Wednesday, March 14, 2012

Magma... the brand that keeps on taking

I hear from a few sources that industry concern about Magma has now become so widespread that enquiries are being conducted, belatedly, in various official quarters.

The shoot in Galway and Bremen of the latest instalment in the 'Jack Taylor' series was fraught with what one might for the want of a better term call 'cash flow' issues. Delayed or non-payment of service providers and crew came to a head when, as a last resort, drastic action was taken by some crew to ensure they were paid.

It now appears that a further episode may not be shot, in Dublin, as was planned. Some crew have expressed concern about invoicing procedures and paperwork, particularly where VAT is involved. And, in the absence of credible explanations for the manner in which suppliers have been treated, there are serious questions about the unavailability of production funds to the project despite its being, supposedly, Section 481 certified.

I believe representations have been made by a number of people to some or all of SPI, SIPTU, the Film Board, the Revenue Commissioners, TV3, MEDIA and others, such is the level of anger. There is also a well-founded anxiety that the circumstances could be very damaging to the wider industry.

I have written about Magma issues from time to time over the last 12 months (enter Magma in the search box, top left). No one in authority can have remained ignorant of the situation, and it's doubtful they could have been ignorant to begin with. That the issues remain unresolved for long-standing creditors and have been added to by the creation of new creditors is an indictment of official procedures and the due diligence that ought to be carried out in the public interest.

Someone concerned about the Magma situation asked me what the status of a 'Shadow Director' is in Irish company law. I have no idea if the circumstance applies but here is the relevant info from the Institute of Directors website:
While not a member of the board of directors, a shadow director is significantly involved in the running of the company. From a distance, he/she dictates to someone who is an actual director how he/she wants the company to be managed.
Prior to 1990 the position of shadow director did not carry the same liabilities and obligations as that of the other directors. Now the position carries the same onerous duties across a range of areas including fraudulent or reckless trading. S.150 of the Companies Act 1990 made shadow directors liable to restriction in the event that he/she fails to act in accordance with the highest standards. S.138 of the 1990 Act amended S.297 of the principal Act and imposed liability on a shadow director who is deemed to have behaved in a reckless or fraudulent manner in his role as an officer of the company. As a result of this Act, a shadow director is under an obligation to disclose, in writing to the company, any interest he/she has in contracts, or proposed contracts, with the company. {S.27(3)}
Failure of a shadow director to disclose any involvement he/she may have in business carried out with the company of which he/she is a shadow director makes that person liable to prosecution by the Director of Corporate Enforcement.
It is not possible for a person to evade responsibility and liability by not being formally appointed a director if he/she comes within the definition of shadow director.
In general, it is very unsatisfactory for a board to be in a position where an individual can exercise such authority within the company without being an appointed member of the board, although he/she is, de facto, a member of the board.


Anonymous said...

This situation was spoken about for 3 years now. Why hasn't it been resolved or acted upon? why did no one say stop. Why were and are funds still been given to this company and it's subsidiaries? Too many in charge have seemed to turn a blind eye to this. The dogs on the street knew about these goings on since 2009. If I got a deutchmark for every person I met owed money I'd bail out Anglo, who I am told are owed money by magma. Maybe now people will stop giving them money.

irish film portal said...

I believe that problems over payment on projects can be traced back to 2007.

This begs several questions not least of which are - were all projects budgeted properly, and did the spend on all projects match the budgets sent to official funding sources, especially the IFB and the Revenue?