MUMBAI: The Securities and Exchange Commission (SEC) has sent letters of inquiry to at least five movie studios in the past two months, including News Corp’s 20th Century Fox, Disney, and DreamWorks Animation seeking information about potentially inappropriate payments to government officials in China.
The letters ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China. The SEC is said to be investigating whether the American entertainment companies have paid bribes or had any illegal dealings with Chin se officials.
China has become a top priority for American entertainment companies looking to take advantage of its booming population and love of entertainment. The state-owned China Film Group tightly limits the number of foreign releases allowed in the country to about 20 per year, though in February a deal was cut to allow more American films to screen in the country.
If true, an investigation could lead to prosecution for violations of the Foreign Corrupt Practices Act, which makes it illegal for Americans to pay bribes to foreign government officials in order to facilitate their business dealings.
While the law has been on the books in the US since the ‘70s, it has not been properly put to use yet.
The total Chinese box office has soared in recent years with multiplexes coming up by the dozens. In 2009-10, James Cameron’s Avatar grossed more than $193 million in China, helping the film to become the highest-grossing film of all time.