At Senate Hearing, Steven Mnuchin Addresses 'Avatar' Profits, Relativity, Hollywood's Chinese Influence
Democratic senators express concerns about Mnuchin's investments in films.
On Thursday, Steven Mnuchin, the president-elect's nominee to head the U.S. Treasury Department, appeared before the Senate Finance Committee. Although the bulk of the confirmation hearing was expected to focus on his positions on tax reform and his role during the mortgage crisis nearly a decade ago, his Hollywood connections got some heavy attention with an attack on where his hedge fund's profits from Avatar were funneled.
Mnuchin, who has invested in dozens of films and is a credited producer on such blockbusters as Batman v. Superman: Dawn of Justice and Mad Max: Fury Road, was called out by Sen. Ron Wyden (D-Ore.) in opening remarks for using "tax tricks" to hide profits from Avatar and other investments in offshore accounts. Wyden (and later other Democrats) also faulted Mnuchin for failing to list his role as a director of the offshore account in initial disclosure forms to the Committee.
"I did not use a Cayman Island entity to avoid tax liability for myself," said Mnuchin later in the hearing when asked whether he would support closing offshore tax loopholes and referring to his time running the Dune Capital Management hedge fund, which had a co-financing pact with 20th Century Fox. "The entity was set up to accommodate non-profit and pension funds. They followed the law."
He did, however, say that he would work with the Internal Revenue Service and lawmakers to "fix the system."
That's not the only aspect of Mnuchin's Hollywood dealings receiving increased attention.
Mnuchin’s OneWest bank once invested substantial millions in Relativity Media, and for a time, he served as co-chairman of the Ryan Kavanaugh-led studio. Mnuchin resigned from Relativity weeks before the studio declared bankruptcy in July 2015. After the resignation, but before the Chapter 11 filing, OneWest swept Relativity's bank account for millions, something that was later blamed as one of the reasons precipitating the bankruptcy.
Now, the FBI may be investigating Relativity. A few weeks ago, one MuckRock journalist attempted to use the Freedom of Information Act to obtain documents from the government agency on Mnuchin only to receive notice that some documents were being withheld due to an enforcement proceeding.
Sen. Sherrod Brown (D-Ohio) put out word on Wednesday that he wants FBI Director James Comey to "release all relevant information on Relativity Media and Mr. Mnuchin."
On Thursday, Brown talked of how Mnuchin bought a stake in Relativity and a private jet with Kavanaugh, and how OneWest "pulled out $50 million [from] Relativity accounts, including one earmark for guild expenses that extended wages for contractors Mr. Mnuchin bailed out just before the studio declared bankruptcy."
Then, the Ohio senator referred to press reports about the FOIA request and asked Mnuchin whether he had been interviewed by federal law enforcement.
Mnuchin responded that he had not been interviewed and assumed that the FBI may have been conducting a background check.
"I am not sure why [the FBI] did not approve the [FOIA] issue," said Mnuchin. "We have had no reason to believe it is an issue associated with me."
Later, Brown returned to the topic of Relativity, attempting to connect Mnuchin to Chinese investment in Hollywood amid a backdrop of Trump's skepticism towards China.
"You were the board member of a company that increased Chinese influence in Hollywood," said Brown. "Were you helping China expand its global power?"
"The Chinese never invested in Relativity, and I don't recall them ever having invested in Relativity films," responded Mnuchin. "They had a small joint venture in China that was not particularly successful ... I one hundred percent support the President's view that we need to look at China overall from a trade standpoint and economic standpoint and security standpoint."
Before the hearing, Mnuchin attempted to satisfy any ethical issues with his ongoing interest in film profits by announcing the intention to sell his stake in RatPac-Dune Entertainment, which has a deal with Warner Bros. for the financing of 85 films, including 23 future productions. He says he will sell his stake, valued at up to $25 million, within 120 days if confirmed.