Hollywood studios and film producers are set to face increasing scrutiny from anti-fraud officials, as a result of a trial involving incidents in Bangkok that could have repercussions across the entertainment sector.
Gerald Green, an American film producer, and his wife, Patricia, are alleged to have violated the US Foreign Corrupt Practices Act by paying bribes to a Thai tourism official. It is claimed that the alleged bribes were offered to obtain contracts to run an international film festival in Bangkok.
The Green’s trial in Los Angeles, which is entering its second week, is the first FCPA case to involve the entertainment industry. The case suggests that Hollywood has joined the pharmaceuticals and energy industries as a target of anti-fraud enforcers at the US department of justice.
Mr Green produced Rescue Dawn, a Vietnam war drama starring Christian Bale, and Salvador, starring James Woods. Mr Green and his wife have pleaded not guilty to bribery charges.
The DoJ declined to comment on the case. But its new interest in Hollywood could become a severe headache for studios and producers that shoot films in international locations.
Cash inducements to local officials are common in overseas shoots and such payments have hitherto been subject to only patchy scrutiny in Hollywood’s notoriously opaque accounting system.
“The reality is the entertainment industry has always been a little loose in its approach to best practice,” said Jonathan Drimmer, a former DoJ lawyer who is now a partner in the anti-corruption group at the Steptoe & Johnson law firm.
The Green’s trial is likely to be followed by more FCPA investigations in Hollywood, he said. “The justice department identifies a practice [in a particular industry] and then suddenly they go across that industry in a lateral manner. They did it with the medical device industry and they did it with oil and gas companies.”
The bulk of the FCPA cases brought in recent years have focused on the energy and mining sectors.
However, the US government has recently expanded its focus to other industries, including healthcare and retail.
In the past six years it has stepped up its anti-corruption work, launching 17 enforcement actions in 2008 compared with three in 2003.
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