Lars von Trier and Peter Aalbæk Jensen’s Zentropa Entertainments has been put under “stricter control” by the Danish Film Institute over future state support for its productions and its auditor has been reported to the National Audit Committee.

The decision, made in consultation with the legal advisor of the Danish Government, follows a report by the Deloitte accountancy firm on certain irregularities in the financial records of four Zentropa productions subsidised by government money, including Danish director Susanne Bier’s Oscar-winning In a Better World (Hævnen).

“Stricter control” involves that a number of requirements for “good bookkeeping” must be met prior to subsidising films from Zentropa. The Danish production company is controlled by producer Peter Aalbæk Jensen and director/producer Lars von Trier.

According to the Deloitte report, Zentropa had refused the auditors access to accounts which may confirm that funding from publicly subsidised companies was transferred to firms privately owned by Aalbæk Jensen. Zentropa is an organisation of numerous companies, servicing each other – such as EF Rental, for hiring out equipment – and Deloitte has not found documentation this follows market prices.

Denmark’s BT discovered that Zentropa set up TeknikFyn, another rentals agency, in Aalbæk Jensen and von Trier’s summer cottage in the island of Funen, to receive support for productions in Funen from FilmFyn, the regional film fund, which requires proof of local expenditure.

All equipment was brought in, and when invoicing TeknikFyn, Zentropa would add a 10% ‘transaction fee’. The paper also documented that fishing gear used by von Trier and actor Jens Albinus was paid from a film production budget, and that a large amount of money was spent in Copenhagen on flying in and dining the director of the Cannes Film Festival.

“”The report is a complete botch-up delivered by auditors who know nothing about the film industry – it is released without I having seen it or been able to comment on it. It is like being accused in a lawsuit without being presented with the evidence. I am in a worse legal position than if I had been charged with stealing a bicycle – I am up against a power that is both legislative, judicial and executive,” was Aalbæk Jensen’s comment to Denmark’s Politiken.

According to the Danish Film Institute, the administration of Zentropa has seen a draft of the report and been asked to respond to it, both in writing and at a March 28 meeting with representatives of Deloitte, the institute and the Danish Producers’ Association. “It has not been demonstrated that I have usurped public funds, or gained a favorable position for myself; I will complain to the Minister of Culture, otherwise go the whole way til the Ombudsman,” he concluded.

Danish Cultur Minister Marianne Jelved has already reacted to the announcement. “I am pleased that the institute has decided that Zentropa is subject to stricter supervision to ensure proper control over the future support of the company. It is also satisfying that the institute will report Zentropa’s auditor to the National Audit Committee to evaluate whether he had failed to fulfill his obligations.”