SEC probes alleged China film bribes by Hollywood studios
Zhang Ziyi
The Securities and Exchange Commission has begun an investigation into whether some of Hollywood's biggest movie studios have made illegal payments to officials in China to gain the right to film and show movies there, according to a person with knowledge of the investigation.
The inquiry creates a potential roadblock for the industry's plans to expand in one of the world's largest markets.
The SEC investigation has so far focused on at least three studios, but all of the largest and some smaller studios have been contacted or made aware of the inquiry, according to the source, who has direct knowledge of the investigation but who spoke on the condition of anonymity because the matter could end up in court.
Foreign corruption act
In the last year, both the SEC and the Justice Department have increased investigations under the Foreign Corrupt Practices Act, which forbids U.S. companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.
Government investigators have been particularly interested recently in the practices of U.S. companies in China, one of the largest potential markets and one that Hollywood executives have been keen to enter.
An SEC spokesman declined to comment Tuesday.
The investigation was first reported Tuesday by Reuters, which said that five companies had been contacted by the SEC, including 20th Century Fox, Walt Disney and DreamWorks Animation.
Officials at those companies declined to comment, as did a spokesman for the Marvel Entertainment unit of Disney, which recently said it would film part of "Iron Man 3" in China.
Spokesmen for the other major Hollywood studios, none of which are known to be under investigation, either declined to comment or did not respond to a request for comment.
Hollywood has been trying to get more films into the Chinese market for decades, but efforts have picked up in recent years in large part because China has identified cinema as a growth priority. China is racing to build more modern theaters to entertain an expanding, cinema-loving middle class. The country is also escalating local film production, partly as a way to spread its culture across the globe.
Princess Raccoon
NTSC/Region 0. This film centers on the lovely and talented Zhang Ziyi who plays Tanuki-hime, a raccoon spirit princess who suddenly falls in love with Amechiyo (Bright Future's Odagiri Jo), a handsome prince who finds himself exiled from his vainglorious father's kingdom. Will the two lovers stay together or will fate tear them apart? With its kaleidoscope of top of the line special effects, surreal painted backdrops, and self-consciously theatrical soundstages, Princess Raccoon is a psychedelic, hallucinatory, and ultimately joyous cinematic experience, making it a true spectacle in every sense of the word! After undergoing extensive training, lead actress Zhang Ziyi dances, speaks in Japanese, and even sings a few tunes in Mandarin to complete the zany, "anything goes" mentality of both the film and director Suzuki himself. With performance styles ranging from operetta and kabuki to rap and reggae, Tanuki Goten is a delirious, fantasia-like tale of forbidden romance that emphasizes the importance of following one's heart!
In February, Xi Jinping, China's vice president and likely future leader, visited politicians in Washington and movie executives in Hollywood. Soon afterward, China raised the number of foreign-produced films that can be shown there each year and increased the portion of box-office revenue from China that the movie studios get to keep.
Under the agreement, China agreed to allow 34 foreign-produced films to be shown annually, up from a quota of 20, as long as the additional films use either Imax or 3-D technologies. China also agreed to let studios keep about 25 percent of the box-office revenue; currently, Hollywood gets about 15 percent.
High-level negotiations
The discussions leading to the deal were conducted at a very high level, as Vice President Joe Biden joined Xi in personal negotiations. Jeffrey Katzenberg, the DreamWorks Animation chief executive, and Disney's chief executive, Robert Iger, also helped forge the agreement.
China currently has about 6,000 movie screens, up from roughly 1,500 three years ago, according to studio distribution executives. The Chinese government has said it expects 20,000 screens to be operating by 2015 and 40,000 by 2040, bringing it on par with movie exhibition in North America.
Ticket revenue in China is expected to reach $ 5 billion by 2015, up from $ 2.1 billion last year, according to box office tracking companies.
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