Canuck producer is subject of tax probe

Cinar accused of scribe switch fraud

MONTREAL — Police are investigating allegations of tax fraud at Montreal-based television producer Cinar Corp., according to accusations raised in the House of Commons in Ottawa by an opposition Bloc Quebecois MP.

Cinar is accused of putting the names of Canadian scribes on screenplays that were actually written by U.S. writers in order to fulfill Canadian-content regs and receive federal tax credits.

News of the investigation has already turned into a public-relations nightmare for Cinar, one of the country’s top entertainment companies. Cinar is known for its non-violent kids programming, including PBS hit “Arthur.”

Most of its shows are sold in the U.S. and sell robustly around the globe. The company is controlled by the husband-and-wife team of Micheline Charest and Ronald Weinberg.

Self review

On Monday, Cinar released a statement announcing that the board of directors’ audit committee, which is made up of outside directors, has been given a special mandate to review the various issues associated with the allegations. The committee has been instructed to report back to the board as quickly as possible. The board will cooperate with all investigating authorities, according to the statement.

Bloc Quebecois MP Stephane Bergeron attempted to use the scandal to tarnish the reputation of the Liberal government, underlining that Charest has close ties to the Liberal party.

Charest recently hosted a fund-raising dinner for the Liberals with Prime Minister Jean Chretien in attendance, according to Bergeron.

Minister of Canadian Heritage Sheila Copps has asked the Royal Canadian Mounted Police to look into the allegations of possible fraudulent activities “by companies who have applied for certification through the Canadian Audio-Visual Certification Office.”

Industry backbone

The federal and provincial tax-credits are the financial backbone of homegrown film and television production in the Great White North, often accounting for approximately 25% of the overall budget of productions.

Francois Macerola, executive director of film and TV funding agency Telefilm Canada, issued a statement noting that “in light of the current situation, Telefilm Canada has decided to review all investment and co-production certification files involving Cinar and its affiliated companies.”

Charest also released a statement saying: “We are extremely proud of our last 15 years of production and of the more than 1,500 hours of high-quality, non-violent children’s programs in our library. Today we are recognized as one of the world’s leaders in this market. In the course of achieving that status, we have been instrumental in the growth of the Canadian television industry and more particularly to the development of Montreal creative talent.”

It has not been revealed which shows are under investigation and, in its statement, company officials say “the allegations in the media appear to pertain to episodes produced several years ago and have no relation to the current operations and activities of the company.”

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