Cinar Corp., the troubled Canadian production company, has taken a further step in its return to legitimacy. Beset by scandals involving fraudulent credits and missing millions, the Montreal-based company has agreed to pay more than $1.7m in restitution to Telefilm Canada in order that its productions may once again qualify as official coproductions. The money represents the sum of Telefilm investment and subsidy procured by Cinar for productions later deemed to have been misrepresented as qualifying for certification. In December 2000, the company agreed to pay $17m in restitution to federal and provincial tax authorities.

Cinar, once considered a model of Canadian production, saw its troubles begin in the autumn of 1999, when allegations emerged that the company had credited Canadian writers for the work of American scriptwriters in order to fraudulently claim Canadian tax credits. Further probes of the company finances found an unauthorized investment of $122m by a senior executive which lead ultimately to the resignation of co-founders and co-CEOs, Micheline Charest and Ronald Weinberg.

In a statement, Cinar president and CEO Barry Usher said the Telefilm agreement was key because so much of the company's business relies on international coproduction, on which Telefilm give its seal of approval. Said Usher, "This agreement will allow the Company to move forward with potential co-producers on future co-production projects which fall under the international co-production treaties."

Cinar spokeswoman Louise Sansregret told Screendaily that the payment arrangements with Telefilm, Revenue Canada and Revenue Quebec were key to the company's return to the status quo ante. "This was a very big thing for us. Cinar is still a great company. The products we make have never stopped entertaining children." Sansregret said the misappropriated $122m is being paid back on a weekly basis and that $45m remains outstanding.

Under the terms of the agreement, Cinar is ineligible for any Telefilm investment or subsidy until January 2004, subject to review by Telefilm, unless the company is sold at which point Telefilm will lift the suspension. An investor-led class action lawsuit remains before the courts.