What would have been a tool to promote foreign investment in our island, attracting tourism and developing the audiovisual sector in Cyprus has more or less turned into... nightmare for the Republic of Cyprus, which is facing three separate lawsuits with claims exceeding €50 million.
While the state approved and promoted the audiovisual project for the purpose of attracting foreign film producers and investors, and while it approved, after a request and thorough scrutiny, the payment of €8.1 million as a "Rebate" to cover the production costs of the Jiu Jitsu film by the producers, amounting to 24 million, it did not pay any of the agreed amount, neither to the producers nor to the investors, with a visible risk of damaging its international credibility.
There are a total of three pending lawsuits against the State, State officials, the Auditor General and others claiming over €50 million, both in relation to the film Jiu Jitsu which was shot in Cyprus starring the well-known and Oscar-winning actor Nicolas Cage, and the film Man of War which was already scheduled to be shot in Cyprus with actors such as Arnold Schwarzenegger.
Lawyer Georgiades clarifies that two of the three lawsuits were initiated by his law firm G.Georgiades & Partners DEPE. The first was brought against the state and other state officials on behalf of the producers and their companies in connection with the Jiu Jitsu film and the Man of War film, for damages in excess of 50 million that were caused as shown by the pleadings due to, among other things, fraud, negligence, breach of contract, and bad faith arising from the mismanagement, actions, and conduct of the relevant state officials. The second lawsuit filed by Mr. Georgiades' office concerns defamation against the Auditor General, his assistant, and other persons for misleading and false information that appears to have been disseminated to the public by the Auditor General's office in the media shortly before the 2020 parliamentary elections and long before a report on the matter was published, according to the lawyer. "In particular, among other things, false news was circulated through the Sigma TV station that allegedly Jiu Jitsu film was linked to the passport scandal by referring to a report by the Auditor General which was not even published at the time. When it was finally published three months later it was found that it did not link the producers of the film to the passport scandal after all. It is noteworthy that the Auditor General was never quick to refute this fake news. On the contrary, his assistant Marios Petridis also a defendant in the defamation suit made continuous defamatory comments in the press as can be seen in the Claim Report of the lawsuit."
The third lawsuit was filed by another law firm on behalf of the investors and concerns damages and the payment of the amount of €8.1 million which was approved on the basis of the certificate issued to the investors for the Jiu Jitsu film due to the financing they provided, and is therefore clearly distinct from the two aforementioned ones.
Mr Georgiades states that while the State managed to attract its clients to invest in Cyprus huge funds for the production of Hollywood films and after the competent authority issued them a certificate for the payment of the amount of €8.1 million for one of their Jiu Jitsu films and the amount of about €15 million for the other Man of War film, in the end they did not give them a single cent even though expenses were incurred for the production of the Jiu Jitsu film which was released internationally with great sales success, as well as for the preparation of the Man of War film.
As explained by Mr Georgiades, the approval of the funds is made prior to the release of the film after a thorough investigation by the competent four-member committee consisting of representatives of three Ministries and CIPA with a three-year term of office (which at the time consisted of Lefteris Eleftheriou, Elena Christodoulides, Naya Simeonidou and Olga Theocharous) who are defendants in the first lawsuit. After she has examined all the documents and evidence contained in a multi-page detailed application, relevant certificates are issued by the State indicating the approved amount. "It is after the issuance of this certificate that my clients decided to proceed with the investment in Cyprus otherwise they would have proceeded with other alternatives in other countries where similar incentives are given such as Greece , Romania , England, Canada" he said.
"It is noteworthy that before the final screening of the film for the purpose of paying a rebate, the chairman of the four-member committee, Lefteris Eleftheriou, gave a written assurance to my clients confirming that the expenses incurred for the filming had been checked up to that point in time and that the payment of the amount of €5.1 million to cover costs and that the control and approval for the remaining €3 million simply remained. In fact, the audit on behalf of the State was carried out by the well-known and large international auditing firm PWC. It is on this certificate that the investors relied in order to provide further funding for the film.
"The state itself, after the film had been processed and after an excessive delay in appointing new auditors since its contract with PWC had expired and after about two years of promises that the amount would be paid soon, finally decided without reasonable cause and any documented explanation not to pay any amount. At the same time, according to the pleadings, those in charge made various manipulations that made the production of Man of War impossible. While Lefteris Eleftheriou and the other responsible persons persistently urged and pressured my clients to resubmit their application for a Rebate for Man of War, when there was already an approved certificate, allegedly so that the production could have the advantages offered by the project after some changes made after the approval of the said certificate, as was subsequently revealed through the Auditor General's report by written statements from the Treasury, the encouragement of re-registration was intended to reduce the allocation and impose other stringent and unfavourable conditions, not to allow the production to benefit from the new incentives as they were assured, says Mr Georgiades.
Specifically, the Auditor General's report states verbatim the following on behalf of the Ministry of Finance: "The non-acceptance of the certificate was not intended to create more favourable conditions. As you will have seen, the conditions contained in the new provisional certificate are much stricter and the amount of expenditure has been significantly reduced, namely by €8.94 million."
"Another example of the sloppiness with which the State treated the producers is the leak to the press by then CIPA President Michael Michael of Arnold Schwarzenegger's involvement before production started, which is forbidden, as well as his erroneous reference to a €120 million budget for the shooting of Man of War when in fact it was around €47 million. In the film projection sector these are serious errors that can leave producers exposed who are bound by contracts with actors that contain, among other things, strict confidentiality conditions and the payment of large damages in case of breach," the legal expert explains.
"To date, there have not been any concrete efforts by the state for an amicable out-of-court settlement of the cases I handle" said Mr Georgiades "so we have no choice but to push our lawsuits to a hearing until the end, trusting in the Cypriot justice system."
Mr Georgiades went on to say: "I believe the matter should be handled very carefully and seriously by the state in order to immediately repair the damage caused to our clients, and the latter should try to reverse the very negative image that has been created internationally for the credibility of Cyprus. The international press has covered the lawsuits pending against the State for the first major production. The state should start implementing properly and consistently the financial plans it advertises to attract investors to our country."
Georgiades also said that "my clients justifiably feel[/B]they were cheated into coming to Cyprus on the basis of the incentives, since while they made domestic expenditures of many millions the state failed to deliver what they agreed to."
As the well-known Greek-American filmmaker/producer Dimitris Logothetis pointed out, "one does not expect to be fooled by a state, even a member state of the European Union".
Cyprus has already lost huge sums of hundreds of millions from productions that were not made, due to the state's refusal to go ahead with covering costs and the negative image that was created and so much more from international publicity that would have resulted from these productions. Well known American lawyer/Hollywood producer Martin Barab says that it appears that the state of Cyprus has finally gone ahead with a plan to attract investors to the island to shoot films without having either the money to support it or the mechanisms to pay the amounts that it approves according to the certificates it issues. "We liked Cyprus a lot" said Mr Logothetis "for film production purposes. We also liked the people and the beauty of the island and we were planning both ourselves and other well-known Hollywood producers to go ahead with more productions with multi-million dollar outlays. It is a pity that instead of going ahead with filming we ended up in court due to bad handling with all the negative consequences both for us and for the island and its people" he said.
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