US regulator probes China film relations

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Policy/Legal News

US financial regulator, the Securities and Exchange Commission has made preliminary enquiries into whether Hollywood studios have been involved in bribery in China.

The SEC is understood to have written to at least five companies including Twentieth Century Fox Film Corporation, The Walt Disney Company and DreamWorks Animation SKG Inc, according to a report by the Reuters news agency and picked up by other US media.

The SEC is concerned that payments may have been made to Chinese officials in order to secure distribution contracts or the right to film in China.

Legislation known as the Foreign Corrupt Practices Act makes it illegal for a US citizen or a US-registered company to bribe overseas officials and civil servants, even if such activity is tolerated or considered normal behaviour in those countries.

The FCPA is unusual, not just in its extra-territorial impact, but also in that it has been used proactively by US authorities which conduct 'sweeps' when they encounter situations that commonly lead to bribery and corruption. Government investigators have paid particular attention to US businesses operating in China, where there are sovereign wealth funds, many state-owned enterprises and where bureaucratic and structural barriers to business are commonplace.

In the entertainment sector, China rations the number of foreign films that can be imported into the country and Hollywood studios maintain representative offices that jockey with each other and lobby monopoly film importer China Film Group Corporation 中國電影集團公司 for slots. Similarly, approval is needed from a state-controlled film censorship body for all film scripts going into production and for release of finished movies.

Christopher J. DODD, now head of Hollywood studio lobby body the Motion Picture Association of America Inc (MPAA), and Frank Dodd (pictured together with Barack Obama) were previously responsible for giving the SEC new powers under legislation commonly known as the Dodd-Frank Wall Street reform law.

Film producers Gerald GREEN and Patricia GREEN were successfully prosecuted under the FCPA for paying bribes to Juthamas SIRIWAN จุฑามาศ ศิริวรรณ, then head of the Tourism Authority of Thailand, in order to win contracts to run the Bangkok International Film Festival เทศกาลภาพยนตร์นานาชาติกรุงเทพฯ. They were found guilty in 2009 and served six months in prison.

The FCPA does not cover the recipients of bribes paid by US citizens, but Siriwan has been indicted for eight money laundering and other offences by the US. Thai authorities have opened an investigation and prosecutors recommended trial for Siriwan, but to date she has not been formally charged in Thailand.

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