursday that they have charged six former executives of building products manufacturer Royal Group Technologies Ltd with fraud in two separate transactions, one of which happened a decade ago.

The Royal Canadian Mounted Police allege that four former Royal Group executives, including company founder and former Chief Executive Vic De Zen, defrauded the company of C$27.4 million ($27.1 million) in a 1997-1998 land deal.

Police also allege that five executives, including De Zen, received a share-purchase warrant for selling a Royal Group subsidiary, and later exercised the warrant for their own benefit, defrauding the company of C$2 million.

In a statement, De Zen said that he intends to fight the allegations "vigorously" in court.

The transactions cited by the RCMP were known to law enforcement officials for more than three years, and were settled with Royal Group in 2005 to the satisfaction of the company's shareholders, De Zen said.

"Given the circumstances, I am perplexed and dismayed that the authorities have elected to lay charges, but I remain convinced that I will ultimately be cleared of any wrongdoing," De Zen said in the release.

Royal Group was sold to chemical maker Georgia Gulf Corp in late 2006.

News of the charges came on the same day that the RCMP announced fraud-related charges against former executives of telecommunications company Nortel Networks Corp, and one day after the force arrested six people for fraud at Quebec investment company Norbourg Asset Management.

The RCMP's integrated market enforcement teams, known as IMETs, have been criticized for being slow to lay charges in those high-profile cases and other financial-market probes.

($1=$1.01 Canadian)

(Reporting by Lynne Olver; editing by Janet Guttsman)