OSC Charges Phillip

On August 30, 2000, the Ontario Securities Commission unveiled a sweeping list of charges against troubled industrial services firm Philip Services Corp. and seven former executives in relation to information that the company failed to reveal to the public in its $364 million share offer.

The commission has implicated former Philip president Allen Fracassi, former executive vice-president Philip Fracassi, former chief financial officer Marvin Boughton, former senior vice-president of finance Graham Hoey, former corporate secretary Colin Soule, former executive vice-president John Woodcroft, and Robert Waxman, former president of Philip’s metals group.

The OSC in its announcement alleged that the executives kept a number of key pieces of information from the firm’s board, auditors, underwriters and the public, including: the fact that Mr. Waxman (a key executive) had been relieved of his position two months prior to the prospectus issue on suspicion of defrauding the company of $20 million; that the company was expecting to take on a $155 million restructuring charge (which it did in early 1998); and that the financial statements included in the prospectus were generally incorrect due to inappropriate accounting.

Philip has said that the allegations involve the predecessor company, which is a separate legal entity, as the company has since undergone a major restructuring. Mr Waxman, who is defending fraud charges in a civil claim against the former Philip incarnation, has said that all the transaction he performed were authorized by the company and that he was not involved in any misleading information surrounding the prospectus. The other executives have said that they relied on auditors Deloitte & Touche in compiling the prospectus, and would defend themselves against the charges.

Patrick O’Kelly of Stikeman Elliott is representing Philip Services. Joseph Groia of Groia & Company is representing Allen Fricassi, Philip Fricassi, Marvin Boughton, Graham Hoey and John Woodcroft. Jim Douglas of Borden Ladner Gervais LLP is representing Colin Soule. Alan Lenczner of Lenczner Slaght Royce Smith Griffin is representing Robert Waxman.