FILM FINANCE.

Auckland Star, Volume LXVIII, Issue 158, 6 July 1937, Page 8

FILM FINANCE.

SECRET INQUIRIES.

LOSSES OVER £3,000,000. j DISCLOSURES EXPECTED.

(Special.—By Air Mail.) LONDON, June 17. Sensational disclosures are expected following secret investigations now taking place into the whole field of British film finance. The investigation is being made in consequence of losses of over £3,000,000 last year, eaya the "Daily Herald." Mr. W. C. Crocker, well known for his exposure of the great London fire conspiracy, is acting in the investigation on behalf of an important client. A remarkable feature of the situation is the refusal of certain re-insurance companies to meet their guarantees under the scheme of guaranteed loan finance which, last year, provided independent film companies—in many cases with interlocking directorates— with mortgage loans totalling over £4,000,000. Wasteful Expenditure. It ie understood that the re-insurance companies are refusing to pay cm the grounds of misrepresentation on the part of certain intermediary parties, and the use of loans for purposes other than provided for under the contracts. The re-insurance companies claim that they guaranteed the money for financing specific films, but that a portion of the money has been used in wasteful genera] expenditure at the studios. They also claim that intermediaries arranging the business fniled to inform them that the money was to be need for general expenditure, though they were aware that tins was the ease. Reasonable Risk. If this information had been given them, they would not, they state, have accepted the business, since, while the possible failure of a specific film is a reasonable insurable risk, general expenditure on production companies ie not. Early this year the "Big Five" banks refused to go on with the scheme of independent company film finances owing to the big losses in which insurance companies were already involvedThis drastic action precipitated the present crisis in the insurance underwriting world, though the banks must be held largely responsible, as they allowed themselves to become partners to the arrangements in the first instance. Sheer Muddle. Fantastic and wasteful expenditure on production has characterised several of the spectacular studio flotations in the last two years. Films have been made under, conditions of eheer muddle and lack of organisation, with enormous overheads in the form of studio staffs, stars and executives. Last year, it is alleged, at least £1,000,000 of the £4.000.000 spent in our studios was wasted.