Ontario Court of Appeal Says Livent Auditors Were Negligent After '90s Fraud Scandal

According to The Globe and Mail, The Ontario Court of Appeal has upheld a 2014 decision directing accounting firm Deloitte & Touche to pay $118 million for negligence in its work as auditor for the now defunct live theatre company Livent, Inc. -- notorious for its connection to fraudulent producer Garth Drabinsky -- in the late 1990s.

Appeal court Justice Robert Blair decided last week that the evidence for Deloitte's breach of "duty of care" to Livent's investors, regarding its audit of three of Livent's 1997 financial statements, was "overwhelming." He upheld the original trial judge's ruling against Deloitte and also concluded that the original $118 million award should remain the same.

The decision is important because after companies face fraud allegations, investors often struggle to sue auditors for their responsibility. This case could pave the way for future lawsuits.

As BWW previously reported, former Livent executive and stage producer Garth Drabinsky was granted parole in 2014 after serving three years in Canadian prison for fraud and forgery. Rumor is Drabinsky is now developing a production of HARD TIMES for Broadway.

Drabinsky and his business partner Myron Gottlieb (who received a four-year sentence) were convicted of two counts of fraud in 2009 after misreporting Livent's quarterly financial statements after the company went public, from 1993 to 1998.

Livent was one of North America's biggest live theatre companies in the '90s. The company had produced such Broadway shows as RAGTIME, SHOWBOAT, THE PHANTOM OF THE OPERA and KISS OF THE SPIDER WOMAN.