Page 1

Inside this issue:

The Film Industry Front Page

The Current Position The History THE TRUTH

The Film Industry in the Isle of Man

Liberal Vannin notes that, in its response, Treasury did not specifically agree to report to Tynwald by December

The film industry has been reported by Government as being

2011 but neither did it refuse to.

a huge success with much benefit generated for the Island. Prior to 2007 film producers could obtain grants direct from a

A Tynwald Committee has revealed that up to 31 March

Government Department or Government controlled entity.

2010 £25,110,462 has been invested in the film industry

In August 2007, the then Treasury Minister, Alan Bell,

and £2,218,062 has been received by way of return on

entered into an agreement with CinemaNX Limited.


Logically, it has to be assumed that

£27,107,600 remained in the fund on 31 March 2010. CinemaNX Limited is a private company but has had a £50 million fund placed under its control.

Liberal Vannin acknowledges that from inception this is a complicated issue but we have attempted to set out the

A Tynwald Committee has raised concerns over various

history and the current situation of the film industry,

aspects of this arrangement including whether or not it is

including the problems.

producing the financial benefits that should be expected. The concerns raised by the Tynwald Committee regarding This agreement comes to an end in August next year and

the potential for a conflict of interest are discussed further

one of the recommendations made by the Tynwald

at the end of this booklet. The facts are printed – it will be

Committee was:

up to you to form your own opinion.








Development consider options for the longer term support and development for the film and media industry post August 2012. Including possible alternative models, and report to Tynwald by December 2011.”

We invite you to read on.

Film Industry from 1995 to 2009

The normal investment was up to 25% of the production

1993 The Isle of Man Film Commission was created under


the Department of Tourism and Leisure. It was transferred

requirements which were publicly stated.







to the Department of Trade and Industry in July 1996 and then to the Department of Economic Affairs following the

The usual process was as follows:

Governments restructure in April 2010.

The consultants to the Department of Trade and Industry submitted a formal report The application was assessed by Film Commission staff

From 1995 to 1997 the funding to attract film makers was via a combination of tax credits worth a maximum of £350,000

If accepted by Film Commission staff, it was

and a potential loan from the Department of Trade and

referred to

Industry worth up to £150,000. The total package had a

Chief Executive of the Department of Trade and

maximum value of £500,000. The first seven films made in


the Isle of Man utilised this scheme.

the Film Commission Board and the

Agreement of Treasury was sought

Contracts were signed

In 1997/98 it was decided to make an annual allocation of funds available in the form of direct grants to film

When all these steps had been taken the Department of


Trade and Industry the agreed financial assistance was paid by the Department of Trade and Industry direct to the production company.

The budgets for these years were as follows: 1997/1998




The two primary functions of the Isle of Man Film





Commission were promotion of the Isle of Man as a





location for film production and investment by assessing





production scripts with a view to providing financial support.

This duality of responsibilities was believed to be confusing

This report identified a number of concerns:

to the production companies and it was decided to separate

the functions.

 

In the 2002 Budget speech, the then Treasury Minister, Alan Bell, announced the creation of a new fund to supplement the money already available via the Department of Trade and Industry’s annual budgets.

This “new financial

mechanism” was to be Isle of Man Film Limited.

Succession planning Sustainability Local spend

In 2006 the UK Government announced tax relief changes that would affect the film industry in the Isle of Man. In 2007 the new revenue sharing arrangement between the UK and Isle of Man Governments came into effect. The combination of these circumstances led to a change in the

This company was incorporated on 17 June 2003. It was a

Isle of Man Government’s approach to financing the film

company limited by guarantee whose sole member was the

industry and on 22 February 2007 a new company,


CinemaNX Limited, was incorporated to handle the

The Isle of Man Film Commission retained the promotional aspect under the new title of Isle of Man Film. Under this new structure, grants were no longer paid by the Department of Trade and Industry direct to the film production companies.

Instead, the Media Development

financing of new projects. This was not debated by or approved by Tynwald. Isle of Man Film Limited was retained, and still exists, as it is still able to receive funds due from contracts held with distributors under the previous structure.

Fund, controlled by Treasury, paid money into Isle of Man


Film Limited who then paid the film producers.

production was transferred from the Department of Trade

In June 2004 Treasury’s Internal Audit Division produced a







and Industry to Treasury.

report on their detailed audit work of Isle of Man Film Limited

There are some very significant differences between the

covering the period April to December 2003.

old structure, utilising Isle of Man Film Limited and the new structure involving CinemaNX Limited

Isle of Man Film Limited

CinemaNX Limited

Isle of Man Film Limited is a company limited by guarantee

CinemaNX Limited is privately owned. Its directors are:

and wholly owned by Treasury. The directors are:

James Stephen Christian

Andrew James Fingret

The Department of Trade and Industry Minister

Marc Jack Wylie Samuelson

The Department of Trade and Industry Chief Executive

Gillian Elizabeth Duffield – stated by the Tynwald

Treasury’s Financial Controller

Committee as having resigned in September 2009

James Stephen Christian

but no resignation is recorded at Companies

Andrew James Fingret


Kenneth Clive McGreal (Financial Controller) – a

Isle of Man Film Limited would invoice Treasury in

board member on behalf of Treasury who has less

respect of individual projects.

influence on the company’s decisions than other Directors under the Shareholders’ Agreement

Isle of Man Film Limited does not make a profit as any surplus it generates is transferred back to the Media Development Fund. Audited accounts are laid before Tynwald and are available to the public.

Its shareholders are: 

James Stephen Christian

4290 “A” shares

Andrew James Fingret

2310 “A” shares

Marc Jack Wylie Samuelson 1700 “B” shares

Gillian Elizabeth Duffield

1700 “B” shares

Treasury approval is needed for each individual project but the entire £50 million has been handed over to the company.

Treasury is only entitled to 20% of CinemaNX Limited’s profit

A Public Accounts Committee was tasked with producing

while the Media Development Fund is entitled to the bulk of

a report on “The Media Development and Public

any profit shares generated by individual films.

Investments on the Film Industry from 1995 to 2009. The

CinemaNX Limited has to provide Treasury with two seats for

recommendations arising from that report are revealing

the UK premiere for each completed film.

but equally so are the responses from the Treasury

Treasury has described the relationship with CinemaNX Limited as the company acting as a Fund Manager to the Treasury. This relationship has not had Tynwald approval. Treasury seems to have a different interpretation of the relationship with CinemaNX Limited to that of the Department of Economic Development who describe CinemaNX Limited as an investment partner of Isle of Man Film.

Minister. Recommendation 1 “That Financial Regulations be amended to ensure that, where an FD8 waiver is sought by Treasury itself, such a waiver shall not be granted unless it is first approved by the Council of Ministers.” Below is an excerpt from the Financial Regulations of

Fund managers operating in the Isle of Man have to be




“Where it is not possible or practicable to seek competitive

CinemaNX Limited does not appear to be registered with

tenders (e.g. only one known supplier, in an emergency,

the Financial Supervision Commission in any capacity.

or where the timing of delivery is of the essence) the





formal tendering process may only be waived upon the CinemaNX Limited does not have to file its accounts, they are not laid before Tynwald and they are not available to the public.

prior written approval of the Accounting Officer, or his deputy in his absence, where the value of the order is likely to exceed £50,000 but be less than £100,000.

The Ministers of the two departments responsible at the time

Where the value is likely to exceed £100,000 the prior

were Alan Bell as Treasury Minister and David Cretney as

approval of the Treasury must be sought.

Minister for the Department of Trade and Industry.


In all instances where strict competitive tendering is not the

Local spend, or approved expenditure, is defined as being

method used, the Accounting Officer must satisfy himself

“Island based expenditure made by the Isle of Man

that the methodology used is transparent, accountable and

resident production services company with Isle of Man

produces a cost effective solution and shall be documented

based individuals and companies”.

and retained for audit purposes.”

Local spend is obviously one of the reasons for

When creating the new structure and relationship with

encouraging the film industry to produce films on the

CinemaNX Limited Treasury approved its own waiver as, for


reasons yet to be explained, it did not want to follow normal

members that the local spend for the first 86 films was £67

procedure and go out to public tender.


Treasury’s written response

In 2003/04 Internal Audit was concerned that, whilst the

“The preferred position would be for Treasury to

production companies’ statements of local spend had

determine each case on its merits and refer such

been independently audited, they had not been reviewed

applications to the Council of Ministers as it considered

by Film Commission staff for reasonableness but had


been accepted on face value.

This recommendation was debated in Tynwald on 14 December 2010. The block vote of the Council of Ministers and the Treasury members came into play and the recommendation was rejected.

In October 2007 it was reported to Tynwald

Internal Audit went on to do a detailed study of three productions and found that the local spend figures included a number of items that should not have been considered as local spend. On the basis of this sample they calculated that the figure

Recommendation 2

taken as likely to accrue to Government general revenue

“That Treasury review the methodology of defining local

as a result of local spend had been overstated by almost



The 2010 Public Accounts Committee reported “……….we

The Chief Internal Auditor responded that no formal follow

are concerned that that there could still be some inaccuracy

up work had been undertaken and that it was not planned

in the reporting of local spend.”

to be subject to a systematic review in its three year planning horizon.

Treasury’s written response “The Treasury is of the opinion that the definition of

Treasury’s written response

“local spend” in the present context of film budgets is of

“As a matter of principle Treasury does not accept

little consequence and not worth investigating any

that there is any fundamental flaw in the definition or


certification of local spend.

However, Treasury is content to review the







Department of Economic Development.”

The current audit process is exhaustive, rigorous and not open to interpretation. These processes currently

This recommendation was agreed by Tynwald on 14

satisfy the requirements of a formal certificate to the

December 2010.

UK Film Council, UK Auditors, Completion Border and

Recommendation 3

any third party financiers.

“That the Treasury take steps to foster the development

Treasury maintain that Tynwald can be reassured and

of a film audit specialism within the Island’s financial

place confidence in such statements.

sector, with the aim of improving the confidence Tynwald can place in statements of local spend.”

In respect of the development of a film audit specialism within the Island, Treasury is obviously

In light of the concerns raised by the 2003/04 Internal Audit

supportive of the idea however, given the relative

and the concerns raised by the 2004 Public Accounts

volume, size and nature of Isle of Man Films, the

Committee, the 2010 Public Accounts Committee raised the

market for such work is relatively low value and

issue with the Chief Internal Auditor and asked about any

unlikely to sustain any local industry specialists.

follow-up work done in respect of the local spend issue.


Treasury will take forward the recommendation and test the local financial services sector with the proposal.” This recommendation was agreed by Tynwald on 14 December 2010.

film industry and on 22 February 2007 a new company, CinemaNX Limited, was incorporated to handle the financing of new projects. The Committee concluded that between 2002 and 2007

Recommendation 4

the Media Development Fund appeared to have achieved

“That Treasury and the Department of Economic

what it had been set up to do but stated that from 2007

Development jointly publish, by December 2011, a

onwards there remains a lack of evidence.

specific financial performance target for CinemaNX Limited – such target to be accompanied by details of

The Committee also noted/concluded/stated:

any performance management framework in place in

respect of the less tangible benefits attributed to the activities of the film industry in general.”

management, a target that each investment break-

The 2010 Public Accounts Committee noted that the film

even would not be acceptable compared to existing

industry had brought benefits to the Island but looked at the

benchmarks for fund managers.”

cost of obtaining these benefits and the financial return for Government on its investment in this industry. In 2006 the UK Government announced tax relief changes

the Isle of Man Government’s approach to financing the

“From 1997 to 31 March 2010 £25,110,462 has been invested in the film industry.”

and Isle of Man Governments came into effect. The combination of these circumstances led to a change in

“CinemaNX Limited is not being treated as a fund manager.”

that would affected the film industry in the Isle of Man. In 2007 the new revenue sharing arrangement between the UK

“The Financial Controller of CinemaNX Limited indicated that each film investment should seek to break even.” “In the context of mainstream investment

“From 1997 to 31 March 2010 £2,218,062 has been the return from that investment.”







investment target it set for CinemaNX Limited.”


“Treasury should publish its wider film strategy and

This recommendation was agreed by Tynwald on 14

explain to Tynwald and the public how they are

December 2010.

assessing the less tangible benefits.” 

“The eight years since 2002 have seen a steady reduction in the Treasury’s aspirations.”

“Will there be any tangible return on the Government’s investment of £50 million over five years?”

“Will Treasury justify the amount of time devoted to CinemaNX Limited and in particular by the senior official required to act as a Director of the company?”

Recommendation 5 That Treasury and the Department of Economic Development consider options for the longer term support and development for the film and media industry alternative












December 2011. In reaching this recommendation the Committee stated: 

“We would urge Treasury to remain hard-nosed and to

That they had serious concerns that the model

demand evidence of tangible returns on its investment.”

adopted in 2007 may not be sustainable.

Treasury’s written response






“Treasury accept that the wider less tangible benefits


resulting from the historic success of the film industry

commercial risk represented by the CinemaNX

have not been made explicit in demonstrating the wider

Limited arrangement.







economic benefit derived by the Island. Treasury will work with the Department of Economic

The five year contract with CinemaNX Limited ends

Development in determining appropriate performance

in August 2012 and the Committee was not

targets for CinemaNX Limited and the film industry in

convinced that it should be renewed in its current



Recommendation 6

Treasury’s written response “Treasury






methodologies of single film finance are becoming less likely to provide a return on investment as have been generated historically. Efforts to redefine what “media development” will consist of into the future will determine the nature and shape of the industry. Whether this is in the form of video, games, mobile advertising, music download, broadcasting services etc. each will be considered on its merits in the final analysis.

“That any extension of the Agreement dated 13 August 2007 between Treasury, CinemaNX Limited and Isle of Man Film Limited, or any similar agreement by way of replacement, should only occur with the approval of Tynwald.” The Committee stated. “In line with the recommendations of our previous report on Reserve Funds we consider that the detail of any new scheme or mechanism should be put to Tynwald for approval.

Even before that stage is

reached, however, it is essential that Tynwald be properly consulted as to any broad change of course.”

Where any changes to the definition, application or use

Treasury’s written response

of the current Media Development Fund is concerned

“Treasury is of the opinion that the commercial agreement

Treasury will consult with the Department of Economic

concluded through Treasury and Isle of Man Film Limited

Development and seek approval of Tynwald.”

with CinemaNX Limited was clearly with the authority of

NB Treasury’s response did not include a commitment to report to Tynwald by December 2011 as had been recommended.

the respective Ministers of Treasury and the Department of Trade and Industry at that time. Treasury is opposed to any requirement to obtain the approval in principle of Tynwald to extend or engage

This recommendation was agreed by Tynwald on 14



December 2010.

implementation policy.”

agreement of







This recommendation was debated in Tynwald on 14

monitored by the Investment Committee of the Treasury

December 2010. The block vote of the Council of Ministers


and the Treasury members came into play and the

Transparency would be improved if Treasury were to

recommendation was rejected.

publish a benchmark “return on investment” against which

Other comments made in the Report are worth noting: “We note that in 2007 the company (CinemaNX Limited)















received the entire balance of the Media Development Fund,

Potential Conflict of Interest

some 50 million pounds.”

The Committee noted that Internal Audit had pointed out

“Treasury and CinemaNX Limited are handling large sums of money on behalf of Tynwald and the public. We believe that

in 2004 that there was the potential for a conflict of interest.

more could be done by Treasury to explain what is being

The 2004 Internal Audit noted that specialists hired on a

done with that money, how it is being done, and why.”

consultancy basis to provide legal and film development

“The committee asked various questions regarding the performance of CinemaNX Limited in its capacity as Fund

investment was actually made. The Committee commented that “this could encourage the

Manager.” Following a

services were only paid a fee for productions where an

response from the

company’s Financial

Controller the committee stated, “We infer from this response, and from the Agreement with CinemaNX Limited

consultants to recommend marginal productions for investment when this might not be in the best interest of the Film Commission.”

and the Treasury, that no specific financial performance

Liberal Vannin wonder if the Tynwald Committee were

target has been set for CinemaNX Limited in their capacity

referring to the seemingly bizarre selection criteria used

as Fund Managers. We would also point out that the target

when the investment was made in Me and Orson Welles

performance of CinemaNX Limited does not appear to be

(details printed later in this booklet).

The Committee also noted that this potential for conflict of

to Gasworks Media Limited (Stephen Christian) and to

interest had not gone away, having learned from the

Samuelson Productions Limited (Marc Samuelson).

accounts of Isle of Man Film Limited that the following sums

In fact, the accounts of CinemaNX Limited for the period to

were paid out each year in “producer fees”.

June 2008 show:







The explanation in the notes to the accounts was, “Isle of

Gasworks Media Limited received fees totalling £150,000

Samuelson Productions Limited received fees totalling £116,667

Out of a total cost of £787,811 in respect of wages,

Man Film Limited has no responsibility to pay fees to third

salaries and social security costs, £516,666 were

party advisors in respect of individual transactions, however,

related to payments to directors

Isle of Man Film Limited invoices and collects, legal and production fees on behalf of Cains Advocates and Gasworks

In addition:  £53,397,255






Media Limited respectively. Isle of Man Film Limited is only

potentially due to Government by way of the

responsible for paying such fees to the extent that they are

agreement between CinemaNX Limited, Isle of Man

first recovered from third parties, thus not exposing Isle of

Film Limited and the Isle of Man Treasury

Man Film Limited to any net third party transaction costs”. The committee noted that the leading players in Cains Advocates and Gasworks Media Limited were Andrew

The company made an operating loss of £1,686,392 in the period

The company owed £682,304 at 30 June 2008 in respect of social security costs and other taxes

Fingret and Steven Christian respectively – both of whom are Directors of Isle of Man Film Limited. The committee also noted that in the accounting period to 30 June 2008 substantial fees were paid by CinemaNX Limited

The company owns two subsidiaries – Lime Swordfish Limited and Cinemanx Films One Limited which in turns owns 100% of Cinemanx Productions One Limited.

Liberal Vannin is sure that you will remember from earlier in

Me and Orson Welles

this publication that:

Investment received £11,723,782 Producers

Ann Carli

Andrew Fingret is a director of Isle Man Films Limited

Stephen Christian is a director of Isle Man Films

Richard Linklater


Marc Samuelson

Stephen Christian is both a director and shareholder of

Co- Producers

Andrew Fingret

CinemaNX Limited

Holly Gent Palmo

Marc Samuelson is a shareholder in CinemaNX

Vince Palmo

Limited. The Tynwald Committee report showed the films that had

Alice Creed

benefitted from investment since the incorporation of

Investment received £850,000

CinemaNX Limited to 31 March 2010.


Adrian Sturgess


Andrew Fingret

Executive Producers

Marc Samuelson

These films are as follows:

Stephen Christian

A Bunch of Amateurs Investment received £2,911,000 Producer

David Parfitt


Karl Sydow

Executive Producers

Stephen Christian Marc Samuelson Jon Diamond

Heartless Investment received £1,415,000 Producer

Richard Raymond

Co- Producers

Andrew Fingret Marc Samuelson Stephen Christian

Wild Target


Investment received £2,825,848

Investment received £2,661,409



Martin Pope

Marc Samuelson

Michael Rose Co-Producer

Andrew Fingret

Executive Producers

Marc Samuelson Stephen Christian

Stephen Christian

Co- Producers

Andrew Fingret Richard Hewitt

Potential Conflicts of Interest

Albatross Investment received £1,645,000

Liberal Vannin can understand why the Tynwald Committee


Adrian Sturgess

had concerns about potential conflicts of interest.

Co- Producers

Andrew Fingret

Liberal Vannin also wonders what criteria have to be met

Andrew Litvin

for films looking for investment using Manx taxpayers’

Marc Samuelson

money. Me and Orson Welles

Stephen Christian

totalling £11,723,782 and we will use this film to illustrate

Executive Producers

has received Investment

our concerns. Chico & Rita Investment received £1,078,423

Me and Orson Welles


Christina Hoete

Select footage was screened at the 2008 Cannes Film

Santi Errando

Festival where financing sales agency, Cinetic Media were

Michael Rose

looking to sell the film to a distributor but it failed to secure

Martin Pope

any American acquisitions.

Co- Producer

Andrew Fingret

Its first full screening was at the Toronto International Film

Executive Producers

Marc Samuelson

Festival which ran from 4th to 13TH September 2008. Again

Stephen Christian

the films distribution rights were not purchased and it went

on to show at the South by Southwest festival in Austin, Texas with repeated lack of success.

Liberal Vannin calls for the Treasury Minister to:

Reconsider her position and to accept the recommendation

In May 2009, CinemaNX Limited announced that it would be

that any extension of the Agreement dated 13 August 2007

distributing the film itself whilst sharing the marketing and

between the Treasury, CinemaNX Limited and Isle of Man

advertising costs with Vue Entertainment.

Film Limited, or any similar agreement by way of replacement

The film was released in November 2009 and in December

should only occur with the approval of Tynwald.

IndieWIRE reported:

Liberal Vannin calls upon the Public Accounts Committee to:

“The do-it-yourself release of Richard Linklater’s ME AND

for funding from producers not connected to CinemaNX

Orson Welles got off to a very nice start, averaging $15,910

have been submitted to it for funding that have been

from its four theaters, the highest PTS of all debuting

refused and what the reasons for rejection have been.

films…….While Orson Welles is one of the first examples of such a high profile film going the DIY route, if it proves

Ask CinemaNX Limited to reveal to it how many scripts

Ask who it is that is handling the reading of scripts submitted to CinemaNX Limited for vetting and what

successful, it’s going to be done a lot more in the future.”

relationship As of 26 January 2010, the movie had grossed $1,107,440 in the United States.









Productions Limited. 




From the forgoing, it would appear that the film, having failed

Productions have been financed during the period of the

to secure any significant financial interest, with £11,723,782

existing contract and make that information public.

of Manx taxpayers’ money invested in it, was used to trial a DIY route.

Establish how many projects have been approved by CinemaNX for funding in the time remaining for the

Liberal Vannin contends that this is an entirely

existing contract to run before it terminates on 13 August

unacceptable risk for so large an amount of public

2012 and provide full details of what those projects are


and the reasons for funding them.

The Block Vote, the “one Party state by patronage” and the “Government Party”

The Ministers then appoint the Departmental Members from the remaining MHKs. The number varies dependent on the

The House of Keys (Keys) is made up of 24 elected MHKs

Ministry but the total of Departmental Members is 11.

Legislative Council (LegCo) has 11 unelected members. 8 of

The Ministers can fire a Departmental Member at any time.

these are elected by Keys with the other 3 automatically being the President of Tynwald, the Bishop and the Attorney General.

All MHKs receive a salary of £36,441 plus a tax-free expenses allowance of £6,178. The salary is increased if an

Keys and LegCo sit together monthly and form Tynwald.

MHK becomes a Minister or Departmental Member.

When there is a general election the Island votes for 24 MHKs

A summary of the gross remuneration, including the

based on their individual manifestos. When casting their votes,

expense allowance, is as follows:

no-one is aware of who is going to be Chief Minister so have

Chief Minister


no idea of what government policy is likely to be.



Departmental Member




At the first sitting of Tynwald the elected MHKs and the non elected members of LegCo vote for one of the MHKs to be Chief Minister. The Chief Minister then appoints 9 Ministers.

In addition there are various positions on Boards that will

He can fire any of these Ministers at any time.

enhance the salary of an MHK.

Government (CoMin) is now formed.

They all then sign to

agree to abide by Collective Responsibility. Collective Responsibility – The Council of Ministers meet to discuss and vote on issues. The vote of the majority carries and then all Ministers then have to support the issue, whether they agree with it or not, or resign.

He who pays the piper calls the tune – and the only piper in this town is the Chief Minister. Where are the checks and balances?

Bringing Politics Back to the People This has been our strapline since day one and our message is now really beginning to be heard. Our membership and our supporters are growing and growing as people realise that this is the only way to have a voice and be heard. Most people only get the chance to voice their opinions every five years when there is a general election. Liberal Vannin members have this opportunity every month at the branch meetings. As a member, not only can you voice your opinions but you can actually create the Party’s policies. Your politicians are here to serve you and not for you to serve them. 

Create the policies that you want

Have a voice

Be heard

Join Liberal Vannin now and make a difference. Applications forms are available today, online at or contact our membership secretary, Juan Cottier on 852775 Published and printed by: Liberal Vannin Party White Cot King Edward Road

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