Former Livent founder and key executive Garth Drabinsky has personally announced a settlement in a two-year-old action he had filed against his former accounting firm, KPMG. The founder and ousted key executive of Livent held a 2:30 PM press conference on July 14 in Toronto's King Edward Hotel where he outlined a chronological account of his side of the Livent story, which unfavorably characterizes his legal opponents, Livent investor Michael Ovitz and the KPMG accounting firm.
Drabinsky's camp supplied information on the July 14 announcement.
According to Drabinsky, under the terms of the confidential deal, KPMG stipulated to a breach of its "fiduciary duty to the plaintiff," and said it will be restrained from cooperating "further in the Livent investigation."
KPMG originally represented Drabinsky, who later claimed he was damaged by the firm when it accepted investigation and security work by Livent, which was being controlled by Ovitz.
In context, the announcement may not mean all that much in terms of theatre history or the outcome of Livent trials for the various stockholders who have actions pending before the courts. But for Drabinsky, it means that personal and privileged information that he once shared with consultants cannot be used against him. A source close to Drabinsky said the courts characterized KPMG's contributions in the two-year-old Livent investigation process as being "tainted and failed" and that the court determined it "could not use it."
Embattled since the summer of 1988 when allegations of "cooked books" were made at Livent, Drabinksy is currently facing federal indictment in the United States.
Despite the fact that Drabinsky's mid-afternoon conference was called in Toronto on a Friday, when many businesses close early, late calls were made to KPMG and Michael Ovitz' Artist Management Group (AMG). A spokesperson at Ovtiz' AMG said staff were preparing to respond and that "someone would get back to you." KPMG was also attempting to provide a spokesperson.
In the spring of 1998, Drabinsky brought in Hollywood super agent Michael Ovitz as a majority stakeholder in Livent. It was Ovitz who later claimed that the Livent books were cooked and that this had cost him $20 million. Drabinsky's camp now implies KPMG was intentionally used as a "catalyst" for getting the Livent matter into court and that Ovitz' plan was to "de-stabilize and conquer" in the words of a Drabinsky insider.
Shortly after the Livent crisis began in 1998, stock trading on Livent was halted and shareholder lawsuits were subsequently filed. That fall, the company declared bankruptcy and its assets were eventually sold, with much of them being absorbed into what is now SFX Entertainment. -- By Murdoch McBride