Livent Inc. once was an award winning live entertainment company that presented famous shows like “Phantom of the Opera” and “Joseph and the Amazing Technicolour Dreamcoat.” The key phrase to take out from that the previous sentence is “once was.” What caused a successful company to deteriorate into a major bust? Accounting fraud.
In 2009, Ontario Superior Court Justice Mary Lou Benotto proclaimed that the owners of Livent, Garth Drabinsky and Myron Gottlieb, were guilty of fraud and forgery. They were reported to have ordered former Livent accountants to “cook the books either directly or indirectly.” Examples on how they manipulated their financial statement are “by moving expenses from one period to another, by amortization roles, by applying the expenses of one show to another and by allocating operating costs to fixed asset accounts.”
There could have been multiple reasons why they committed accounting fraud but in my opinion, they simply saw a perceived opportunity to gain profit. Any company that is knowingly providing false statements are putting their business at extreme risk and therefore do not care about the future success of their company and are only concerned about the short term benefits. Drabinsky and Gottlieb were very reckless with the way they ran their business and as a result lost everything they worked for.
If a company wants to succeed, they have to play by the books, instead of cooking the books.
