Very Naughty Boys [EBK]

  O’Brien was also keen for Harrison to provide a song for the film. Lynn remembers, ‘George came in one day with a song and played it and I loved it, and the next day I tried it up against the sequence in the film and it killed the scene, it turned it into a kind of music video. The music was just too powerful. So I had the unenviable task of calling both a Beatle and the executive producer of the film saying, “I can’t use your song.” So I was a little apprehensive about this. But when I phoned him, he said, “Oh that’s all right. It’s not compulsory,” and went back to his dinner. Later, I got messages that he liked the film via Eric.’

  Early test screenings, however, revealed a different story. Audience reaction was good up until the last five minutes when it nose-dived. ‘And Joe Roth,’ Idle continues, ‘head of Twentieth Century Fox who were releasing the film in America and who used to be a film director so knew about movies, he said, “You need a new ending and here’s some money, go and shoot a new ending.” I’ve never heard such intelligence from a film-maker.’

  No doubt on the back of the recent success of A Fish Called Wanda, Nuns on the Run opened in America in March 1990 to good business and some rave notices. The Village Voice said, ‘Idle and Coltrane are physically in the tradition of Laurel and Hardy.’ ‘This movie is hysterical. It’s a divine comedy,’ gushed Good Morning America.

  The exception was Siskel and Ebert, a sort of excruciatingly annoying double act of TV reviewers — just think of Barry Norman cloned and you’ve got the idea. Ebert particularly loathed the film. ‘Apparently,’ says Idle, ‘Ebert was brought up by nuns in some kind of orphanage and, for some reason, he got very upset about the movie on behalf of all the nuns who were actually not upset by the movie. And he couldn’t leave it alone. He kept attacking it everywhere.’

  It was when Siskel and Ebert began holding the film up to derision outside of their regular show that Fox took swift action. ‘Joe Roth went nuts and withdrew all screening privileges from them,’ Idle says, ‘which was great because it just showed them who they’re dependent on. Without films to view and review, they don’t have a job. I always thought they reacted completely ridiculously, but Ebert is a nun really, isn’t he.’

  Despite the film’s Stateside success, O’Brien had a problem when it came time to release Nuns on the Run in Britain. He’d no confidence in Twentieth Century Fox’s London office to get behind the film wholeheartedly, and so reluctantly came round to the view that, whatever his feelings and personal animosity towards Stephen Woolley, Palace were in the best position to make a hit out of it. That’s if they wanted it. Woolley recalls, ‘I saw it and thought it’s got three funny moments in it and I likened it to a kind of Carry On film. It was basically a one-joke movie, which was Idle and Coltrane dressed as nuns; if you think that’s funny, you’ll like the movie; if you don’t, you won’t. As usual, Nick Powell went in to do the deal and they made Nick take Cold Dog Soup, and Nick comes back saying, “Oh, I’ve signed that film Nuns on the Run and I’ve done this other deal with Cold Dog Soup.” I said, “What the fuck’s that? No one’s seen it.” He said, “Oh, Denis wanted to get rid of it.” I bet he did.’

  So Palace Pictures released Nuns on the Run in the UK where it did extremely well, in spite of mixed notices. ‘There are few screen farces which can sustain themselves without flagging for 95 minutes, and even fewer British ones. Nuns is an outstanding achievement within its genre,’ said the Sunday Telegraph. The Observer, however, believed it to be ‘a pre-cooked microwave version of Some Like it Hot’.

  Former HandMade director Richard Loncraine made no bones about what he thought of it. ‘Nuns on the Run was one of the most unspeakable films, I thought, and that it did so well made it even more depressing.’

  Indeed, it did do very well and therein lay the problem. Jonathan Lynn was unaware that HandMade was close to collapsing about itself, as O’Brien kept calling him all the time trying to set up other movies. But he was aware of financial goings-on that never made any sense to him. ‘For instance, we made the film for about $5 million. It was sold outright to Fox for American distribution for $4 million. So it virtually recouped before it opened anywhere. However, you will not be surprised to hear that none of the profit participants have ever received a penny. The film is unquestionably a profitable movie, although the books seemed to show something different — “creative accountancy”.’

  Part of the problem was that Palace refused to give HandMade any of the profits from the film’s UK release, citing the fact that O’Brien still owed them money from Mona Lisa’s cinema run. That cuts no ice with Lynn. ‘Stephen Woolley seems to think that’s an ethical argument. He had no legal basis for holding that position. I’m not happy about it and neither is anybody else who worked on Nuns, it was a great deal of money that was withheld. And then Palace went bankrupt. Palace’s dispute with HandMade was nothing to do with any of the people that made Nuns and they had no right to withhold that money. They were separate disputes.’

  Lynn’s still waiting for the money and so, too, are Idle and Coltrane. According to Woolley, ‘Denis was telling Eric Idle that he wasn’t going to give Eric any money because we weren’t paying him, not telling Eric that we were actually owed money from Mona Lisa. And Denis very much personalised it towards me, he said, “Stephen Woolley owes us the money.” I was taking Eric Idle’s money now. And it’s a bone of contention with Eric, I swear, to this day, and even though I’ve had late nights with him at Cannes explaining it and he goes, “Yeah, I understand now,” I know that like three weeks later he’ll say, “That bastard Woolley owes me money.” So Denis was very cruel to do that because it was an internal business thing, it was nothing to do with any individuals.’

  But the bitterness hasn’t gone, particularly as Idle, Coltrane and Lynn deferred their fees in order to get the movie made, so to be financially shafted at the end of it made the pill even harder to swallow, especially when Palace, having gone bust, started up again a little time later as a different company. ‘I don’t take kindly to working very hard,’ Idle says, ‘deferring my money, making a success — God knows, which is rare enough in movies — and then having someone take the money and just keep it. So whatever he feels, I felt they shouldn’t be allowed to come back into the business and I really find it very hard to forgive that. It’s our money they took. They had an argument with Denis — they’re not the first people to do that — but the effect of that was to just take all our money and keep it. So the minute he pays it back, I’ll be happy with him.’

  The last word on all this is probably best left to Robbie Coltrane. ‘I am still very fond of Nuns on the Run, but every time I see it on Channel 4, getting huge ratings, I get severely pissed off thinking about the money I am owed. And it’s a shame because a lot of goodwill went into that film, the crew and everyone else alike. It was all legal, but in the scheme of things, legal isn’t everything.’

  Just before cameras rolled on Nuns on the Run, Eric Idle told a reporter that he’d done the first film with HandMade and that this would probably be the last film with HandMade. ‘And that got printed and Denis was furious. But, of course, it turned out to be true.’ Ironically, O’Brien’s downfall was to be at the hands of a man especially brought in by him to raise funds in order to keep his ailing company afloat. His name was John Reiss, a film accountant, and what he was to discover at Cadogan Square sounded HandMade’s death-knell.

  13

  THE WHISTLE-BLOWER

  In November 1988, Ray Cooper and film accountant John Reiss visited George Harrison at home at Friar Park to tell him they’d discovered that Denis O’Brien was robbing him blind. During the meeting, Reiss warned Harrison, ‘One of these days, you’ll open a newspaper and you’ll find a headline BANKRUPT BEATLE.’ He also urged Harrison to call in an independent accountant and lawyer to investigate. But Harrison either didn’t believe what was being said to him or simply didn’t want to hear it. Whatever, Reiss and Cooper were all but thrown out. Palmer remembers, ‘Geo
rge was the kind of person who’d shoot the messenger because he didn’t want to know. He wanted to believe that everything was hunky dory and fine.’ It wasn’t.

  John Reiss had previously been Finance Director at Thorn EMI Screen Entertainment where he’d been involved in various negotiations with O’Brien over video rights for HandMade films. ‘I remember Denis being a very tough and shrewd negotiator. His reputation as a tricky bastard preceded him.’

  In early 1988, O’Brien began to court Reiss to join him at EuroAtlantic. ‘Clearly, what Denis wanted was to raise a lot of film production finance for HandMade,’ says Reiss. ‘I’d been quite successful in doing that at EMI. We’d raised a bank facility of $175 million for film finance there and an equity fund from the City of about £36 million, which did various films including Passage to India. And I think Denis thought that perhaps I would be a link to the respectable side of the City, to use my bank contacts to raise substantial credit for the company.’

  Reiss became a part-time consultant at EuroAtlantic in May 1988 and almost immediately sensed an atmosphere within Cadogan Square, one of fear; and particularly the fear of one man — Denis O’Brien. ‘Denis could be very personable. He was superficially extremely charming. But he ran the organisation with a rod of iron, everyone was in total fear of him. And there was no wastage, except in his own lifestyle. Denis actually was not there very much and the place used to relax when he wasn’t around. When he was there or when he was coming back, everybody used to get tense. Key people were highly paid, most people were badly paid and he traded on their loyalty to George. It was the atmosphere of fear — you co-operated. But, obviously, he had something to hide so he had to be very careful.’

  Just what O’Brien was hiding gradually grew apparent as Reiss discovered that EuroAtlantic was merely the tip of the iceberg of a complex network of companies, which O’Brien told him were for tax-saving purposes. Reiss even drew up a chart listing each and every one of O’Brien’s ‘funny companies’ which ended up being so complicated that today it makes no sense to him at all. Companies existed all over the place, some with bizarre sounding names like Harikrishna SA and Clog Holdings. Most of them appeared to operate out of Panama, a popular country for people like Denis O’Brien to do their business because of the lack of any disclosure laws there. One didn’t have to bother about such legal niceties as filing your accounts and so forth, so once something went to Panama it was as if it was lost forever. Very convenient.

  O’Brien was also reluctant to explain the group structure when confronted about it and would look at Reiss with a charming expression whenever fundamental questions were raised like, ‘Why does George Harrison need to borrow so much money?’

  Though he’d been with EuroAtlantic some months by this time, Reiss had yet to even lay eyes upon the elusive Harrison. ‘I’d kept saying to Denis, it would be nice to meet George some time. I suppose nothing to do with work, but because he was a Beatle, me being a child of the Sixties. And when I finally met him it was in very controlled circumstances. Denis never left the room when I was there. I remember thinking beforehand, What do I say to a Beatle? I ended up saying to him, “The last time I saw you was at the Blackpool Odeon in 1964.” And he said, and I’ll never forget this, he said, “Yes, you were on the seventh row, weren’t you?”’

  Previously, many of HandMade’s films were financed by partnerships, which were a tax device to get tax relief for high network individuals like Harrison. A small amount of money, in essence equity money, was put into these partnerships, and the rest was financed by bank loans, something like 90 per cent of the cost of the production, secured partly against any pre-sales there had been, and very often these were quite small as the films in question were not necessarily mass-market films. The rest was financed by just the security of a guarantee which the bank got from Harrison. A lot of banks at the time were more than happy to take the personal guarantee of a Beatle, enjoying as they did the benefits such an affiliation engendered, going to premières and the like. Reiss recalls, ‘Denis was very good at enticing people with all that. Everyone wanted to be associated with a Beatle, particularly senior bankers who were probably children of the Sixties like myself. They just assumed the balance sheet of a Beatle, without ever seeing it, was enough.’

  All that changed one day when the Soho Square branch of Barclays, which handled a lot of film banking, suddenly and quite sensibly asked to see the personal balance sheet of George Harrison to make sure that it did, in fact, support the guarantee. ‘I had to mention this to Denis,’ says Reiss, ‘and we started to compile this balance sheet and it became quite obvious as you got more and more of the information together, sensible values for the physical properties, the flow of income coming from the music royalties and so on, that perhaps we were heading towards a pretty substantial deficit. I calculated at the time, and it is a figure I shall never, ever forget, that the deficit was $32 million.’

  Reiss began to dig a little deeper and made a startling discovery. ‘I found documents to suggest that Denis had been telling George that he and George were equal partners in backing these films and that the bank guarantees would be signed by them both. But, in fact, Denis never signed them himself. So it was a single guarantee.’

  Harrison was almost like a walking credit card for O’Brien that the American used whenever HandMade’s coffers went bare. Wendy Palmer states, ‘That was the thing that most of us felt most culpable about, that George really did not know what Denis was doing with his money, and what he thought he was doing with it was not an accurate picture. Every time Denis needed more money for films, he would basically use George’s personal guarantee to guarantee the loan and George had no idea and, of course, the bank assumed he was mega-rich and they never checked and he had personal guarantees that were far greater than his net worth. I remember clearly Denis going off to see George, clutching the document, and coming back with a signature and we’d have more money again.’

  It suddenly dawned on Reiss what had been going on and the realisation made him go hot and cold. ‘You think, my God, you don’t discover these things very often in life, and I began to see the whole thing was a pack of cards. I’d assumed all this network of companies was because George and Denis were obsessed about tax but then I began to realise it was far more than that, it was a massive moral breach of trust.’

  How exactly was O’Brien doing this and how had he been getting away with it for so long? First, he had an easy victim in George Harrison, a trusting man and a simple man in terms of business, although there’s no reason why Harrison should have been an expert in business matters; that’s what business advisers are for, after all. ‘George was mesmerised by Denis,’ Reiss believes. ‘What would happen, occasionally they’d meet and he would actually lie down on the chaise longue in his office and Denis would talk to him for three or four hours, a bit like a shrink with a patient. And what Denis used to do was terrify George above all about the tax man. And, to me, that is the critical thing. George was terrified about tax, and probably didn’t have any reason to be, so Denis used to frighten him about tax and say, “This is for tax reasons.” He just took advantage of George.’

  Harrison relied on O’Brien totally and gave him unchecked control of his affairs. In effect, he placed his entire financial life in O’Brien’s hands. What’s even more ironic is that O’Brien often received lavish gifts from Harrison. One Christmas, for example, O’Brien was presented with a black Mercedes from his unsuspecting client. ‘It’s the worst sort of abuse,’ Reiss adds. ‘George gave him total trust and it’s a total breach of that trust. I got the impression that Harrison’s wife Olivia was probably more wise to it but then probably wasn’t able to change things. It was so sophisticated the nature of the fraud.’

  Much of the problem was that Reiss couldn’t actually analyse where all the money was going because it was all being mixed up and recycled over and over again. To complicate matters further, a lot of funds from Denis’s companies were intermingled wit
h funds belonging to Harrison. ‘There was also no reporting of stewardship which was what a manager should do to his client. Denis also took a very large salary from EuroAtlantic. But it went beyond the professional breach of trust and went into actual, I believe, probably criminal fraud, and certainly moral fraud. He borrowed the credit of a Beatle and used that to his own advantage. I know, for example, that George’s income flow from various sources was at that time financing a house Denis was building in New York. I don’t believe Denis ever spent a penny of his own money. Everything was borrowed from somewhere.’

  Even Harrison’s participation in the all-star group the Travelling Wilburys, which he must have taken huge creative solace in at times of stress over HandMade, was open to exploitation. ‘Everyone was very excited about the Travelling Wilburys,’ says Reiss, ‘but Denis was so deprecating about it. He thought it was a load of nonsense and was very negative, until, of course, it started to be successful and he was delighted that it was going to be a vehicle to raise money. And when the sad news came that Roy Orbison died, and George was clearly devastated at the loss of a personal friend, Denis was devastated because it would stop the royalty flow on the Travelling Wilburys. I’ll never forget that.’

  Reiss took his findings to Ray Cooper, whom he knew to be the closest associate to Harrison. Cooper needed no persuading that what he was being told was true; indeed, he’d all but guessed as much. For a while now, a lot of the senior people within the company had an inkling that O’Brien was taking advantage, but none guessed the scale. Now, what to do about it?

  Sensitive to Harrison’s feelings and determined not to cause him any embarrassment, Reiss and Cooper decided instead to visit the musician quietly at Friar Park. ‘We were there for quite a few hours,’ Reiss reveals, ‘we had supper with him and his family, Olivia and Dhani. And I remember thinking how bizarre this is, here I am in a Beatle’s kitchen and George is tossing a salad.