"There is no valid evidence that my client knew about fraudulent accounting manipulations at Livent," said Edward Greenspan at the appeal case of Myron Gottlieb, who, along with Livent founder Garth Drabinsky, had been found guilty of defrauding the company.
I think all accountants should take note of this case. The former Chief Financial Officer, Maria Messina (previously an auditor with Deloittes) has had to endure grueling cross examination and accusations that she acted knowingly and alone. I can only guess the effect on her career and her peace of mind. It is clear that she did not benefit personally from the manipulations, whereas the two co-founders, Drabinsky and Gottlieb, were convicted of receiving $8.2 million from a false invoicing scheme involving two suppliers (according to the Globe and Mail, a Toronto newspaper).
Messina's assertion was that she had been directed to manipulate Livent's books by Drabinsky, but she was unable to prove it. It turns out that he didn't sign anything or leave any trail of his instructions. Funny, how that happened.
The lesson is clear. If you are being told to perform significant illegal acts, get out. If you can grab some evidence on your way out, all the better, but blow the whistle from a safe distance. No good can come from remaining with the company.
Oh, and while we're at it, could someone please mention that ignorance of accounting is no excuse, whether there were any fraudulent manipulations or not? It is the responsibility of management to understand ALL of the operations of a company.
For more information about this case, go to: http://www.theglobeandmail.com/search/?q=Livent+fraud