Today Rex Features, a long established and, until recently, respected photo library has emailed all its contributors admitting that a number had been defrauded.
EPUK advises Rex contributors not to take any action or to respond to this email until the extent of this malpractice becomes clearer.
Rex has been forced into this admission by an investigation started by EPUK and which was triggered by BAPLA announcing that they were forming a Collective Management Organisation (CMO) to be called PICSEL. EPUK believed that this was intended to grab the money that The Design and Artists Copyright Society (DACS) currently distribute as Payback to photographers every year and instead pay it to library and agency members.
At the heart of the PICSEL plan is the BAPLA assertion that these bodies could all be trusted to pay out fairly to their contributors. EPUK's long collective experience of agencies meant that we found this difficult to believe.
EPUK decided to investigate. With limited resources we were only able to focus on one agency. We chose Rex as being a large, widely respected library, historically very close to BAPLA and its management. Rex was founded 60 years ago as a family owned firm and remained so until 2011 when it was sold in a management buyout led by Larry Lawson, the existing Director of Business, with the backing of existing advisor to the business Miguel Ferro and other personal investors. [The previous sentence was edited on December 22, 2015 to clarify that the Selby family had no involvement after 2011.] In 2015 Rex was acquired by the large US based Shutterstock.
EPUK estimates that Rex would have received well over £400,000 from DACS in Payback claims last year.
EPUK contacted some members who market their work through Rex. For a library to claim Payback for a contributor it must confirm that the library has the authority to make the claim from DACS in the contributor's name and so the library sends them a DACS Mandate Form to sign as confirmation.
EPUK asked those members if they had received a copy of the DACS Mandate Form for them to sign from Rex and if they had signed and returned it to Rex. We also asked them if Rex had made a Payback payment to them and, if so, how much.
A number of our initial sample had received the Mandate form to sign and had declined to sign it. When they examined their sales reports they found that Rex had nonetheless paid them money in respect of Payback. That was hard to explain so EPUK asked these members to get DACS to send them a copy of the DACS Mandate Form. Our members were shocked and outraged to find that in most cases Rex had forged their signatures.
From the first signs that something was badly wrong at Rex EPUK has been passing its evidence to DACS and doing all it can to assist DACS in its own investigations.
DACS is taking this very seriously and has broadened its own investigation. DACS is now contacting all Rex Features claimants to validate their Payback authorisations. EPUK understands that DACS is working quickly and diligently to carry out the necessary checks and is working to minimise the delay in Payback payments to Rex claimants resulting from the fraudulent actions at Rex.
When EPUK asked the members whose claims had been faked to request DACS to tell them how much Rex had been paid on their behalf we found in every case the amount reported by Rex was 15% less than the amount that had really been paid to Rex. Rex has never mentioned this covert deduction to its contributors nor can we see anything in the contract that would allow it.
From its first announcement EPUK and the NUJ were seriously concerned at BAPLA's PICSEL proposal and called a British Photographic Council (BPC) meeting in November on the basis that BAPLA, a BPC member, was working against the interests of photographers. EPUK raised the issue of Rex secretly skimming off 15% of their contributors' Payback money. A few days later BAPLA responded on behalf of Rex. BAPLA wrote:
"It was repeatedly stated that one member agency charges a 15% administration fee on top of their commission. The photo agency is extremely concerned about this misrepresentation of the facts and can confirm that they do not charge this alleged additional fee."
This is not true.
The amounts shown on every one of our members' sales reports that we have seen for the 2014 DACS payment is 15% less than the amount that DACS confirm having paid to Rex. Rex or BAPLA or both are presenting as fact information that is untruthful and is calculated to hide the retention of (we estimate) around £60,000 a year of money that should be shared with its contributors.
BAPLA has told EPUK that it is relying on what Rex have told it. That only shows that BAPLA are unable to vouch for the honesty and integrity of its members and cannot be relied on to run a CMO whose administration is to be based on trust of its library members.
There is an impression of 'slackness' with regard to library behaviour at BAPLA. We know of no library ever having been brought to account over matters of under-reporting, threatening contributors, contract breaches or skimming - all matters that EPUK members have raised in the past. We are concerned that the endemic lack of openness in agency accounting will be carried over and misused.
There is a degree of carelessness with the truth at BAPLA. When EPUK stated at the BPC meeting that BAPLA's decision to form the CMO was due to its need to raise money this was indignantly denied with BAPLA saying that they were not at all short of money. Yet in their newsletter a few weeks later BAPLA wrote: "we intend to offer this survey for sale to interested parties, in order to earn some badly-needed extra revenue." A small point but it is indicative of a flexible attitude to factual accuracy.
EPUK is deeply concerned by BAPLA's proposal, relying as it does on a blind trust in the honesty of its members. Most libraries, we believe, are indeed honest but given that the very first library we examined has been found to be forging signatures and skimming money off the payments due to its contributors this is not something that we can take for granted.
Damage limitation is not enough
Meanwhile the email from Rex raises more questions than it answers.
- If Rex can claim that the forgeries only concern a small number of photographers they must know who they are and the extent of the fraud. If that is so why did they bulk email all contributors as well as ex contributors, photographers who have never been contributors and ex employees?
- Why have they not notified the specific photographers concerned? A bulk email relies on recipients having to audit their Rex statements against DAC's Payback statements, in order to know whether they are among the “small number” of victims of the scam. If Rex knows who, they also know how much and for how long. The least they should do is tell the victims.
- Who at Rex was responsible for the forgeries and skimming? It is hard to believe this could be a rogue employee acting alone, without oversight. Where did the money go? Did the accountants, auditors and finance director sanction a significant revenue stream without inquiring as to the origin, or did the money just disappear from company funds?
- On what basis is Rex taking 15% of the Payback money from photographers? How long has this been going on? Why were photographers not told? Where has that money gone? Does Rex intend to repay it?
- Does Rex intend to repay the Payback money falsely claimed through the use of forged signatures to its contributors?
- Payback is declared to contributors in their sales reports. Have undisclosed deductions been made from other items in the sales reports?
Note added at 18:52 December 18, 2015: DACS have released their own statement on this shocking behaviour.
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