SEC Investigates Hollywood’s China Play

The push by Hollywood studios to break into China’s film market may have hit a snag as the Securities and Exchange Commission has opened an investigation into possible bribes to Chinese officials. From The New York Times:

The S.E.C. investigation has so far focused on at least three studios, the person said, but all of the largest and some smaller studios have been contacted or made aware of the inquiry, according to the person, who has direct knowledge of the investigation but who spoke on the condition of anonymity because the matter could end up in court.

In the last year, both the S.E.C. and the Justice Department have increased investigations under the Foreign Corrupt Practices Act, known as F.C.P.A., which forbids American companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.

Government investigators have been particularly interested recently in the practices of United States companies in China, one of the largest potential markets and one that Hollywood executives have been particularly keen to enter.

Hollywood studios have struck several recent deals in China, where Reuters reports that box office revenue grew 35 percent last year. DreamWorks unveiled plans to build a Shanghai production studio as part of a joint venture in February, and Disney announced last week that it would co-produce Ironman 3 with a Chinese company and film parts of the movie in the PRC.