Son Says Redstone Misused Funds2/17/2006 7:00 PM Eastern
Viacom Inc. chairman Sumner Redstone’s private feud with his son Brent became public when the latter filed a lawsuit in Baltimore City Circuit Court Feb. 6, asking for the breakup of one of his father’s biggest holdings.
Brent Redstone, who serves on the board of National Amusements Inc., the Boston-based movie theater chain and the vehicle that holds his father’s controlling interests in Viacom and CBS Corp., accused his father and sister Shari Redstone of misappropriating funds and freezing him out on important company matters. The younger Redstone is calling for a break-up of National Amusements — which he estimates is worth about $8 billion — with a one-sixth share of the proceeds to go to him.
In the suit, Brent Redstone claims that his father failed to hold necessary board meetings; provide him with basic information on the financial and corporate affairs of National Amusements; or appoint him to any “significant or well-compensated position at National Amusements.” Instead, he showed favoritism to Brent’s sister, Shari, who is president of NAI and is likely to take her father’s role at Viacom and CBS at his retirement or death.
Brent Redstone also says that his father had National Amusements pay off a $425 million personal loan, and that the company gave Shari’s ex-husband Ira Korff, a former NAI employee, a severance package of millions of dollars “as a payoff in exchange for considerations in the divorce that were personal to Shari Redstone.”
Brent Redstone also claims that Shari and Sumner have funneled millions of dollars from National Theater Corp. (the movie theater chain that is Brent’s chief source of income) to themselves.
The relationship between father and son, which according to the suit, soured shortly after Sumner Redstone divorced his wife and Brent’s mother Phyllis in 1999.
Fearing that a divorce settlement could reduce his control of NAI, the suit alleges that Sumner Redstone asked his children to sign an irrevocable trust which would surrender their voting rights. When Brent refused to sign the document, Sumner then offered a revocable voting trust to Shari, which she signed.
National Amusements dismissed Brent Redstone’s allegations.
“It is unfortunate that Brent Redstone is abusing the court system in an attempt to extract a financial settlement in a family dispute,” National Amusements said in a statement. “His allegations are completely unfounded and NAI will defend itself vigorously against this meritless lawsuit.”