Follow the money, goes the adage.
But when it comes to the taxes collected by foreign countries to compensate writers and directors, the trail is a convoluted one at best.
Now, the Dept. of Labor is investigating the Writers Guild of America West for allegedly failing to pay millions of dollars of such funds to its members.
At issue are funds collected in more than a dozen countries on behalf of WGA members. (The Directors Guild of America has a similar arrangement.)
Those nations typically impose a fee on blank videocassettes and VCRs as a sort of copyright use tax, which typically includes a producers’ share that goes to studios, for films and TV programs aired in those markets.
According to the WGA, the WGA and DGA have agreements to handle those funds for U.S. writers and directors — both members and nonmembers. Countries covered by those pacts include Argentina, Austria, Denmark, France, Germany, Hungary, Italy, Mexico, the Netherlands, Poland, Spain, Slovakia and Switzerland.
WGA West member Eric Hughes, who twice ran for the presidency of the WGA West, confirmed the existence of the Labor Dept. investigation.
The Dept. of Labor had no comment. Tony Segall, outside counsel to the WGA West, said: “We are aware of no federal investigation. We don’t know how this would be within the Dept. of Labor’s jurisdiction.”
Probe comes just as the WGA West has been working to settle a lawsuit over collection of foreign levies for writers who aren’t WGA members. But those efforts apparently collapsed recently after plaintiff William Richert told attorney Neville Johnson to withdraw his name from the suit.
Richert said he took that action after an attorney at Johnson & Rishwain told him the firm was moving — against his wishes and without his knowledge — to settle the matter with the WGA West through an arbitration or mediation.
“He (the attorney) said that the guild had admitted to some accounting flaws or procedural mistakes but they were correcting them as part of the negotiations,” Richert said. “He said that the money amounts involved were very small.”
Richert told Daily Variety he was uncomfortable settling the case because he believes the dollar amounts owed are significant.
“I was originally told when I agreed to be a plaintiff that there was a giant amount of money that was being withheld from widows and retired writers,” he added. “Maybe they picked the wrong guy to be the plaintiff.”
Segall said of the Richert suit, “We’ve participated in one day of mediation at the suggestion of the judge, and we’ll have a second day of mediation shortly.”
Hughes also asserted Tuesday that the foreign levy amounts due to writers are “considerable,” noting that quarterly payments from Germany for the estate of Preston Sturges during a single quarter of 1999 exceeded $5,000. Hughes additionally said Johnson has knowledge of evidence that a witness has supplied the government in the investigation.
“Mr. Johnson has full knowledge that the individual amounts are considerable and that the union does not keep an accounting of foreign levies,” Hughes said in a statement. “My union is not being honest with me or any other member. What has been said, officially and unofficially, by the guild about foreign levies has not been factual.”
The foreign levies issue first came to prominence last year when writer-director Richert (“The Man in the Iron Mask,” “Winter Kills”) filed suit in state court in Los Angeles.
The Richert suit — now in federal court — alleges that the WGA has no authority to collect the funds for nonmembers, hasn’t communicated that information to the affected writers and hasn’t paid them. Richert sought class-action status for the suit and asserted that the allegations cover at least 1,000 writers.
WGA officials said at the time of the filing that the suit was without merit and that the guild’s authority to collect the funds for nonmembers stems from initial agreements it struck in the late 1980s with the collection agencies. Segall said Tuesday that Richert isn’t entitled to raise the issues “because he’s not a member of the class.”
A few days after Richert’s suit was filed, WGA West president Daniel Petrie Jr. sent a letter to all 8,000 WGA West members to complain about the accusations against the guild, focusing on complaints that the guild had collected but not yet dispersed foreign levies to writers such as Tom Clancy and to the estates of Vladimir Nabokov, Sturges and Alan Pakula in amounts between $2.38 and $205.
“The guild is not hiding anything nor trying to steal anything,” Petrie asserted at the time. He also noted the guild’s Web site contained the names of those owed money and that the names stay on the site even after a check’s been sent.
The WGA West admitted at the time that it was holding $23 million in such funds and said it would distribute $8 million by the end of 2005. Hughes said at the time that the guild hadn’t made serious efforts to let writers know about the funds.
The DGA was sued last month by director William Webb on similar grounds over its practice of collecting foreign levies for helmers who aren’t DGA members. Webb alleged that the DGA began making foreign collections in 1991 on monies due to copyright holders, has no authority to collect the funds for nonmembers, hasn’t communicated that information to the affected directors and hasn’t paid them.
The DGA said the Webb suit was baseless and noted it had spent “considerable” time and effort to distribute tens of millions of dollars received from foreign collection societies to guild members and nonmembers alike.
The developments in the WGA investigation come two years after the Dept. of Labor supervised a rerun of the WGA West presidential election, due to the federal government’s conclusion that the WGA West had failed to properly qualify Victoria Riskin as a candidate.
Hughes was defeated by Riskin in the 2003 election and was defeated by Petrie in the government-supervised rerun.