A Toronto court said (Oct. 7) that accounting firm KPMG Peat Marwick, which has been investigating the financial books of Livent under Garth Drabinsky, must supply its report to deposed vice-chairman Drabinsky before presenting it to Livent.
The ruling allows Drabinsky to request the court censor any opinions, conclusions or personal information he might find in the report, according to a story in The Toronto Star.
For Livent, it means a delay in the time company officials -- lead by Michael Ovitz and Roy Furman -- can examine the report of the yet-unclear bookkeeping practices during founding impresario Drabinsky's reign. Livent is the world's only publicly held company devoted to producing commercial theatrical productions (Ragtime , Barrymore ).
Drabinksy's lawyers had argued that KPMG's retainer with Livent's new regime constituted a conflict of interest because KPMG was Drabinsky's personal accountant for years. Justice Jack Gourd agreed.
The court told KPMG it may not further investigate Livent, The Star reported. According to Variety, Livent stated it has "always been eager to hear any explanations by Mr. Drabinsky with respect to the accounting irregularities identified by the company and his knowledge of such irregularities."
In a previous statement, KPMG general counsel Peter Sahagian said, "The action is completely without merit. 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 "irregularities" totaling in the millions. Stock traded has been halted since then.
Furman has said a restating of the company's financial results for 1996, 1997, and the first quarter of 1998 was "virtually certain."