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SAA Seeks Accountability from Photolibrary on Obligations to Index Stock Contributors |
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Written by Stock Artists Alliance
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Thursday, 06 December 2007 |
December 6, 2007-- The Stock
Artists Alliance (SAA) continues direct discussions on behalf of SAA
members currently or formerly represented by Photolibrary's Index Stock
brand. Recent revelations and accusations leave the SAA Board greatly
concerned about whether Photolibrary has met its contractual obligation
to pay Index Stock contributors all past commissions.
Serious Issues Raised about Photolibrary's Index Stock reporting and payments
Photolibrary acquired Index Stock in October 2006 and assumed all
liabilities and debt of the company which had been in financial
distress. Photolibrary stated then publicly that all contributors would
be paid in full for all past commissions, following the results of a
comprehensive, independent audit by the accounting firm KPMG.
Photolibrary has previously told its contributors and SAA that the
audit was complete and all past commissions had been paid, so it
surprised SAA when Photolibrary's controller sent an email Nov 11 to
1,500 Index Stock contributors, along with statements of outstanding
commissions due from as far back as 2001. The message acknowledged some
payments of Index Stock debt has already been made, but not all,
stating, "At the time of the acquisition about US$ 3.9 million was owed
by Index Stock to Contributors. Photolibrary paid a large sum after the
acquisition and currently the debt stands at about US$ 2.2 million."
Attached, were contributor statements itemizing outstanding commissions
due from as far back as January 2001, described as "your portion of the
US$ 2.2 million." The controller added, "Photolibrary will soon come up
with a payment plan." The letter went on to make serious allegations
about Photolibrary's accounting systems. The text of the letter is
posted at: http://www.pdnpulse.com/2007/11/letter-to-stock.html
SAA Investigates on Behalf of Contributors
Due to confusion caused by the events, SAA has sought to assist
photographers in determining whether they have been fully compensated
for all past commissions due - on the items detailed in the recent
statement, as well as any additional findings from the audit. SAA has
urged its members to follow up with Photolibrary. In addition, SAA
ombudsman Allen Russell has contacted Photolibrary executive chairman
Tim Moore about the issue of substantial outstanding payments and the
other allegations in the letter.
Photolibrary Dismisses Allegations
Moore told the SAA Board the controller's Nov. 11 letter was an
unauthorized correspondence from a "disgruntled employee," making
inaccurate and false statements, and the controller had been fired from
the company. Moore described the statement of outstanding commissions
as "worthless," and he reconfirmed that all monies owed to Index Stock
contributors have been paid in full, with the only exceptions "a few
problem invoices." He vigorously denied all allegations made by the
controller about the company's accounting and reporting processes and
payment history. Moore dismissed the letter, saying it should have been
clear to SAA's ombudsman this letter was a "joke."
SAA Finds Troubling Discrepancies
Over the past two weeks, SAA has also communicated with a sample group
of members who are Index Stock contributors and who authorized SAA to
review their records, including past Index Stock statements and
documentation of payments received.
When SAA compared the controller's statement to contributor records, we
found in all cases the statements of commissions due matched, and
payment had never been made. According to the controller's letter,
these statements account for "around $2.2 million" in outstanding
commissions amassed before April 2006.
On Nov. 28, SAA proposed to Photolibrary to conduct a review of audit
findings from a sample group of SAA members who are Index contributors
as "a check on the system." The following day, several contributors
informed SAA that Photolibrary had sent them payment amounts matching
the controller's statement.
Having reviewed the sample group of contributor records, and in light
of this recent actions by Photolibrary, SAA concludes the statements
sent by the controller seem to be accurate. Furthermore, SAA is puzzled
why Photolibrary had not already paid out these very old commissions
clearly documented in the company's accounting systems, from which the
controller prepared his statements.
Audit Findings Not Reported to Contributors
Also unanswered is the question of whether additional commissions are
due to artists as a result of Photolibrary's audit of Index Stock
records. A December 2006 letter to contributors stated, "We are
conducting an intensive audit with the assistance of the accounting
firm KPMG, who will be more able to establish on an independent basis
for us both what is exactly owed to each photographic partner for
period prior to April 2006. ... We will have available an independent
calculation of commission owed for each and every photographic
partner."
Since then, the company stated widely that the audit had concluded and
all pre-acquisition debts to Index contributors had been paid. SAA is
unaware of any contributor who subsequently received a statement and
payment resulting for audit findings.
SAA Urges Photolibrary to Promptly Address and Resolve Issues
SAA continues to assist photographers in determining whether they have
been fully compensated for past commissions. While we are encouraged to
see Photolibrary has begun making additional payments of monies owed,
this action does not fully address or resolve the serious issues raised
and the information that has come to light.
We urge Photolibrary to openly participate in the process of meeting its obligations to contributors by:
· Remitting to all past and current Index Stock contributors a complete
accounting of outstanding commissions, based on the report of the
independent forensic audit by KPMG.
· Commit to ensure accuracy of contributor reporting and payments, both
retroactively and going forward for all Photolibrary contributors.
· Address the sub-distribution system that Photolibrary's email alleges
is in deep trouble and commit to changes that will support its
viability and accurate accounting.
On Dec. 4, PDN reported that the Picture Archive Council of America
(PACA) confirmed that its Ethics and Grievance Committee is
investigating "a related complaint" against Photolibrary. SAA is
encouraged that the American trade association of stock distributors
has committed to address the serious issues raised about a member
company.
Next Steps for All Current and Past Contributors
SAA urges all artists and archives with images represented - now or in
the past - by the Index Stock brand to contact Photolibrary. Regardless
of whether or not you received the Nov. 11 statement, it is important
to share your current contact information and your interest in this
matter. To do so, see http://www.indexstock.com/ or
http://www.photolibrary.com/.
Also, please contact SAA with any concerns you would like to share.
Contact
Roy Hsu, SAA Board President
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Betsy Reid. SAA Executive Director
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tel 404.881.6482
About SAA
SAA is the only worldwide photography trade organization dedicated to
the business of professional stock photogrphers. We offer members
access to substantial information resources, a professional community,
and an active advocate that is speaking up for their rights. Membership
in SAA help support business and protect rights of photographers.
Learn more about the benefits of SAA membership at http://www.stockartistsalliance.org/info/membership/application.asp
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Last Updated ( Thursday, 06 December 2007 )
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