It took more than a month, but deposed Livent founder Garth Drabinsky has struck a counter blow. On Sept. 16, in Ontario Court in Canada, Drabinsky filed a law suit attacking the accounting firm KPMG/Peat Marwick, which is currently investigating Livent's books for financial irregularities practiced under Drabinsky's tenure.
As first reported in Variety, Drabinsky claims KPMG holds a conflict of interest in the matter, because the firm has been the impresario's personal accountant for 20 years and was also Livent's new management team enlisted to inspect the company's books earlier this year.
"The action is completely without merit," said KPMG general counsel Peter Sahagian, in a statement. "KPMG categorically rejects and denies any allegations that the firm has performed its duties in an improper manner."
Drabinsky, along with Livent co-founder Myron Gottlieb, was suspended on Aug. 10 by the company he helped create. Livent, which was taken over last spring by a new management group headed by Roy Furman and Mike Ovitz, cited accounting regularities totaling in the millions. Furman has said a restating of the company's financial results for 1996, 1997, and the first quarter of 1998 was "virtually certain."
Until now, Drabinsky has protested his removal but done little else in his defense, even while he saw Roundabout head Todd Haimes supplant him as Livent's new artistic director. Daniel Roebuck, of Roebuck, Garbig, told Variety Drabinsky had objected to KPMG's appointment the moment it was made, but his protest has been dismissed. As for Drabinsky's delay in filing the suit, Roebuck said the producer has been busy sorting out his life as it has come "crashing around him." Roebuck did not return a call by press time.
The suit argues that KPMG's conflict of interest stems from its long held and extensive knowledge of Drabinsky's finances -- information it could use in its investigation of Livent's situation. The suit also questions the ethics of the accounting firm being brought in, since it purportedly conducted the same job for Furman et al last spring.
Roebuck told Variety he hoped to secure a preliminary hearing on the matter soon. A Livent company spokesman said the suit would not deter the investigation: "KPMG has been conducting the investigation for more than a month, and it is proceeding on track with all deliberate speed. We are confident that when the investigation is concluded, the results will speak for themselves."
* In one of the biggest artistic power shifts in the theatre in recent memory, Todd Haimes, head of the Broadway and Off-Broadway powerhouse Roundabout Theatre Company, was recently named the new artistic director of Livent, the once dominating, but now financially struggling Canadian production company. Haimes will assume his post immediately, while continuing in his artistic director duties at the Roundabout through the coming season, including the company's move into the Selwyn Theatre.
"Todd's artistic excellence and creative touch have enabled him to mount a string of critically acclaimed productions at Roundabout that have enjoyed commercial success," said Livent Chairman and CEO Roy Furman (Sept. 2). "These productions have shown his ability both to handle multiple projects simultaneously, which is essential for us at Livent, and to present shows widely varying in tone, content and audience."
Haimes said, "Joining Livent give me the opportunity to work in the theatre on a scale and with a palette that holds almost limitless artistic and creative possibilities."
In the course of the last month, Livent has gone from a theatrical force akin to Disney, to a hobbled giant with an uncertain future. In August, the company's new management team, headed by Furman and Mike Ovitz, discovered accounting irregularities dating back to 1996 involving millions of dollars. The discovery lead to the ouster of Livent founders Garth Drabinsky and Myron Gottlieb. The two officials, who ran Livent as recently as April, are on suspension until a financial investigation is completed. Since then, accusations that Drabinsky kept two set of books have arisen and Livent has been hit by several class-action suits.
Haimes will be taking over the artistic end of the company -- formerly Drabinsky's province. The Roundabout chief would seem a logical replacement for the famously profligate Drabinsky. Over the last eight years, the frugal Haimes successfully brought the Roundabout back from the brink of bankruptcy, transforming it from a tired Off-Broadway institution into a Tony-nominated titan of New York theatre. Some productions Haimes has shepherded over the years include successful revivals of Anna Christie and She Loves Me. The past season alone produced A View From the Bridge and 1776, both of which transferred to Broadway houses, and Cabaret, perhaps the biggest hit in New York.