Former Livent Inc. chief financial officer Maria Messina managed to "spin a story" about an alleged accounting fraud at the company to convince senior executives to keep her employed even after the improprieties were uncovered, lawyer Edward Greenspan charged Monday.
Mr. Greenspan, who is representing Livent co-founder Garth Drabinsky at his fraud trial in Toronto, suggested while cross-examining Ms. Messina that she misled new owners who took control of Livent in 1998 about what really happened with the fraud.
"They didn't know what you did," he said. "You hid from them what you did. You managed to spin a story so you had officials … keeping you on as CFO of a public company where no responsible public company would keep you on."
Although new owners of Livent learned about the fraud in August, 1998, Ms. Messina stayed on at the company as CFO until December, 1998, when the U.S. Securities and Exchange Commission insisted she be fired as part of Livent's settlement with the regulator.
Since 2000, she testified, she has been paid $325,000 a year to work for Ernst & Young, the receiver overseeing Livent's bankruptcy.
Mr. Drabinsky and Livent co-founder Myron Gottlieb were suspended in August, 1997. They are charged with fraud and forgery in connection with misstating Livent's financial position between 1993 and 1998. Both men have pleaded not guilty and have suggested others conducted the fraud without their knowledge.
In court Monday, Mr. Greenspan suggested Ms. Messina has been supported by Livent and its former management team since the fraud was uncovered, continuing to work for the receiver and having many of her legal bills paid.
Mr. Greenspan read from a letter written by Robert Webster, who was part of the investor group that took control of managing the company in mid-1998. Mr. Webster wrote the letter on behalf of Ms. Messina to the Institute of Chartered Accountants of Ontario when she was facing a disciplinary hearing in 2000.
In the letter, Mr. Webster said Livent was opposed to her being charged criminally in the United States for her involvement with the case and said she only pleaded guilty after U.S. authorities "applied an extreme amount of pressure" to her.
"It's quite remarkable how many friends you have in high places," Mr. Greenspan noted after reading from the letter. "You weaved a story to the company who knew you were going to be its star witness."
Ms. Messina responded that the former managers knew the truth about what had happened. "They knew what I did," she said.
Also in court Monday, Mr. Greenspan challenged Ms. Messina at length over an inconsistency in her prior testimony.
Mr. Greenspan said she told investigators from the SEC during an interview on Sept. 10, 1998, that she first learned of the fraud in late October or early November, 1997.
However, he noted she told the SEC in questioning a day earlier, on Sept. 9, that she had learned of the fraud in July, 1997. She has also testified at the trial of Mr. Drabinsky and Mr. Gottlieb that she had realized the fraud was occurring in July that year.
Mr. Greenspan accused Ms. Messina of changing her story to the SEC to move the date later so that she could avoid facing more charges related to hiding the fraud at Livent for a longer period of time.
"You came back on the 10th and you walked away from virtually every aspect of your testimony on the 9th," he said.
Mr. Greenspan asked Ms. Messina if she is the kind of person who says something one day that is true, and then tells a lie on another day.
She replied that is not the case. "I stand for truth and integrity, and I do my best each and every time," she said.
Ms. Messina insisted repeatedly that she had not changed her story to the SEC, but had only become confused during her testimony to the commission because she was in a "fragile" emotional state at the time and was extremely stressed during the two-day interview.
However, Mr. Greenspan suggested there is no evidence in the transcript that she was being bullied or yelled at by SEC staff, and said there is nothing to suggest she was upset while giving her answers.
"I'm going to suggest you lied on the 9th, you lied on the 10th, and the way you hid behind your lies was by saying 'I can't remember,'" he said.
Ms. Messina, however, said she had not expected the SEC meeting to be so confrontational, and became upset and nauseous during the interview and got mixed up about the dates.
"I got myself into greater and greater difficulty, I got more nervous, and everything was coming out wrong," she said. "My head was spinning. At the break … I went to the washroom and threw up. I can feel it today, what it felt like in that meeting."
Janet McFarland