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Ex-Livent exec sues KPMG
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September 17, 1998: 3:30 a.m. ET
Former chairman Drabinsky claims conflict in accountants' investigation
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NEW YORK (CNNfn) - Garth Drabinsky, a former executive of Livent Inc. implicated in alleged financial irregularities, has sued accounting firm KPMG Canada in an attempt to stop its investigation of the company's books, according to a published report.
Drabinsky filed suit in Ontario Court in Toronto, claiming that the accounting firm has a conflict of interest because a sister company, KPMG Peat Marwick, represents the investor group that acquired control of Toronto-based Livent in June, the Wall Street Journal reported Thursday.
That investor group includes former Walt Disney Co. executive Michael Ovitz and investment banker Roy Furman. The new management group suspended former chairman Drabinsky and former president Myron Gottlieb in August, after uncovering what it called "serious" accounting irregularities that could represent "millions of dollars" of fake revenue, possibly dating back to 1996.
Drabinsky said KPMG also acted as his personal accountant for two decades, adding to the conflict of interest.
In addition to blocking KPMG from the investigation, Drabinsky's suit also asks the return of business documents and personal items that were allegedly seized when he was locked out of his office in August, the Journal reported. He also is demanding $25 million in damages.
Drabinsky, Ovitz and Furman declined to comment on the suit to the newspaper. KPMG called the complaint "completely without merit."
Livent won 18 Tony awards staging productions on Broadway and elsewhere, including such hits as "Ragtime" and "The Phantom of the Opera."
Because of the risks of sagging attendance or even one bad review, live theatrical productions frequently fail to turn a profit. Drabinsky developed innovative ways to finance his shows, taking profits from long-running road companies to help fund new works.
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Livent Inc.
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