Wednesday 6 July 2011

SGAE investigated over "misappropriation of funds"

Spanish collecting society SGAE has featured in this weblog a couple of times. The Court of Justice ruling in Case C‑467/08, Padawan SL v Sociedad General de Autores y Editores de España (SGAE) has given quite considerable food for thought, and there's also the matter of the organisation's local battle with EXGAE.  It now seems that SGAE has been hitting the headlines again -- and not for the best of reasons.

Billboard reports that the organisation has been raided by Spanish police as part of an investigation of "misappropriation of funds".  Nine people, including president of SGAE's Board of Directors Eduardo Bautista, were detained, while offices and private homes were searched.  The investigation is said to have been triggered by a 2007 complaint filed by a number of organisations representing internet, computer and the restaurant trade; the main target is said to be SGAE's subsidiary SDAE -- the Digital Society of Authors.

Thanks, Jonathan D. C. Turner (13 Old Square), for spotting this item.


John R walker said...

Privatized taxes are bad design. Because very few know how much is- in total- being collected and how much -in total -is being retained, the temptation to indulge in the creation of what Galbraith called "psychic wealth", is enormous.

"To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)"

John R walker said...

From Techdirt: 'More Details On Spanish Music Collection Society Corruption':

In our fight against the attempt to impose compulsory management of an artist resale royalty (in Australia) by the collection agency Viscopy and its twinned artist society NAVA, we had to combat a familiar problem. Artists' societies derive both income and special representative status from their association with collection societies and, therefore have a vested interest in promoting collection societies and, a disinterest in critically observing the behaviour of the managements of these collection societies. Typically, the senior managements and board appointments of these linked organisations often involve the same people in a revolving door scenario. Moral hazard and conflict of interest are intrinsic to this situation. Hence, when giving evidence to a Parliamentary Select Commmittee on the implementation of the resale royalty, the then CEO of Viscopy (who self-described as an 'artist') dismissed my hostility to compulsory servicing by her organisation as that of an 'untypical artist'.

One of the committee members was visibly surprised when I explained that I managed my own copyright. His surprise was despite the fact that the majority of Australian artists self-manage their own copyright, ie they do not use the services of a collection society.

Phantom employees are a typical manifestation in this area. In many ways the artists' societies that are linked to collection managements are effectively phantom employees of that management. Not all societies are legally corrupt but all are in a position of moral hazard and conflict of interest.