Pinewood...more Govt Propaganda

[Slim]

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.

The leap of logic in the above is that you consider all advice to be independent. This isn't the case, the interests are well known and declared up front. In fact the government is party to it also, because it's invested into Pinewood itself to benefit from that bias.

 

If I go to see an independent adviser, my expectation is that they are going to show me a range of products. If I go to see the adviser who works for my bank, my expectation is that they will guide me to products from that bank.

[Lost Login]

IoM to Advisor. "We were not sure if this investing in films was all that it appears to be, so we were going to stop at the end of the Silymanx contract. But we have since received your proposal that we appoint Pineapple to mange the fund and advise on which films to invest in. Now we are not sure what to do so as our advisor would you recommend we stop investing in films or should we carry on but with Pineapple as advisor/manager? Now be a good chap and please don't let the idea that if the film investment stops you will have to find a new job, but if it continues you will become a director of Pineapple and be well paid to manage the fund and can carry on being a producer on all these films affect your judgement. Yes it will be no problem if most of the films we will invest in are made at Pineapple or have you as a producer. Just lump it in the films budget which we cover. Now do you think it should continue? You do! Oh thank you very much. Trebles all round.

[Lost Login]

Slim so the interest is well known and declared. Great but it still does not mean there is not a potential conflict.

 

Company B has a large whole in its budget. It could sink the company. But look what yonder magic does it see? It advises on the use of funds in projects which it runs and if one of those projects was picked it would earn enough to solve all its problems. Oh Lord be praised. But oh whoa there is only project and it is an absolute turkey and if clients follow there advise and put their money in they are bound to loose it. But if they don't Company B goes bang. What should Company B do? Does Company B save the clients their money or look after itself? It thought it was conflicted but apparently cannot be as Slim says that as long as it is well known and declared it is fine, so that's OK then. Company B can take the money and save itself at the expense of the clients.

 

Slim I expect that you think there would have been no potential conflict of interest in what the Louis Group were doing just so long as it was declared that they had an interest in where the funds went.

 

On the same basis you would have been happy if when Peel Road was done if the party inspecting and signing off had been the same or a related firm to that who did the work. If when the Govt chooses investment advisors for its funds the advisor recommending who to use is one of those lined up in the beauty parade and the one chosen. It should be a standard rule that those who advise do not stand to benefit more or less depending on what option is chosen. If there is the possibility of benefitting more if you advise a third party to choose option A rather than option B a potential conflict will arise.

Edited November 21, 2014 by Lost Login

[newsnight]

Slim.

 

Steve Christian was an employee of Ernst & Young from its office in Douglas in the past.

 

Ernst & Young had a contract or contracts with the Department of Trade & Industry as part of those contracted services Steve Christian was involved and credits himself with creating the ‘Manx Film Industry’ which the Minister at the time David North supported and promoted as did Allan Bell.

 

Mr Christian was not a civil servant he is a private individual working for a Company with a contract to provide services to the Department of Trade & Industry.

 

In 2007 Mr Christian proposes significant changes to the way the Isle of Man Treasury and public money is used by the Media Development Fund.

 

The most important of those changes is that his own private company is now contracted to provide sole film services’ for fees to the Treasury.

 

His company /ies charges fees for services’; his company /ies charges for producer fees, he makes significant money out of the changes.

 

The Treasury says Cinemanx is a fund manager, the Public Accounts Committee says it is not a fund manager.

 

Cinemanx Ltd is given the interest on £50 million pounds to use as he sees fit by the Treasury as part of the new deal for five years.

 

Mr Christian charges the fund significant fee’s from two Companies he controls as majority shareholder.

 

He exercises a very high degree of control over how the Media Fund is spent and particularly on what it is spent.

 

At the end of the five years of the Cinemanx contract with the Treasury. Mr Christian proposes a new way of dealing with the Media Development Fund.

 

It has not been established if this new proposal was of his own devising or his together with others.

 

He spend approx. £40K out of a Government owned company his is director of on a Report that only considers if the proposal he is making the best of all options for the public’s money. The Report says that it is, but no alternative is identified and therefore the proposal has no competition.

 

The Pinewood deal as presented says Pinewood Shepperton Plc will have 12 million pounds worth of shares bought by the IOM Treasury described by the Treasury Minister and Mr Christian as a “hedge”.

 

Pinewood will create a new company called Pinewood Film Advisors Ltd and that is the company that is contracted to provide ‘film advice’ to the Treasury.

 

Mr Christian’s has over one and a quarter million shares in Pinewood Shepperton Plc held in Cinemanx Ltd, how those shares were acquired, who they were bought from or how they were paid for, or to whom they were sold has never been demonstrated before any Committee of Tynwald..

 

The Cinemanx accounts are not open to public access. Requests for those accounts by MHK’s are denied.

 

The new deal is that Pinewood Film Advisors Ltd are to the sole contractor providing the contracted service to the Treasury.

 

Mr Christian becomes a director of Pinewood Shepperton Plc.

 

Mr Christian becomes a director of Pinewood Film Advisors Ltd (UK)

 

At no time is it revealed to MHK’s or the wider public that another deal has been done with Mr Christian’s Gasworks Media Ltd to provide consultancy services at a cost of hundreds of thousands of pounds to Pinewood Film Advisors Ltd.

 

I have found no mention of that aspect of the deal in all the documents and Hansards dealing with the Media Development Fund,

 

The Gasworks Media payments from Pinewood Film Advisors are not referenced when the Government Committee asked Mr Christian and Mr Teare how the Pinewood deal works.

 

So, why was it not made clear at the outset that Pinewood Film Advisors couldn’t provide the services as contracted unless it had another contract with Gasworks Media Ltd for the same value as the one with the Isle of Man Treasury?

 

Why was it not made clear that Mr Christian’s company was in reality going to be the main recipient of a sum of money equal to and over the fee being paid to Pinewood Film Advisors Ltd that it couldn’t deliver without the involvement of Mr Christian?

 

The Pinewood deal could be described as a method of Mr Christian keeping the position he had gained for himself and his companies in 2007 by hiding behind the contract made between Pinewood and the Treasury in 2012?

 

Was the deal presented openly and honestly to the Tynwald? Well was it?

 

Do you really see no potential or actual conflict of interest in that set up?

 

How much of the Media Development Fund has been spent on Gasworks Media or Cinemanx’s own projects and who made the decision to spend the money on them?

 

Should any money have been spent on them at all from the Media Development Fund?

 

I have provided you with the evidence given to the Committee to assist you in your deliberations. Nobody can think for you.

 

 

 

[Mr Shoe]

Excellent newsnight. Appreciate your work.

 

I'd further like to know what contribution the Film Fund shenanigans had on the VAT renegotiation and the loss of £ hundreds of millions to the manx economy. This aspect is too often overlooked.

 

From vague memory the entire Film industry was a clever ruse to inflate our applicable GDP to grasp more VAT. The effect was to attract the attention of Westminster with somewhat negative consequences.

Edited November 22, 2014 by Mr Shoe

[newsnight]

Thank you Shoe.

 

This as[ect is a very crucial part of the whole thing. For example using Mr Christian's own words only. "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."

 

The facts as I have been able to identify them are that Cinemanx Ltd has a number of companies incorporated in the United Kingdom (available for viewing at Companies House UK)and out of those companies incorporated in the UK claims for tax credits and producer credits were paid by the UK Government for film projects under the Cinemanx funding. That statement he made has not to the best of my knowledge been tested by any Committee of the Tynwald, it appears to have been taken at face value. I cannot understand why that arrangement was said to be unfavourable to the Isle of Man. So far as I am able to determine there was no change on the part of the United Kingdom film credit regime that would necessitate the changes Mr Christian says was resultant in " the understanding that subsidy money was not availalbe". The Isle of Man Government has prevously published figures concerning the amount of VAT claimed from the UK it is over two hundred million pounds.

 

If we had a Public Accounts Committee that functioned as it is supposed to then finding this information would be significantly easier than it has proved to be so far. I think what can be said is that the VAT claims from the film projects are more than likely to have had a considerable part in the resultant adjustments that were made by the UK that have profoundly affected adversely the finances of the Isle of Man.

 

What I can direct your attention to is this; Evidence as delivered to the STANDING COMMITTEE, FRIDAY, 27th JUNE 2014

__________________________________________________________________

3 EPRC-T/13-14

Standing Committee of Tynwald on

Economic Policy Review

 

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".

[Slim]

Do you really see no potential or actual conflict of interest in that set up?

Nope. All along he's been an external advisor, the final decisions have been taken by the treasury. If he'd have worked inside treasury, then I'd agree with you.

 

Influential; yes. Overly influential? Probably. Good value for money? Almost certainly not. Self interested? Definitely. Conflict of interest? Nope, don't see it.

 

I don't see the benefit of posting this stuff without sensible conclusions; it just isn't constructive.

[2bees]

Is he your best friend Slim?

[newsnight]

One harsh political reality on the Isle of Man is that the Council of Ministers’, and the Chief Minister especially, can rely on no effective opposition for the most part to what they intend to do.

 

The Public Accounts Committee investigates and reports to the Tynwald its findings and recommendations, those are generally ignored or at best neutered by senior civil servants.

 

The PAC consists of a membership of Members of the House of Keys. COMIN is usually favoured by having MHK’s sit on the PAC who are mindful of the need not to dig too deeply or say too much in their Reports.

 

The PAC reports taken together with the Official Hansard Reports give us the public an incontrovertible body of written material that we are able to read and decide if our elected representatives are serving us well, or not.

 

Many on the Isle of Man hold the opinion that Government is too secretive and almost impossible to hold to account for what it does with our money and in our names.

 

When MHK’s are supine and thoughtless taking no more action than to vote the will of the Chief Minister and the Council of Ministers’ we suffer the consequences of their failure to respect the proper functioning of a Democratic Parliament and to defend us, the powerless, from the powerful and their vested interests being put ahead our own.

 

What I post up here is information for the public to access, read, consider and make its own mind up about, if that is what it would like to do. Anyone is perfectly free to ignore it as they like.

 

Having read everything I can find regarding the Media Development Fund and having carefully examined the many statements that have been made regarding it to the PAC in evidence, other Committees, or on the floor of the Tynwald, with the many and blatant contradictions in the justifications for the things that have been done with the MDF / Public money, this has promoted the posting up of information that our senior politicians have made plain that they would rather we did not have.

 

We have experienced a Treasury Minister tell an elected representative, a Member of the House of Keys that information freely available to anyone could not be provided on the grounds of “commercial confidentiality”.

 

When direct questions are asked regarding the MDF and the Pinewood contract the response from the Treasury Minister and the Chief Minister has been scornful evasion, arrogant dismissal, and obfuscation of any possible information that would be factual and helpful in understanding what is being done with our money.

 

I don’t think that is an acceptable way of conducting a Parliament in our name, I don’t think that serves us well at all.

 

When it was decided to change the way the Media Development Fund was operated back in 2007, those changes were decided by Allan Bell and a private individual who was going to benefit considerably financially as a result of those changes which he had proposed.

 

Parliament was not even considered important enough to be consulted about those significant changes that had already been pre-decided and were being implemented.

 

When the Pinewood deal was ‘brokered’ by the same individual documentation that was supportive of that deal was commissioned by the individual using public money to do it. Who was it that going to financially benefit considerably by that deal going through?

 

The PAC stated that the accounts of the company (CinemaNX) that had been handling substantial amounts of public funds and the Treasury should be more open and transparent in explaining what was being done with the public’s money, that recommendation along with the rest in the Report was ignored by Government.

 

Those accounts for the full five years of the contract have never been made public and they should have been.

 

MHK’s were told that Pinewood Film Advisors Ltd had been set up to provide ‘advice’ to the Treasury.

 

In the Oxford Economics Report it is stated that Pinewood had no experience of actually investing in films, in fact it rented out space for film-makers to use only. The clue to what was being planned was and is there for anyone to read.

 

The five year contract with CinemaNX was in large part created it was said to take away the reliance on a few individuals to make the ‘”Film Industry” work on the IOM. At the end of the five year period the very same reliance on the very same key individual was in place and he had ‘brokered’ a deal that has resulted in the exact same individual with substantial financial benefits, and no less influence on the way the MDF is being spent.

 

How many MHK’s knew of or approved the fact that a new made company with no experience of film investment was in realty little or nothing more than a device to continue business as before?

 

Once again those who are paid to exercise scrutiny on our behalf fail to do that, and in place of that absolute duty to us, we get nodding through of the objectives of the Chief Minister with a braying of self-congratulatory hear hears, whilst giving themselves a good patting on the back for doing nothing.

 

Are you not tired of the subterfuges that are constantly a feature of this Government’s way of doing things? Are you not weary of the feeble or non-existent testing of the justifications being offered for spending multi-millions of pounds of our money?

 

When we have a handful of MHK’s who actually do the job we have elected them to do they can depend on being in a fight to the last breath to get an honest and open answer from our Government in the Tynwald, and usually witnessed by the silent majority of MHK’s who tow the COMIN line unquestioningly.

 

Is this the Government we really deserve?

[Slim]

When it was decided to change the way the Media Development Fund was operated back in 2007, those changes were decided by Allan Bell and a private individual who was going to benefit considerably financially as a result of those changes which he had proposed.

Were they proposed or were they decided by that individual? What you're claiming here are two very different things.

 

You have a strong argument, but it loses credibility when you make things up to support what you're saying.

[Lost Login]

Slim. Can you define what you believe a conflict of interest is or give an example, because if acting as an advisor to others when that advise directly affects your income is not a potential conflict I am not sure what is. Presently we potentially have a situation where as an advisor the correct advise would not be to invest in a film but as the producer or provider of services you would want the film to go ahead. Apparently though that is not a potential of conflict of interest.

 

With regard to Treasury I doubt they ever do more than rubber stamp the advise they get. Do you think they really have ever rejected a proposal that has been brought forward? The idea therefore that practically there is any real control by Treasury is in my view totally illusionary

[Slim]

Slim. Can you define what you believe a conflict of interest is or give an example, because if acting as an advisor to others when that advise directly affects your income is not a potential conflict I am not sure what is.

What you are describing here is a salesman earning a commission, is it not?

 

A conflict of interest to me would be if you are given the responsibility for making the decision, then took the decision in your own interests. What's been made very clear is that the final decision is with the treasury, that everything else provided is advice only.

 

With regard to Treasury I doubt they ever do more than rubber stamp the advise they get. Do you think they really have ever rejected a proposal that has been brought forward? The idea therefore that practically there is any real control by Treasury is in my view totally illusionary

I've no idea how they scrutinise the advice and it looks like you don't either. I'd rather not make the assumption either way when we're deciding that someone is guilty of something.

[manxy]

Best way to resolve this is from an external investigation point of view and not by the Government old boys club

[newsnight]

 

When it was decided to change the way the Media Development Fund was operated back in 2007, those changes were decided by Allan Bell and a private individual who was going to benefit considerably financially as a result of those changes which he had proposed.

Were they proposed or were they decided by that individual? What you're claiming here are two very different things.

 

You have a strong argument, but it loses credibility when you make things up to support what you're saying.

 

 

Slim take note, all the information is from official sources, quoted and can be independently verified.

 

Logic and thought, Note the dates, Cinemanx Incorporated on 22 February 2007.

 

Idea put to Treasury by Steve Christian in JANUARY 2007.

Formal Paper in FEBRUARY 2007.

Cinemanx Incorporated 22 FEBRUARY 2007.

Alluded to in Budget Speech MARCH 2007.

 

Presentation made to Tywald Members OCTOBER 2007.

 

Most people I think would accept that the movant was Steve Christian in January 2007 and the Treasury Minister Allan Bell in concert with Mr Christian and the political members of the Treasury decided to impement the proposal, a formal paper was presented in Treasury in Febuary 2007 and obviously we can conclude that it had all been decided at that point because Cinemanx Ltd was incorporated on the 22 February 2007. I make nothing up these are the facts as reported in official reports. May i suggest that you take the time to inform yourself of the facts?

 

http://www.tynwald.org.im/business/pp/Reports/2010-PP-0105.pdf.

 

2.6 A new company, CinemaNX Limited, was incorporated on 22nd February 2007 and was alluded to by the Treasury Minister in his budget speech on 20th March 2007.

 

 

2.7 A presentation was made to Tynwald Members on 2nd October 2007 on how the new financing model involving CinemaNX Limited was to work. The operation of this model is described later in this Report.

 

4.2 When, in 2007, the arrangements with CinemaNX were being set up, no consideration appears to have been given to whether Tynwald should have a say in such a novel departure.

 

 

The idea was put to Treasury by Steven Christian in January 2007 and set out in more detail in a formal Treasury paper written in February 2007.

 

 

The new arrangements were alluded to by the Treasury Minister in his budget speech in March 2007 but the comments in the Pink Book were vague and there was no explicit motion on the Tynwald Order Paper

[Slim]

Slim take note, all the information is from official sources, quoted and can be independently verified.

Great, but none of it appears to be relevant. The accusation of a conflict of interest was made regarding the payments between pinewood and gasworks, what does the 2007 arrangements have to do with that?

 

That aside, you've nothing above to say that Mr Christian was anything but the person who tabled the proposal. It would have been someone in Treasury who made the final decision. Someone who isn't in Treasury wouldn't have been authorised.