Who Feels for the Accountant?

By Bill Kennedy - Yesterday marked the end of three weeks of grueling cross examination of Gordon Eckstein, the Chief Financial Officer of Livent (short for live entertainment), a company whose founders, Myron Gottlieb and Garth Drabinsky, have been accused of a massive fraud. Their defense? That it had been perpetrated without their knowledge by their accountant.

Eckstein is not innocent. He pleaded guilty to fraud a year ago and is the key witness for the prosecution against his former bosses. He has testified all along that he knew that what he was doing was wrong and made copious notes for the inevitable prosecution. He was quite aware that his bosses would turn around and blame him should the proverbial mud hit the fan. Brian Greenspan, lawyer for the defense, has dismissed Eckstein's testimony as "Nuremberg" (i.e. I was only acting under orders).

Eckstein has withstood attacks on his credibility and his character. He has been accused of being the solo mastermind of this nefarious plot. Viewed from the outside, this smokescreen by the defense is laughable:

  • Gottlieb didn't know about the fraud because he tended to sleep through meetings
  • Gottlieb couldn't have known about the fraud because he didn't sell any of his shares (although the way that the owners removed millions of dollars from the company has been well documented)
  • Gottlieb delegated all of the financial dealings to Eckstein (but somehow got the reputation of being a financial wizard on Bay Street - the home of the Toronto Stock Exchange)

The fact is that the defense was unable to show any way that Eckstein profited personally from being the financial mastermind behind the fraud. If he was such a criminal genius, why did he not keep any of it for himself?

Three weeks of cross examination by one of Toronto's best paid lawyers is a substantial punishment all by itself. The accusations of lying and cheating by themselves are soul destroying. Yet nobody in the courtroom takes the side of a witness to the prosecution. There was nobody to object to this farce on Eckstein's behalf. It sure makes you think twice before becoming a whistle blower or agreeing to testify for the prosecution, doesn't it?

The best thing to do would have been to just walk away the second he was asked to do something he knew was wrong. No matter how high the salary, your life is worth more.

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by Bill Kennedy, CA.IT, PMP - With over 25 years of accounting experience, Bill has a varied background in accounting management and accounting systems implementation, with a focus on the charitable sector. He is also an experienced volunteer board member and fundraiser.

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