Defence Lawyers: Livent Documents Were Tampered With. Defence lawyers in the criminal fraud trial of Garth Drabinsky and Myron Gottlieb kept up their assault on the integrity of the mountains of documents that prosecutors insist prove the men masterminded one of the most infamous accounting frauds in Canadian history. The tools used to undermine the integrity of those documents are familiar: accuse the witnesses of lying and engaging in a widespread conspiracy to frame the Livent founders.

The accusations of lying started early Friday as Edward Greenspan, the defence lawyer representing Drabinsky, wrapped up his cross-examination of Gary Gill, a KPMG forensic investigator who was hired by former Livent managers to investigate the original allegations of financial irregularities. The accusation is a bit complicated so bear with me.

Gill and his fellow investigator John Beer previously testified that they searched Drabinsky and Gottliebs offices shortly after the Livent founders were suspended by Livent management and barred from the building. The offices were searched on August 11 and 12th and documents seized during the search were moved to a locked boardroom on the buildings second floor on August 13 just prior to Drabinsky and Gottliebs return to the office to collect their personal belongings.

However, in an affidavit filed in the Livent civil suit in 2000 as well as in an interview with the RCMP in 2006, Gill incorrectly stated that the boardroom where the documents were stored was on the fifth, not the second, floor. Gill told the court that he noticed the error and corrected it in April this year after reviewing his affidavit, John Beers notes and the sign-in log for that second floor room.

While some might view that error as a minor discrepancy, the defence saw it as an illustration of how the witness was lying. What you told us, I suggest to you, was not the truth, Greenspan said.

There are other minor inconsistencies between Gills 2000 affidavit and RCMP statement made six years later that indicate the documents collected from Drabinsky and Gottliebs office could have been catalogued later than Gill originally suggested, Greenspan said. The longer the boxes remain in that office the longer the opportunity for boxes to be interfered with.

Greenspan went on to suggest that the KPMG investigation and the efforts to maintain the integrity of documents seized from Drabinsky and Gottliebs offices were flawed. After all, there was no security guarding the second floor storage room ensuring that everyone that entered the room signed the log or did not remove or plant documents in the boxes. When someone is kicked out of their offices, it is important to maintain the integrity of those offices, Greenspan said. Its a priority, right? It is important, thats correct, Gill replied. If thats the case, how could you do such a sloppy job?

How could you do such a porous job? We have no idea who is coming or going? Greenspan said. This was a long time ago and Ive tried to recall the facts as best as I could, Gill replied. Unless some document had Beers signature on the back of it indicating it had been found in Drabinskys office, there is no way to determine if some document found in the boxes has been added to those boxes sometime between August 13 and August 28, Greenspan suggested. No, I could not determine that, Gill replied. Gill acknowledged that he could not determine if anyone had added documents to Drabinsky or Gottliebs office between the evening of August 7 when Livents accounting staff disclosed the alleged accounting fraud that was occurring at the company and the afternoon of August 11th when KPMG searched Drabinskys office. Some of those documents could have even been planted during that search, Greenspan seemed to imply as he questioned Gill about who discovered one specific document during the search. Gill and Beer both gave testimony about the single page summary of $21.22 million in 1997 accounting problems that had been moved to 1998.

In earlier testimony, Craib testified that the document had been produced by Gordon Eckstein Livents former vice president of finance and administration and he had seen Drabinsky pull the document from his briefcase and wave it in Ecksteins face during an argument. Gill testified that he specifically remembered finding the document in one of two brown leather briefcases located behind Drabinskys desk. When Greenspan suggested that it must have been Stikeman Elliott LLP lawyer Patrick OKelly who in fact found the document since the lawyer had been sitting at the desk right next to the briefcases a notion that Beer dismissed during his testimony even without being asked, Greenspan, pointed out.

Im going to suggest to you that its more than a coincidence that [Beer] offered up that OKelly had nothing to do with that document. Thats too cute by half, Greenspan said. You and Beer must have talked before coming to this courtroom. No, Gill replied. Thats not correct. Defence lawyers have suggested that Stikeman Elliot are part of an elaborate conspiracy to frame Drabinsky and Gottlieb for the alleged accounting fraud that eventually forced the company into bankruptcy.

And some documents seized during the KPMG investigation into those allegations of accounting irregularities have gone missing. Greenspan pointed out notations on several boxes indicating that several files or binders that had been catalogued after the seizure of documents from the executive offices have been lost. You cant say whether these folders contained exculpatory evidence that may have been favourable to my client, Greenspan suggested. No I cant, Gill replied. Once the KPMG investigators completed their investigation, they left the seized documents locked in Gottliebs office, Gill testified. Several weeks later when the RCMP finally filed for a search warrant to seize those documents, some of the boxes had been moved to Drabinskys office or even the offices of Stikeman Elliot, further increasing the chances that their contents could have been tampered with, Greenspan suggested. All sorts of people had access to these documents, Greenspan said.

Im going to suggest to you that this is not what KPMG would call maintaining the continuity and integrity of documents. We did the best we could under very trying circumstances, Gill replied. Brian Greenspan, the lawyer representing Myron Gottlieb, suggested that KPMGs seizure of Livent documents was far from complete. The accountants, for instance, failed to seize Gottliebs Day-timers. Im going to suggest to you that these Day-timers were filled with exculpatory evidence and thats why you didnt take them. This is the first time I have seen them, Gill replied.

Evidence of a potential conspiracy to frame Gottlieb can be found in the notes Gill and Jim Hunter, another KPMG investigator, made of an interview with former Livent manager Robert Webster. In the typed transcript of the interview Webster is quoted as saying that Garth Drabinsky and Myron Gottlieb were the drivers of Livents accounting policies. However, in Gills handwritten notes of the interview, Webster names Garth Drabinsky and Gordon Eckstein as the drivers of Livents accounting.

There is nothing [in the notes] to suggest there should be a change from Garth Drabinsky and Gordon Eckstein to Garth Drabinsky and Myron Gottlieb, Greenspan said. Who suggested that we better implicate Myron Gottlieb in this thing for the report? I dont know. I submitted my typed notes to Mr. Hunter, he may have made changes, Gill replied.

During a brief re-examination, lead crown prosecutor Robert Hubbard pointed to questions on the same page of that interview. When asked who was calling the shots with regards to Livents accounting policies, Webster replied Drabinsky and Gottlieb. When asked about the accounting knowledge of the two men Webster replied that Drabinsky had a high degree of accounting knowledge and Gottlieb less so.

Defense lawyers are expected to wrap up their cross-examination of John Beer on Monday. It is still unclear whether the defense will call any of their own witnesses or merely hope that they have undermined enough of the prosecutions case.

Needless to say, this investigation was not performed very well.

Answer the following questions:

1. Identify two mistakes the KPMG investigators made during the document collection for the Livent investigation. Remember to explain why their actions are not "best practices."

2. For each of the mistakes you identified in #1, explain what they could have done differently.