SAA seeks accountability from the Photolibrary Group on obligations to Index Stock contributors
Atlanta, GA, Dec. 06, 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.
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.
Serious Issues Raised about Photolibrary´s Index Stock reporting and payments
Photolibrary then confirmed to 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 had 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."
The controller's 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 this event, SAA has sought to assist photographers in determining whether the controller's statement was accurate and whether they have been fully compensated for all past commissions due.
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 investigate 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, president@stockartistsalliance.org
- Betsy Reid, SAA Executive Director, betsy@stockartistsalliance.org
About SAA
The Stock Artists Alliance (SAA) is the only trade association dedicated to the business interests of professional stock photographers, supporting its members with information resources and ongoing advocacy initiatives. More information about SAA is available at www.stockartistsalliance.org.
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