Pinewood...more Govt Propaganda

[Slim]

If there is a conflict between an interest or duty of a director and an interest of the company in any transaction, the director must account to the company for any benefit he receives from the transaction. This applies whether or not the company sets aside the transaction"

The FSC is the Manx regulator, Pinewood isn't a Manx company. That aside..

 

Do you know the person in question is:

 

a) a director of both companies

b) has not declared as outlined above

 

Note that the directorship is listed on Pinewoods director listing:

 

Steve Christian is responsible for coordinating the investment advice to the Isle of Man Treasury Film and Television Fund. Prior to joining the Company he was responsible for overseeing the development of the Isle of Man's film investment programme. He is currently a non executive director of the Isle of Man's largest energy provider The Manx Electricity Authority and is also a director of CinemaNX Limited, Fordex Limited, Agrimark Limited and Gasworks Media Limited.

 

 

That Pinewood appear to be paying him via Gasworks media isn't something to get excited about. I really don't see the issue.

 

Newsnight, you keep posting these public records as if they're some kind of find. What are you seeing that you think isn't appropriate?

[censorship]

So, the suggestion is that there could be a conflict between being a director of the studio company and being an adviser to a film-financing fund (in this case the Isle of Man)? Presumably this is being suggested because people aren't sure how you can act in the best interests of both at the same time.

I'm not sure I understand that. It is in the studios interest to have films made there, especially successful ones which will enhance its reputation. It is in the film-financing funds interests to fund successful films.

In both cases, IOM Government's interests are served, as owner of the investment fund, if the advise is right, and as a shareholder in the studio, as their dividends and share values go up.

Or have I misunderstood?

[Lost Login]

 

Could you let us know what you think of the evidence presented to the Committee do you think?

No, I'd rather you answered my points. You seem to be really good at pasting reams of stuff you deem relevant, but not particularly good at interpreting it.

 

LL: you've been pretty consistant in this thread talking about the arrangement as if it's some sort of regulated/licensed financial instrument. It isn't.

 

 

It is irrelevant whether or not it is a regulated/licensed fincial interest.

 

Party A is responsible for whether a request for funding by party B should be agreed or rejected. Party A earns if funding is provided but not if the request is rejected. At that point there is a huge potential conflict of interest whatever the business or financial arrangement is.

 

That is what we have here. I am sure IoM Gov and even yourself would not find it acceptable if a person in authority who had the decision on whether to spend or retain a part of their budget had a direct financial interest in the money being spent. Why is it different just because it is the film fund. As a standard principal the person who advises on whether or how money should be spend should not potentially have a financial interest in the money being spent. That should be taken as standard even if the parties are meticulous in managing any potential conflict.

 

I give you an analogy. IoM Railways recently bought a new diesel. Would you really have had no concern if say the decision on whether it was required or not and how much to spend rested with Mr Topham Hat and that the contract to design and build went to a company that Mr Topham Hat partly owned or had an agreement with to act as a consulatnt to and he got paid by that company for assisting with the design and build of diesel. It may all be fine and above board but it would not look great.

[censorship]

Party A is responsible for whether a request for funding by party B should be agreed or rejected. Party A earns if funding is provided but not if the request is rejected. At that point there is a huge potential conflict of interest whatever the business or financial arrangement is.

 

i think i get it now. Took long enough.

[oldmanxfella]

Sourced from Companies House UK. All files available to the public on demand and payment of fee.

 

15. Related Party Transactions Page 13 Accounts 2013/14

 

During the period, the Company signed a consultancy agreement for services related to the Isle of Man Investment Advisory Agreement with Gasworks Media Ltd, a company incorporated in the Isle of Man, whose sole shareholder, Steve Christian, is also a Director of the Company. The total value of the transactions during the period is £386,000 of which £105,000 remains outstanding for payment by the Company at 31 January 2014. The balance owing is unsecured, interest free and payable in cash on invoicing.

 

Note 16.

 

 

See also Rent Mortgage.

 

Great so he has actually clearly declared his interest despite Eddie saying he doesn't believe there is any conflict of interest.

 

Slim, I used the FSC rules purely as an example of what a conflict is, so it's irrelevant whether it's an IOM or a UK company because it was just an example to show what a conflict is and when one usually arises. I also suggested that people who were unsure should maybe read the FSC guidance if they dont understand what a conflict is as their guidance is quite clear. The fact is though that it looks to me that a conflict was declared if the extract from Companies House above is correct. So do we have the case of a conflict of interest being duly noted and yet Eddie denying a conflict exists?

Edited November 21, 2014 by oldmanxfella

[woolley]

He's declared his interest. He hasn't declared a conflict of interest. That's open to interpretation. Big difference.

[oldmanxfella]

He's declared his interest. He hasn't declared a conflict of interest. That's open to interpretation. Big difference.

If the interest has been noted and declared in the accounts would you not assume that someone had to declare a conflict of interest in order for this situation to be noted?

Edited November 21, 2014 by oldmanxfella

[newsnight]

5

‘Mr Christian: Now the Media Development Fund is held directly by the Treasury, so no title to the fund had ever passed under the Pinewood arrangement. So, effectively, Pinewood sits as an adviser to the Media Development Fund, rather than the whole of the Media Development Fund, and that is the big difference. 50

The process for drawing down is pretty similar, insofar as we will come – ‘we’ being Pinewood – to the Treasury with a report and will make a recommendation. However, as I say, the big difference is, back in the day prior to Pinewood, the funds would be drawn directly from the Media Development Fund sitting in the name of NX, now sitting in the name of Treasury. So that is the big fundamental change. 55

 

The other change is not so much of a structural change but it is a change of emphasis, and it is a change of standing in the marketplace, really. The Committee will probably be aware that the Island was facing a very competitive environment, and that competitive environment was really driven by the availability in the UK and Ireland of free money – and when I say ‘free money’ I really mean subsidy. That proliferation of free money, that subsidy, was the thing that 60 really led to the Pinewood deal because there was a realisation that the Island had to change if we were to remain as a player in the industry. We had to change on the understanding that subsidy money was not available, so the Island was not in the position, or did not want, to offer subsidy directly to film – unlike Northern Ireland, unlike the United Kingdom, and then also regions of the United Kingdom. 65

 

So the change in emphasis has come about whereby by marketing as Pinewood rather than marketing as CinemaNX – just as, I think, was suggested at the time of the transition – the Island would get better visibility and therefore better access to bigger, probably more commercial, films and certainly to a bigger throughput of films. And that has certainly happened’.

The Minister: Yes we do, we have the ultimate control. Mr Christian is not a discretionary fund manager, he is a fund adviser, so in effect he will source out what he thinks is a suitable project. He will then come to Treasury and then it is up to Treasury to decide whether that meets our, shall I say, risk appetite I think is the best way of putting it – whether we think that is (270) appropriate, does it bring the appropriate level of economic benefits that we are expecting from the investment.

So, as it were, the final decision finishes with Treasury.

 

Q23. Mr Butt: Can I ask a final one now, Mr Chairman? 275

 

How does this investment compare in terms of revenue for the Isle of Man, compared to your investments with the rest of your investment funds?

The Minister: Well, it has not matured yet. The problem that we have is the long timescale between the investment when the film was being made, as it were, and then the subsequent 280 post-production process until it is actually marketed and it appears on the screen or television, satellite, or whatever. So, overall there is quite a long time frame.

 

Q25. The Chairman: Can I just try and get my mind around all of this?

 

We took £12 million approximately and we bought a share of Pinewood Studios: that is one part of the transaction. Pinewood Studios then created Pinewood Film Advisers, who advise the 295 Isle of Man Treasury on how to invest the £25 million which you keep in your name in the Isle of Man, or wherever you choose to place it.

Is that basically a summary of the how it works?

 

The Minister: It is, in effect, yes.

 

Q26. Mr Butt: Can I just recap on the NX days, Mr Christian?

 

I presume the films that were made in that period, and in the earlier period, there is still revenue that comes in from those as the years go on. Is that right?

310

 

Mr Christian: That is correct, yes; and again, as part of the transition and part of the Treasury agreement CinemaNX effectively ceased to trade – or at least it ceased to have a major engagement to trade when the Pinewood deal took effect. Again, because of the structure of NX there are a number of films within NX where some of the rights are held in the NX name – which again is not unusual. They are all charged to the Treasury so there is security over all of those. 315

 

Part of the safeguard there is that basically – certainly for the term of the Pinewood deal, i.e. five years – NX must remain in existence. So whilst it has gone off the radar, whilst it does not trade anymore, the company is still wholly solvent. It still sits there fully compliant, it still has an obligation when it collects money to pay that money over to the Treasury – although I would say in the vast majority of cases when there is any money due on any titles invested by NX, that the 320 money will flow through independent collection accounts anyway. So NX does not actually hold a great deal of cash on behalf of the Treasury, it flows through independent collection accounts and is paid to a very specific charged account for the benefit of the Treasury'.

 

Having read the Hansard's very carefully going back to the time when the presentations were being made to MHK's and then reading carefully the related published documents issued by the Government regarding the Pinewood Film Advisors deal it has not been possible to locate in any of that information one single mention (at the time of the proposal "brokered" by Mr Christian) that his company Gasworks Media Ltd was going to benefit substantially from the deal.

 

Moreover nowhere was it mentioned any requirement for 'an investment co-ordinator' between Pinewood and the Treasury to make the Pinewood deal work.

 

Would it not have been a good opportunity for Mr Christian to have laid out the details of the Gasworks Media Ltd involvement in the Pinewood Film Advisors contract at the time of his giving evidence to the Committee, and can the same also be said of Mr Teare?

Steve Christian Friday 27th June 2014.pdf

[asitis]

I confess to being lost in all of the arrangements and sub arrangements and pre vat bubble arrangement and post Vat arrangement, but would a fair synopsis be that, the shares if it were possible to sell them have made a profit and have returned about 90k in dividends 13/14, and the rest of the film fund variously put at 50million at inception to 25million or less now has bombed ! and we (taxpayers) are paying some entity 360k a year for that advice ?

 

If my understanding is at all close why the hell are we invested in this ?

[Slim]

 

Party A is responsible for whether a request for funding by party B should be agreed or rejected. Party A earns if funding is provided but not if the request is rejected. At that point there is a huge potential conflict of interest whatever the business or financial arrangement is.

i think i get it now. Took long enough.

 

I don't. Like Wooley said, it's an interest, not necessarily a conflict of interest. You're example would only pan out of Gassworks didn't get paid based on the advice given. That doesn't appear to be true.

 

This looks quite simple to me:

 

We moved the funds from a company to in house

We appointed advisor (pinewood) to give advice on how to invest the funds in future

Pinewood appointed our previous partner as a director and advisor, and paid him pretty much what we're paying them

 

Where's the conflict? When is the advisor acting against the interests to create a conflict? They get paid either way.

 

Please don't post more reams of quotes, your interpretation of them is what's needed. We can all read the public record.

[Slim]

I don't work in government. I'm asking for the conflict to be pointed out, because nobody has yet.

 

You cannot say anyone who's paid a fee for advice that's not performance related has a conflict of interest. That's stupid.

[Slim]

You can if there are two related and inter-linked parties that are contingent on you keeping that fee arrangement. It's a clear potential conflict. It's like being an estate agent and selling your own home to another company you are a director of at a valuation agreed by your estate agency.

In the Pinewood arrangement, where is the conflict? Be specific, because it's lost on me.

[Slim]

Jesus, several people have done just that above. But you're always fucking right arent you Slim? Despite all the detailed evidence showing that your fucking wrong. It's not even worth having the debate. There is a clear potential conflict where there are inter-connected parties on both sides of a commercial agreement. In the real world that is. Not in whatever non commercial fantasy land you inhabit.

I'm right about what? I've not said anything, I've just questioned the claim.

 

If it's clear, explain it clearly. On one side you have Steve Christian advising on a deal to which he's a party, but the interest was fully disclosed and his move to pinewood was clearly defined as part of it.

[Lost Login]

Slim I cannot believe you do not understand after the examples given.

 

The advisors are there to advise/recommend what films to invest in. Presumably they base their advise on whether they think the film will make a profit. The potential conflict is because they provide additional services on top of that advice e.g. acting as producer, providing film stages etc. They are potentially conflicted as it is in their interest to recommend others to invest their funds so films are produced so that they can earn a fee for those additional services. It is not for the giving of the advise.

 

As an example, you appraise a stage play but you are mindful to turn it down as it does not meet the criteria that would make it worth whilst investing in. If you do though the production will not go ahead and you are not in a position to charge for your additional services. You are therefore potentially conflicted because on the one hand the right thing to do as an advisor is to advise against putting money into the production, but as a provider of services you want it to me made. That is where the conflict is. Basically it appears there is a additional financial incentive for the advisor to recommend that the production be made and the concern is that might over ride their judgement on whether the production is worth investing in.

 

Now just to cover myself again, we are only presently talking about an apparent potential conflict. There is no suggestion that the parties have not identified such a conflict and acted appropriately but it simply should not even be an issue in the first place as in matters such as this should not be able to benefit financially apart from the fee they earn for giving advice.

 

I have no problem if X are paid just to give advice about whether to give money to Y. I have a problem when it appears X has a financial interest in Y and that stands for anything relating to Government

[Slim]

Another post where you refer to these obvious facts. Why not just spend the time pointing them out to me?

 

If he was a government employee, I'd agree it was a conflict of interest. Otherwise, it looks like a bloody good sales job.

 

If you read up, you'll see I'm not a fan of the use of the media fund in this way, I think personally that the cash would be better spent encouraging our own media industry, particularly digital. I think if there is wrongdoing, we should have them discussed, the pages of documents and generalisations don't help.