President of National Steel Car arrested

National Steel Car CEO Gregory Aziz has been arrested and charged with ten counts of fraud in the United States.

The charges stem from the construction of a new rail car plant in Tuscambia, Alabama back in 2007.

The Alabama Plant is now owned by Navistar Corporation which has no connection to the current legal charges, but court documents allege that back in 2007 Aziz, and his brother Warren Aziz enticed the Alabama Retirement System to invest $350 million in the form of a construction loan to build a new manufacturing plant, to be known as National Alabama.

By 2008 the cost of the plant had more than doubled, and Gregory Aziz was asking for another $400 million to complete construction due to cost over-runs that he could not explain.

The documents allege that both Aziz and his brother knew from the beginning that the cost of the plant would far exceed the budget originally laid out to the Alabama Retirement System, and deliberately kept the true costs hidden from the ARS, until most of the initial loan had been spent on construction.

Gregory Aziz is a principle shareholder of National Steel Car in Hamilton, but a company spokesman said today that the criminal charges against Aziz will not affect the Canadian plant:

“There is certainly no immediate or forseeable impact on the operations of National Steel Car. My understanding is that National Alabama was a separate facility, separate project, it’s got no current relationship in any way to National Steel Car, and nor to the current legal situation. His hope is to co-operate fully with the Alabama Securities Commission, and resolve this as quickly as possible.”

Despite Mr. Crean’s statements on the situation, Gregory Aziz is a principle shareholder of National Steel Car, and it is not clear at the moment whether those assets might become the target of a restitution order should the courts find Aziz guilty on the charges.

Under Alabama law, if found guilty, Aziz could face ten years in prison for each of the ten charges filed against him, meaning that Aziz is potentially looking at a hundred years in prison.