Puttnam to sue Goldcrest

The road to court is paved with broken dreams.

For six years, David Puttnam was the most influential board member of Goldcrest, the multiple Oscar-winning company that made “Gandhi,””The Killing Fields” and “The Mission.”

Now he is preparing to sue his old company for what he alleges is inadequate financial reporting and failure to pay money owed from four of his films.

Merchant’s mad, too

And he’s not the only one who’s aggrieved. Producer Ismail Merchant also is suing Goldcrest for monies allegedly owed from the smash hit “A Room With a View” and “Maurice.”

Merchant’s company, Merchant Ivory, is joined in the “Room” suit by co-investors British Screen Finance and Curzon Film Distributors. Merchant accuses Goldcrest of inaccurate financial reporting, misapplying distribution expenses, failing to distribute effectively and failing to collect revenues efficiently.

Merchant-Ivory have audited Goldcrest’s books twice, each time apparently gaining additional revenues from the company.

It is believed that trial dates will soon be set for the Merchant and Puttnam cases.

The disputes are especially ironic because throughout the 1980s Goldcrest, partly at Puttnam’s bidding, tried to be more honorable than the average film company. Producers, directors, stars and even crews were exhorted to see themselves as members of an intimate and trusting family.

In this spirit, front-end fees were kept down in the expectation that back-end profits would be shared fairly among participants.

According to Puttnam, it hasn’t worked out like that and he is taking the case to court to prove it.

His four films–“Local Hero,””Kipperbang,””Secrets” and “Experience Preferred But Not Essential”–date from the first half of his six-year association with the company. In all, Puttnam made eight feature films and nine telefilms for Goldcrest, garnering eight of the company’s 19 Oscars.

Puttnam resigned from the board to take the top job at Columbia Pictures in the summer of 1986.

The following year, Goldcrest was acquired by leisure conglom Brent Walker, headed by George Walker. In 1990, as Brent Walker teetered on the verge of collapse, Walker sold out to a management team led by John Quested.

Per Puttnam, the post-1987 management has been “less than forthcoming with information” about revenues generated by the four films and has foiled his attempts to “come up with an amicable solution” to the problem of the disputed money.

Just how much is involved in the Puttnam case is an open question. Goldcrest invested T3.9 million ($ 5.8 million) in the four pictures, which at last count had contributed profits of about T1.5 million ($ 2.3 million) to the company coffers. It is not clear how much, if any, of this money has been distributed to the 245 cast and crew members who could be entitled to a share.

Among the participants are stars Burt Lancaster and Peter Riegert, helmers Michael Apted and Bill Forsyth, composer Mark Knopfler and writer Jim Rosenthal, all represented in Puttnam’s suit.

According to Puttnam, the amounts involved are less important than the principle at stake. He sets up trust funds for cast and crew on his movies, on the basis that all should benefit if the films succeed. The most profitable trusts were those on “Midnight Express” and “Chariots of Fire.”

To cover payments to the trusts, Puttnam’s company, Enigma, was able to negotiate an unprecedented 60% profit-share in some of the films it made with Goldcrest. In exchange, budgets were kept low.

Two points are now in dispute. The first is whether non-film revenues, such as the proceeds of tax-leasing deals, were to be included in the calculation of profits. Puttnam insists they were. The second is whether interest charged by Goldcrest should accumulate according to a compound or simple formula. Puttnam says the latter.

A quiet Goldcrest

Goldcrest is keeping quiet.

“This is a matter of contractual interpretation between two companies. As it is now the subject of court proceedings, we can’t comment,” said Tony Murphy, Goldcrest VP of worldwide distribution.

Goldcrest certainly knows the terrain, having successfully sued MGM/UA for non-payment of monies due from the U.S. video release of “All Dogs Go to Heaven.” Reportedly flush with cash, Goldcrest has nevertheless failed to kick-start its long-awaited production slate.

Now, with bankrupt George Walker under arrest on charges of misappropriation of funds–some of it alleged to be money owed to Goldcrest–the company could find itself diverted by further protracted court proceedings.

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