Livent bosses robbed Show Boat to pay Ragtime
Gordon Eckstein’s version of Livent’s accounting practices reminds me more and more each day of a punchline from the Marx Brothers movie Duck Soup: the Minister of Finance says, “Here is the Treasury Department’s report, sir. I hope you’ll find it clear.” To which Rufus T. Firefly replies, “Why, a four-year-old child could understand this report. Run out and find me a four-year-old child—I can’t make head or tail of it.”
Eckstein completed his third day on the stand by laying out chapter and verse—with the numbers growing larger every year—the chronology of Livent’s allegedly cooked books from 1992 through 1998. Put simply (or at least as simply as a complicated scheme like this can be), Myron Gottlieb and Garth Drabinsky robbed Peter to pay Paul—or, in this case, robbed Show Boat to pay Ragtime. Each time a Livent production started to show a loss, money earned from another production would be rolled into the flop, et voilà! A hit!
Eckstein and his interlocutor, Crown prosecutor Bob Hubbard, refer to these accounting miracles delicately as “adjustments” or “intra-period reallocations.” At one point, tossing his head mischievously toward certain gallery observers who were feverishly taking notes, Hubbard asked Eckstein, “Would you say that again? ’Cause there’s a few other accountants in the room.”
In fact, among these fervent note-takers were several non-accountants. They were lawyers acting for Garth and Myron in some of their ongoing civil matters, including one David Roebuck, who we’d seen before at the Black trial. Throughout the day, they were seen caucusing with team Greenspan in and out of the court, presumably helping concoct a plot that will explain away all this numerical hocus-pocus as merely “aggressive” accounting or some other innocent—or at least not guilty—practice.
NB: In the papers yesterday, the Star’s David Olive weighed in with more sadness than anger in his quasi-editorial, suggesting that “putting the man’s insufferable personality aside—not easy to do—a fair-minded assessment would find that Drabinsky’s downfall was to no one’s gain, and indeed a significant cultural loss for a Toronto lacking in bold dreamers.”
I take it Olive is referring here to Drabinsky’s interest in theatre, not accounting.
• David Olive’s Lookahead [Toronto Star]• Livent hid large losses, court told [Toronto Star]• RBC noticed accounting irregularities with Livent, trial hears [Canada.com]• Livent made larger adjustments to meet projections, court told [Globe and Mail]