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Film firm to pay $8,500 ethics penalty

By Susan Essoyan


The state Ethics Commission has reached a settlement with Relativity Media LLC, which gave DVD box sets worth up to $360 to legislators last year and failed to disclose the gifts as state lobbying law requires.

The film company agreed to pay an administrative penalty of $8,500 to the state general fund to resolve the case. Legislators have either returned the DVDs, paid fair market value for them or donated them to community organizations or schools.

"I'm hoping that it provides a reminder to lobbyists about the reporting requirements under the lobbyist law," Les Kondo, executive director of the Ethics Commission, said Tuesday about the agreement reached this month.

Relativity Media, based in Beverly Hills, Calif., has lobbied unsuccessfully for bigger tax breaks for film productions in Hawaii. The studio has been involved in films that have generated more than $17 billion in box office receipts, according to its website, including "The Social Network," "The Fighter," "The Bourne Legacy," "Atonement" and "American Gangster."

A spokesman for Relativity Media did not respond to a call from the Star-Advertiser seeking comment by press time Tuesday.

The ethics issue came to light when some legislators reported receiving the DVD sets on their gift disclosure forms filed in June 2011. At that point Relativity Media had not registered as a lobbyist or filed spending reports with the state. The DVDs were arrayed on a table as gifts at meetings in February 2011 hosted by Relativity that were attended by legislators and staff.

"We unfortunately did not keep track of exactly who took the boxes — some of them went to legislators, some went to assistants and other staff," the company reported in response to a commission inquiry.

The commission advised Relativity Media to register as a lobbyist and report its spending. In its first filing covering January and February 2011, the company reported spending $10,150, the value it assigned to the DVDs. It later amended its filing and reported zero value for the DVDs, saying the company had received them as part of its production contract for each movie.

The commission, however, has consistently construed the law to require reporting the fair market value of gifts.

"It's the fair market value, not the subjective value from the donor's perspective," Kondo said.

In a later revision of its report, Relativity Media pegged the value of each set at $100 to $360, depending on the number of DVDs it contained. Overall, the company reported to the commission expenditures of $156,900 in January and February 2011, mostly on preparation and distribution of lobbying materials. It included $15,000 for a party at Mandalay Restaurant attended by legislators, Hollywood stars and other guests.

Hawaii ethics law requires lobbyists to report expenditures and the name and address of legislators to whom they give gifts, including hospitality, worth more than $25 per day, or $150 in a reporting period.

Lawmakers may not accept gifts intended to influence or reward them in the performance of their duties, and must report gifts with an aggregate value of more than $200 from a single source.

Relativity Media and Shangri-La Industries have offered to build production facilities on Maui and Oahu if the state boosts its tax incentives. They supported a bill this year that would have increased the film production tax credit to 35 from 15 percent on Oahu and to 40 from 20 percent on the neighbor islands. The bill did not pass.

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