The backroom drama that has thrown one of Canada’s largest telecom companies into turmoil moves into a B.C. court room on Monday, as both sides will ask a judge to rule that they are rightfully in control of the company.
The backroom drama that has thrown one of Canada’s largest telecom companies into turmoil moves into a B.C. court room on Monday.
Lawyers working for Rogers Communications Inc. and its rogue chairman, Edward Rogers, will face off in court, with both sides asking a judge to rule that they are rightfully in control of the company.
The bitter family drama erupted into public view last month, when it emerged that Edward, son of company founder Ted, had tried to oust CEO Joe Natale and replace him with Anthony Staffieri, the company’s then-CFO.
Natale got wind of the plot and alerted the board of the company to what was going on. Other members of the Rogers family, including his sisters Martha and Melinda and his mother, Loretta, voted to block Edward’s power play and voted to remove him as chair.
Staffieri abruptly left the company at the end of September, without explanation, which was the first outward indication that anything was amiss.
But instead of a failed palace coup that saw him removed as chair being the end of the story, Edward turned the drama up a notch in October by unilaterally firing five members of the board, replacing them with successors of his choosing, and reinstating himself as chair.
The Supreme Court of British Columbia on Monday is being asked to decide who is in fact the chair of the company: Edward Rogers or John A. MacDonald, who was voted to the top job by the original board. The court case has landed in B.C. because that’s where the company is incorporated.
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In court filings obtained by CBC News, Edward Rogers says his move to oust Natale had the support of the board, including his family. But his family says that didn’t happen. Edward produced a statement signed by his mother, Loretta, voicing support for new leadership. But in a court affidavit, Loretta says she was misled.
“I very much disagree with Edward’s portrayal of the facts,” Loretta Rogers said. “I also very much disagree with his personal view that he is entitled to exploit his entrusted position as [chair] to circumvent Ted’s wishes.”
She said, “It brings me no joy to swear this affidavit. But I feel compelled to do so in light of Edward’s conduct, which has put what we built at risk.”
MacDonald also disputes Edward’s version of events. MacDonald, a long time member of the company’s board of directors, was named chair when Edward was demoted. But if the court sides with Edward and rules that his newly constituted board is valid, MacDonald officially has no formal role at the company.
Edward has accused MacDonald and others of continuing to claim a role at the company as a way of empowering and enriching themselves, something MacDonald pushes back strongly against in his own affidavit.
“It is disappointing — and completely disingenuous — for Edward to suggest that members of the [board] are motivated by a desire to ‘entrench’ ourselves,” MacDonald said. “As Edward is fully aware, at several times throughout this period, the other independent directors and I openly proposed resigning from the board over our concern with Edward’s conduct.”
“Proper governance cannot simply be ignored when Edward believes it is convenient to do so.”
Court proceedings will kick off at around 10 a.m. local time in Vancouver, or 1 p.m. Eastern time.
The investment community is watching the drama unfold with great anxiety, as the ugly power struggle is weighing on the company’s prospects, including the proposed $26 billion takeover of rival Shaw Communications.
Matthew Dolgin, an analyst at Morningstar, believes a court battle could be long and drawn out.
“Normally, we’d more readily dismiss the actions and desires of an ousted chairman, but the complexity of the firm’s family control makes it anything but cut-and-dried,” Dolgin said.
The ‘butt-dial’
The court docs also shed new light on perhaps the most headline-grabbing part of the saga — how the plot came to light in the first place
When the story first broke in early October, media reports suggested that Natale got wind of the plan to replace him when Staffieri accidentally called him while discussing the plot with someone else — a “butt-dial,” in the common parlance.
But the affidavits from Loretta and MacDonald say the phone call wasn’t accidentally dialled by Staffieri at all. In fact, Natale called Staffieri, who made the mistake of answering the call, and then forgetting to hang up.
“Mr. Natale advised me that he called Mr. Staffieri and that Mr. Staffieri took the call, leaving the line open,” MacDonald said in his affidavit. “Mr. Natale told me that during the 21-minute call, he heard Mr. Staffieri outline a plan to reorganize the company.”
Loretta’s affidavit echoes this version of events.
“Mr. Natale found out about Edward’s plan to terminate and replace him by accident … when Mr. Natale called Mr. Staffieri and Mr. Staffieri inadvertently picked up the call,” Loretta said.