Cinar scandal

The Cinar scandal was a major accounting scandal in Canada that came to light in March of 2000 at Cinar, one of the world's most successful children's television production companies at the time.[1] The scandal came to light when $122 million (US) was invested into Bahamian bank accounts without the board members' approval. The scandal resulted in Canada's longest criminal trial ever brought before a jury.[2]

In 2004, following the scandal, Cinar was sold to a group led by Nelvana founder Michael Hirsh, and former Nelvana president Toper Taylor for $190 million.[3] The company was subsequently renamed Cookie Jar.[4]

Background

Cinar was founded by the husband and wife team of Micheline Charest and Ronald Weinberg in 1976 in New York City after organizing an event for a women's film festival, and later moved its operations to Montreal. Throughout the 1980s and 1990s, the company saw massive success with children's programming such as Papa Beaver's Storytime, The Busy World of Richard Scarry, Nickelodeon's Are You Afraid of the Dark? and The Adventures of Paddington Bear. And perhaps its most famous works are Caillou and Arthur.

Cinar went public on the Toronto Stock Exchange in 1993, and then on the Nasdaq one year later.[5] By 1999, Cinar boasted annual revenues of $150 million (CAD) and owned about $1.5 billion (CAD) of the children's television market. In 1996, Cinar acquired the library of the British animation studio FilmFair - which includes television adaptations of Paddington Bear, and closed it in 1998. In February 1999, Cinar acquired the film library of Leucadia Film Corporation.

The company collapsed in 2000, when an internal audit revealed $122 million (US) was invested into Bahamian bank accounts without the board members' approval.[6][7] Cinar had also paid American screenwriters for work while continuing to accept federal grants and tax credits for the production of domestic content, although the names of Canadian citizens (generally non-writers connected to Cinar, including Charest's sister Helene) were credited for their work.

While criminal charges were not filed, Cinar denied any wrongdoing, choosing instead to pay a settlement to Canadian and Quebec tax authorities of $17.8 million (CAD) and another $2.6 million (CAD) to Telefilm Canada, a Canadian federal funding agency. The value of Cinar's stock plummeted, and the company was soon delisted.

There was some speculation that Cinar's CFO Hasanain Panju was the mastermind behind the investment scheme. Other individuals believed to have helped with the scheme include John Xanthoudakis of Norshield Investment Group and Lino Matteo of Mount Real Corporation. It was alleged that Charest and Weinberg (and later Panju) used Cinar as a personal 'piggy bank' and schemed to transfer funds out from the company to the Bahamas through a series of complicated transactions to their own offshore holding companies.[8]

In 2001, Charest and Weinberg agreed to pay $1 million each, and were fired from the company's board of directors.

On August 26, 2009, in a separate case, the Superior Court of Quebec ruled that Cinar had plagiarized the work of Claude Robinson for its animated series Robinson Sucroe. The series was based on a concept he had pitched to Cinar in 1986, but had been turned down. Robinson was awarded $5.2 million in damages, in a suit that resolved a 14-year dispute between the two parties.[9][10]

In 2014, Panju pleaded guilty to undisclosed crimes, and was sentenced to four years in prison. The judge noted these crimes were "disgraceful" and placed a publication ban on details surrounding the trial. Two years later, Weinberg, Xanthoudakis, and Matteo, were each sentenced to 9 years in prison for their involvement. Charest never lived to see an outcome, as she died of complications from plastic surgery in 2004. In 2019, Weinberg was paroled.[11]

References
  1. Yakabuski, Konrad. "The tattered Cinar legacy is a lesson in humility". The Globe and Mail. Retrieved 20 April 2020.
  2. "Cinar verdict sets example for white collar crime". Montreal Gazette. Retrieved 20 April 2020.
  3. "Cinar sold for $143.9 million US; new owner outlines growth strategy". CBC News. October 31, 2003. Retrieved September 7, 2006.
  4. "Cinar turns into Cookie Jar". Variety. Retrieved March 14, 2017.
  5. "Cinar seeks Nasdaq listing". Variety. Reuters. Retrieved 21 April 2020.
  6. Swift, Allan. "Cinar Co-Founders Fined $1 Million Each, Banned From Company For Five Years". Sanford Law Schooenson was awarded $5.2 million in damages, in a suit that resolved a 14-year dispute between the two parties.
  7. "Cinar to pay $5.2M for plagiarizing cartoon". Retrieved 20 April 2020.
  8. "Norshield CEO led 'cleanup'". Montreal Gazette. Retrieved 21 April 2020.
  9. "Cinar to pay $5.2M for plagiarizing cartoon". CBC News. August 26, 2009. Retrieved August 27, 2009.
  10. "Montreal animator wins $5.2M in copyright battle". Montreal Gazette. August 26, 2009. Archived from the original on August 30, 2009. Retrieved August 27, 2009.
  11. Cherry, Paul. "Cinar founder Ronald Weinberg gets full parole on 9-year sentence". Montreal Gazette. Retrieved 21 April 2020.
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