Cinar's case closed

Police fraud probe yields little evidence

By BRENDAN KELLY

MONTREAL -- Quebec prosecutors are dropping fraud charges against troubled entertainment company Cinar Corp. after a major two-year police investigation failed to dig up enough evidence. The Montreal-based children's TV producer was alleged to have fraudulently obtained millions of dollars in film tax credits.

Celine Bilodeau, assistant crown prosecutor, said in a brief statement that "the nature and quality of evidence available" led to the decision to close the case.

The allegations were first raised in the House of Commons in October 1999. Cinar was said to have put Canadian names on scripts written by American authors to get federal and provincial tax credits.

Though the Quebec prosecutors said there was insufficient evidence to proceed, last year Cinar agreed to pay back C$27.5 million ($17 million) in improperly obtained tax credits.

Change of pace

This is good news for Cinar, which has been torn apart by scandal for the past two years. After the allegations of tax fraud, it was revealed that the company had made unauthorized investments of $122 million in suspicious offshore funds without board approval.

After this revelation, company chief executives Ronald Weinberg and Micheline Charest were fired, though they still maintain positions on the board.

Cinar's stock was also delisted from the Toronto and Nasdaq stock exchanges, and the company is the object of a number of regulatory investigations. In addition, there are several class-action lawsuits pending against Cinar on both sides of the border.