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Filmfest Bribery Case Could Have Deep Impact

Could seriously hinder the way Hollywood does business overseas.

UPDATED: For four years, from 2002 to 2006, Gerald and Patricia Green ran the Bangkok International Film Festival in Thailand. They brought the glamour of stars such as Catherine Deneuve and Michael Douglas to gala events, and films like Pedro Almodovar’s “Talk to Her” to the screen.

To achieve that, the U.S. Department of Justice says, the Greens bribed Thai authorities $1.8 million, for which they received $14 million in government contracts and grants.

On Aug. 18, the Greens — he produced Oliver Stone’s “Salvador” in 1986 and was an executive producer on the 2006 Christian Bale film “Rescue Dawn” — go on trial in a Los Angeles federal court, charged with violating the Foreign Corrupt Practices Act. (The trial was initally scheduled for Aug. 4 but was postponed.)

The Greens were arrested in December 2007 and have pleaded not guilty. They are currently out on bail.

The consequences of the case could have serious implications for the way Hollywood does business overseas. This is especially true in countries where the local culture demands a few palms be greased to get a job done.

“The movie industry has good cause to be somewhat fearful of the way the administration may or may not choose to utilize this law,” Green’s lawyer, Jerome Mooney III, told TheWrap.

The money allegedly went to, among others, former Tourism Authority of Thailand Governor Juthamas Siriwan, through Film Festival Management, a company specifically created to bid on the Bangkok International Film Festival.

The Greens were awarded the management contract for the 2003 debut of the Bangkok International Film Festival. Created out of the Bangkok Film Festival, which debuted in 1998, it saw such stars as Steven Seagal walking the red carpet, master classes from Terry Gilliam, films such as Julie Taymor’s “Frida,” starring Salma Hayek, and Park Chan-wook’s “Oldboy” playing to packed houses. 

Their involvement with the festival, and the various spin-offs of it, ended when Siriwan and other officials they dealt with lost their pivotal positions in a coup in 2006.

The Greens are also accused of obstruction of justice and falsified tax returns. In indictments filed in October 2008, the Department of Justice alleged that, besides the greasing of palms with bribes, they "altered and falsified film production budgets to make them appear as though they were created in 2006 in an effort to characterize bribe payments as bona fide film production expenses” when the budgets “were not created in 2006." 

It is charged that they hid the payments in various businesses, all of which had the same offices and personnel, and created false tax returns.

 

The corrupt practices act, which became law in 1977, prohibits American citizens and corporations from making “an offer or payment of anything of value to a foreign official, foreign political party or candidate for political office, for the purpose of influencing any act of that foreign official in violation of the duty of that official, or to secure any improper advantage in order to obtain or retain business.”

In recent years, investigations and prosecutions under the corrupt practices act have become the number two enforcement priority behind terrorism cases. This is one of the few cases in which an alleged violation has resulted in a trial.

If convicted, the Greens could be sentenced to a maximum penalty of five years in prison. The tax charge carries an additional 10-year sentence, and they could get 20 years for the money laundering.

The problem with the corrupt practices act and the film industry, as lawyer Mooney sees it, is that the act neglects to take into account the real cost of doing business outside North America and Western Europe. “The fact, is in the movie business there are many things that have to be taken care of, and that have to be paid in local areas,” he told TheWrap

By prosecuting the couple, the U.S. government is simply "not accurate in what it is saying. They never inflated any budgets for any purpose, and they did not hide any of the funds they paid to anywhere,” he told TheWrap. “They all showed up properly in their books and records.”

In that context, last month, Mooney and Marilyn Bednarski, the lawyer for Patricia Green, even attempted an order precluding the prosecutors from using terms like "bribe" or "kickbacks" at trial. While that attempt was unsuccessful, Mooney said the judge appreciated the Greens’ concerns and has told the government to watch its language.

 

"They can’t throw the words around just for the purpose of trying to create improper implications. They’ve got to be contextual and appropriate to the setting," Mooney told TheWrap.

 

Jonathan Drimmer, a lawyer specializing in the corrupt practices act, agrees that the outcome of the Green case could seriously affect Hollywood’s desire to make movies overseas.

 

While there are “narrow” payment exceptions granted within the act — as long as they are made through official and transparent channels — the real crux, says Drimmer, is in strict adherence to letter of the law. The U.S. government, he said makes illegal for businesses in this country what is the natural course of business in another, especially in cultures outside of Western Europe.

 

“We are mixing apples and oranges,” Drimmer told TheWrap. “One of the most vocal criticisms of the application of the law is that it restricts the ability of U.S. businesses, including the film industry, to conduct business overseas and be competitive. We are imposing our own legal regime on a culture where often the cost of doing business is making a small contribution or gratuity.”

Though Drimmer said the Greens’ was the first case he knew of to be prosecuted under the corrupt practices act, it is not the first example of a Hollywood production running into trouble for greasing palms overseas.

 

Although not a government case, in 2007, the budget of “Sahara,” the 2005 adventure film starring Matthew McConaughey was entered into the public record in a contractual lawsuit between author Clive Cussler, who wrote the novels on which the film was based, and production company Crusader Entertainment.

Cussler’s complaint was not budget-oriented. He claimed that the final script featured changes which he had not authorized and which caused the movie’s failure at the box office. But during the course of the suit, the budget showed that there were "courtesy payments," "gratuities" and even "local bribes" totaling $237,386 handed out on locations in Morocco to expedite production.

Among the line items that seemingly would clearly fall under the corrupt practices act were a $40,688 payment that halted a river improvement project during filming and $23,250 for "Political/Mayoral support."

Crusader countersued Cussler, claiming the author also had breached his contract, giving the movie bad publicity and making details of his financial negotiations with Crusader public, and both sides ended up having to pay.

Contacted by TheWrap, Department of Justice spokesperson Laura Sweeney had no comment on either the Green case or the “Sahara” case.

Others distinctly do.

“You do have a recipe here,” says lawyer and former DOJ corruption-enforcement official Jonathon Drimmer, “where the outcome of the Green case could become an instigator of addition scrutiny of the entertainment industry by the Department of Justice. Like they have with the medical device industry and the oil services industry, they could begin to pursue industry-wide cases based on an investigation of one on a practice that may be repeated by others.

“I’d look very close at my internal controls and books, because the Green case is just the kind of spark to lead to a much brighter spotlight on the film industry.”

For Mooney, the corrupt practices act needs a "second look" to prevent producers and Hollywood studios from being caught up in the vaguenesss of a law which, in his view, "can be problematic for domestic industries — an dthe movie industry is certainly one of those."