The CINAR Scandal: A Tale of Deception in the World of Children's Television

In March 2000, the serene world of children's television was rocked by an accounting scandal that unfolded in Canada. At the heart of this financial maelstrom was CINAR, a company renowned for producing beloved children's programs. What began as an internal audit soon revealed a clandestine operation involving the unauthorized investment of US$122 million into Bahamian bank accounts, a maneuver executed without the knowledge or approval of CINAR's board members. This scandal would eventually lead to Canada's longest criminal trial before a jury, spanning from May 2014 until 2016.

Beginnings and Success

CINAR's story began in 1976, founded by the ambitious husband-and-wife duo, Micheline Charest and Ronald Weinberg, in the bustling city of New York. Their journey into the world of children's entertainment started after they organized an event for a women's film festival. Eventually, they relocated to Montreal, Quebec, where they would build their empire. Throughout the 1980s and 1990s, CINAR flourished, producing iconic children's programs like Papa Beaver's Storytime, The Busy World of Richard Scarry, Are You Afraid of the Dark?, The Adventures of Paddington Bear, Wimzie's House, Caillou, Zoboomafoo, and Arthur.

The company went public on the Toronto Stock Exchange in 1993, with a subsequent listing on the Nasdaq the following year. By 1999, CINAR was generating annual revenues of CA$150 million and commanded approximately CA$1.5 billion of the children's television market. In 1996, the company acquired the library of the British animation studio FilmFair, which included the beloved Paddington Bear adaptations, only to shut down the studio two years later. February 1999 saw CINAR further expand its portfolio by acquiring the film library of Leucadia Film Corporation.

The Scandal Unfolds

The house of cards began to topple in 2000 when an internal audit uncovered the unauthorized transfer of US$122 million to Bahamian bank accounts, signaling financial improprieties within the company. Compounding this, CINAR had been paying American screenwriters while continuing to accept federal grants and tax credits designated for Canadian content, falsely crediting Canadian citizens—often non-writers connected to CINAR, such as Charest's sister Helene—for their work.

Despite the gravity of these revelations, criminal charges were not initially filed. Instead, CINAR opted to settle with Canadian and Quebec tax authorities, paying CA$17.8 million, and an additional CA$2.6 million to Telefilm Canada, a federal funding agency. In the wake of these disclosures, CINAR's stock price plummeted, leading to its delisting.

Speculation soon arose regarding the identity of the mastermind behind this financial subterfuge. Some pointed fingers at CINAR's CFO, Hasanain Panju, while others implicated John Xanthoudakis of Norshield Investment Group and Lino Matteo of Mount Real Corporation. Allegations suggested that Charest and Weinberg, along with Panju, had used CINAR as a personal "piggy bank," orchestrating a complex scheme to siphon funds through offshore holding companies to the Bahamas.

In 2001, Charest and Weinberg faced the consequences of their actions, each agreeing to a $1 million settlement and removal from the company's board of directors.

Aftermath and Legal Battles

The scandal's repercussions extended beyond financial losses. On August 26, 2009, in an unrelated case, the Superior Court of Quebec ruled that CINAR had plagiarized Claude Robinson's work for its animated series Robinson Sucroe. The series, based on a concept pitched by Robinson to CINAR in 1986 and subsequently rejected, resulted in Robinson being awarded $5.2 million in damages, finally resolving a 14-year legal battle.

The legal troubles for CINAR's co-founders did not end there. On March 10, 2011, Ronald A. Weinberg, returning to Montreal from a Caribbean vacation, was arrested for securities fraud following an earlier issued warrant. The legal proceedings continued, and on January 17, 2014, former CFO Hasanain Panju pleaded guilty to undisclosed crimes. The judge overseeing the case described these actions as "disgraceful," and imposed a publication ban on trial details. Panju received a four-year prison sentence.

The courtroom drama reached a crescendo on May 12, 2014, when Weinberg, Xanthoudakis, and Matteo faced 26 counts of fraud in Montreal Superior Court. In a gripping trial, Panju emerged as a key witness for the Crown. On June 2, 2016, the trio was convicted on most counts, with Weinberg sentenced to 8 years and 11 months in prison, while Xanthoudakis and Matteo each received sentences of 7 years and 11 months. Weinberg was granted full parole on May 3, 2019.

The CINAR scandal, once the pride of children's television, became a cautionary tale. As The Globe and Mail aptly described, Charest and Weinberg's initial noble intentions to create non-violent, socially progressive programming for children were overshadowed by greed and avarice. Their journey from visionary creators to perpetrators of one of Canada's most infamous financial scandals serves as a sobering lesson in the pitfalls of unchecked ambition.

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