MUMBAI: Sony Corp has admitted that investigations are on at its India unit – Multi Screen Media (MSM) - for alleged corruption in business practices.
In an email sent out to media, Sony Corp today stated that "this investigation is ongoing… Sony Pictures is strongly committed to business ethics and the investigation of allegations of wrongdoing that might arise anywhere in the world. If wrongdoing is identified, we take appropriate action."
The Sony Pictures Entertainment email was sent out in response to a Bloomberg report on alleged business malpractices at MSM based on emails leaked following the hack on the electronics and entertainment giant's IT infrastructure late last year.
The Bloomberg report stated that the leaked emails revealed that Sony ordered an investigation, led by Ernst & Young, to look into its India business practices, which in turn revealed evidence of wrongdoing. And the hacked emails revealed that E&Y had allegedly uncovered fraudulent business practices in the case of the Sony and Discovery Communications joint venture (TheOneAlliance). Cases of fraudulent bids, kickback and excessive handouts to government officials came to light in the investigation by E&Y, said the Bloomberg report.
It may be recalled that the Sony-Discovery JV company - TheOneAlliance - was allegedly dissolved on 1 January, 2015 due to the new regulations by the Telecom Regulatory Authority of India (TRAI), which stated that distributors could no longer bundle channels from different broadcasters while selling content to various platforms such as cable operators and direct-to-home (DTH) companies.
Additionally, as per the Bloomberg report, an email from Sony Pictures Entertainment senior vice-president and compliance counsel Cindy Salmen in early October stated that “further investigations be conducted, employees be re-trained and that some workers face disciplinary actions, including termination.”
She cited four areas of concern in a memo, the Bloomberg report states. The first related to TheOneAlliance as a distributor of television channels to cable TV or DTH operators. The second to carriage or retransmission fees. The third was linked to potential gifts and entertainment to government officials. And finally the fourth referred to customs payments. All these were investigated by E&Y.
And on the first area of concern, the probe revealed that the process of appointing vendors for distribution through competitive bids was suspect. In some instances some of those who bid did not exist and those who won had ties to those who lost. Employees were aware of the practice, the Bloomberg report has the memo saying.
E&Y stated that it received allegations that both MSM and MSM Discovery were receiving kickbacks from cable TV operators and distributors ranging from 10-15 per cent of carriage fees. This apart, MSM Discovery recruited employees who were fired by other rivals for receiving kickbacks.
On the third probe, the memo pointed out that government officials were given expensive IPL tickets and laptop bags, much beyond the MSM Discovery limits. As far as payments to customs by MSM Discovery’s marketing group were concerned, the memo stated that E&Y found some communication which was questionable.
Sony Pictures senior vice president for global investigative and forensic services Raymond Smith had called for an investigation with regards to the alleged malpractices and policy violations in September. Emails from him revealed that he was planning to travel to India along with his colleague Mike Ornelas (executive director for global investigative and forensic services) to investigate the matter in October 2014, said the Bloomberg report.
The report added that the leaked emails disclosed that “alleged” corruption at MSM as well was being investigated. This followed an anonymous email to Sony Pictures Television worldwide networks president Andy Kaplan and to Sony Pictures Home Entertainment boss Man Jit Singh who headed the India venture until last year. The email alleged that MSM India deputy president Sneha Rajani was allegedly routing all movie acquisitions for the channel via an external agent namely Manish Shah of Goldmines Telefilms, which in turn raised the cost of buying by as much as 35 per cent. The email further alleged that Rajani also communicated to movie producers, who wanted to sell satellite rights for their films, to route their proposals through Shah.
When Indiantelevision.com contacted MSM officials no one was willing to come on record. But a senior manager called the allegations against Rajani as a total fabrication or motivated by a disgruntled fired employee.
Goldmines Telefilms owner Shah stated that “it was a bunch of crap. Let the investigations continue. I have been dealing with all the broadcasters not just Sony. So I am not worried. We have been very transparent.”
No one was available to comment from MSM Discovery at the time of writing the report.
With heavy charges of malpractice and company policy violations, it remains to be seen what the outcome of the probe throws up and more importantly, what it means for the people, whose names are involved.
