Veteran film executive Milt Barlow has left as CEO of Tangren Cultural Group, an Australia-based, multi-territory distributor of Chinese movies, amid allegations on both sides of breach of contract.

Barlow sold his Asia Releasing company to Tangren in mid-2018 and became its CEO at the end of the year, but said he has now issued a breach-of-contract notice and plans to follow up with legal action against the company, possibly including a petition to shut it down.

“It became obvious to me in January that the structure and funding of the company was not something that I felt comfortable with,” Barlow told Variety. “Multiple breaches of my contract with Tangren over the past three months with no offer of resolution unfortunately forced my hand to issue a breach-of-contract notification to Tangren at the end of April and to end my association with the company.”

Tangren has hit back, saying that Barlow was the one who breached their contract and suggesting that Barlow did not leave voluntarily. Tangren alleges that, although it paid him for Asia Releasing, Barlow failed to transfer the company to the new owner. It also alleges that Barlow has not fully remitted box office revenues earned from film releases in the U.S., Canada and the U.K. since April last year.

“Our CFO (sent) a lawyer’s letter, telling him the status. He did not reply,” Tangren board member Jack Li told Variety. Li also says that Barlow spent $68,000 (A$100,000) of the company’s money on a car which he failed to properly register in Tangren’s name.

Barlow was CEO of Village Roadshow between 1988 and 1998, and in 2008 helped launch China Lion, a company which helped release more than 50 Chinese films in North America. Barlow exited China Lion in 2013, established video outfit Chopflix and later returned to the theatrical business with Asia Releasing.

Tangren, which previously had connections in advertising, has over the past two years become the biggest distributor of Asian-language films in Australia and New Zealand. Rentrak data show that Tangren released more than 15 films in 2018, enjoying success with Chinese titles “Operation Red Sea” and “How Long Will I Love You” and Korea’s “Along With the Gods II.”

Tangren was a major advertiser at last November’s American Film Market in Los Angeles, where it paid for hoardings and gave away drinks bottle souvenirs to executives. It had been expected to have a similarly large presence in Cannes, but instead is absent.

Barlow says that the company’s precarious financial position means that it has stopped acquiring new films, citing Ning Hao’s Chinese New Year hit “Crazy Alien” as an example of a title Tangren has announced but has not released in Australia or New Zealand.

Barlow said Tangren told him that the Chinese government was planning to privatize the company and take a majority share position. “This information needs to be approved by the board of directors, [and] is not released public information,” Li told Variety. “We have received a lot of invitations and have not decided yet.”

One thing Barlow and Li agree on is that earlier this year, Tangren played pro-Chinese trailers, including a message from Chinese President Xi Jinping, in several Australian cinemas, ahead of films such as “How to Train Your Dragon.” The Herald Sun newspaper called the message “bizarre” and said it espoused “socialism with Chinese characteristics” and was aimed at increasing China’s soft power in Australia. The Daily Mail said the Mandarin-language advertisement talked about “promoting Chinese political philosophies” along with “producing an important influence on Western society” before finishing with mentions of ‘enhancing cultural soft power and promoting Chinese culture to the world.”

“We just want to do cultural propaganda,” Li told Variety, suggesting that the Italian word need not have sinister overtones.

China is Australia’s largest trading partner, with business built on Australian exports of raw materials, metals, and dairy products. But in the last couple of years, relations have soured over fears of Chinese political and industrial influence in Australia. Last June, Australia passed anti-foreign influence laws that targeted Chinese political donations and espionage. Bilateral relations were described as “toxic” after Australia prevented controversial tech company Huawei from bidding to supply 5G telecoms equipment.