Film commission fails on film awards transparency, gets a pass for cash rebate scheme

Updated at 5:25pm with Malta Film Commission's reaction

The Malta Film Commission’s business model when organising events like the Malta Film Week is a shambles with the National Audit Office saying it lacks transparency.

Nonetheless, a review of the Malta Film Commission’s (MFC) work tabled in parliament on Monday afternoon, also shows that initiatives to market Malta’s film facilities have been beneficial.

The mixed results come from an NAO audit to analyse the promotion of the film production industry that eventually encompassed requests for further investigations made by Arnold Cassola and Opposition MPs on the Public Accounts Committee.

The complaint filed by Cassola concerned the Malta Film Awards held in January 2022, a few weeks before the general election. The lavish ceremony that sought to award Maltese film producers and actors, formed part of a week-long series of activities dubbed the Malta Film Week.

The NAO investigation raised “concerns” on the business model used by the film commission to manage these events characterised by a lack of checks and balances.

“These concerns influence the level of transparency and audit trail embraced by MFC, especially in an event that had a significant financial magnitude,” the NAO report states.

The report also notes that the concentration of decision-making in the hands of Film Commissioner Johann Grech – partially the result of severe shortage of staff – further compounded the problem, especially since there was a lack of documentation to support budget prioritisation and the selection of service providers.

The cost to organise the Malta Film Week stood at €1.3 million with no breakdown of expenses provided to determine the cost of the awards ceremony. The final documented expenditure overshot the budget allocation of €400,000 with the rest of the funds coming from the Malta Tourism Authority and Malta Film Studios, a company operated by the Commission itself, and private advertising.

No minutes of ‘high-level discussions’ supposedly held with Tourism Ministry and Finance Ministry to secure budget approvals and allocations were kept.

The NAO found that 19 of the 112 invoices related to the Malta Film Week exceeded €10,000, the threshold for seeking ministerial approval. No such documented approval was provided and in eight of the 10 cases reviewed, the Commission did not enter into a contractual agreement for procured services.

To complicate matters, the Commission’s audited accounts for 2020, 2021 and 2022 were only finalised in October 2024. The NAO did note that the Commission had been chasing its auditors to complete the exercise.

In its reaction to the NAO findings, the Tourism Ministry recommended that any financial material events are to be presented in the central government budgetary estimates for 2025 “to enhance transparency”.

Furthermore, the NAO noted that in 2024, the ministry was supporting the Commission through the issue of calls to address vacant positions and the drafting of two tenders, namely that related to security and cleaning.

The NAO acknowledged that the commercial and highly competitive environment within which the film commission operates does not always dove-tail with the public service governance framework.

Nonetheless, it said more comprehensive planning and, where possible anticipating lead times, the opportunity exists for operating in the industry’s dynamic environment while still upholding public governance principles.

Positive outcome of cash rebate scheme

The NAO report also analysed the impact of the various incentives operated by the Commission to encourage film production in Malta, including the generous cash rebate scheme.

The NAO review confirmed the principal positive economic impacts of the 40% cash rebate scheme, finding no reason to dispute the conclusions of reports commissioned by the film commission in 2021 and 2023.

The cash rebate offers foreign film producers up to 40% cash reimbursements for expenditure made in Malta subject to several conditions being met. The scheme came under fire last year it was revealed that more than €100 million were paid out to foreign film makers. But the NAO argues the level of investment in the film industry, including schemes like the cash rebate, are a matter of public policy.

“It remains a matter for policy makers to decide the appropriate level of investment in film production, taking into account the opportunity cost of resources used, socio-economic priorities, as well as the potential for the industry to diversify and complement the overall make-up of economic activities in Malta,” the NAO report says.

An analysis of the film commission’s work between 2018 and 2022, shows that it incurred an operational expenditure of around €12.3 million, mostly attributable to administration costs, marketing and advertising, and staging keynote events.

The NAO report also shows that between 2018 and 2023, the Commission awarded €3.4 million to local film producers through financial incentive schemes. Between September 2018 and August 2023, the commission awarded €143.8 million in relation to the cash rebate scheme.

The NAO said the various initiatives to the promote the facilities at the Malta Film Studios, marketing activities, promotional events and schemes like the cash rebate have “led to positive outcomes”.

“There is no basis to dispute the broad conclusions of the film commission’s commissioned reports of 2021 and 2023 and the implications with regards to the economic role of the film sector in Malta. While the results are to be noted, it is the policy-maker’s responsibility to evaluate if the return that the scheme is yielding from the film industry is deemed to be sufficient,” the NAO concluded.

Film Commissioner reacts to NAO findings

Film Commissioner Johann Grech says NAO's observations on administrative processes are fair

The Malta Film Commission welcomed the NAO findings, which it said dismissed the complaint of wrongdoing linked to the Malta Film Week of 2022.

“The NAO finds no funds allocated for local film production schemes were used for the 2022 Malta Film Week, contrary to claims,” the MFC said.

It added that the NAO’s reference to the economic model of the Malta Film Week, “has been noted” and restructured accordingly for the 2023 and 2024 events.

The MFC acknowledged that the NAO report does identify “a number of general routine administrative shortcomings”, pointing out areas where “processes and oversight could be improved”.

But the NAO also noted the understaffing at the commission, the MFC emphasised, when compared to the responsibilities and tasks the Commission is required to manage. The Commission manages millions of euros in cash rebate funding with a complement of nine office staff members.

“This staffing shortage is highlighted as a key factor impacting the Film Commission’s ability to effectively address its administrative obligations and maintain optimal efficiency in its operations,” the MFC said.

The Commission added that it has already implemented several measures to address these issues, including the employment of additional personnel.

The MFC said the NAO’s findings endorse its own study on the economic impact of the cash rebate scheme, published in 2023. “The NAO confirms that the programme delivers a substantial return on investment for the economy,” the MFC said.

Film Commissioner Johann Grech thanked the NAO and said discussions were numerous and conducted with “utmost professionalism and courtesy”.

“The report’s constructive observations on administrative processes are fair, and the Film Commission has already taken proactive steps to address them,” Grech said, insisting it was necessary for the Commission to have the necessary team capacity to “meet its responsibilities effectively”.