Blogs & Comment

Drabinsky Final Argument – 17: We Didn’t Do it, But it Was Proper

One of the strangest aspects of this case was the argument by the defence that while Drabinsky and Gottlieb had no idea of the accounting manipulations that mysteriously transformed the millions in losses Livent was actually producing into tens of millions in profits, many of those manipulations were – well – proper.
The defence pointed to a Deloitte and Touche statement that allowed Livent to book some advertising costs to the Ford Theatre in New York – putting a lie to Messina’s testimony that you could never book advertising to fixed assets. Of course, those expenses were for specific ads related to the grand opening of the theatre – and not for the millions in advertising expenses that Livent allegedly buried into other theatre construction accounts.
The defence argues that it was proper to push advertising from one year to the next since the tickets were sold in future periods. An argument could be made for that, witnesses said, if Livent set up the transactions as a pre-paid expense. Livent didn’t do that, they arbitrarily pulled advertising invoices from one period and shoved the into future periods, prosecutors argue.
As for the improper show-to-show transfers, LIvent’s accounting policies allowed those transfers, but Drabinsky and Gottlieb were unaware of the arbitrary nature of Eckstein’s transfers. “Drabinsky and Gottlieb were not chartered accountants. They were not trained to make accounting decisions,” the defence says. “Things that were very clear to Eckstein wer not clear to others in the accounting department of Livent and certainly would not be clear to two business people with no accounting background.”