Now he is suing the archive for $250,000 in compensation for losses and damage. Michael Loebenstein, its departing chief executive, said this happened before he was appointed to head the organisation. "That arrangement around the loan of the machine which is the cause of all of John's grievances was done before I was on board. "But, in brief, the more I looked into the issue, the less I liked what I saw. We don't loan out the machine any more and won't do so in the future." That's cold comfort for Mr Flanagan, 63, who had set up his own business, Broadcast Transfers, transferring quadruplex videotape programs on to modern digital formats, after buying, transporting and installing the most up-to-date machines. When he started, Broadcast Transfers was the only commercial company in Australia doing such transfers. But after being assured he'd be given work by the archive, he was then told a former staff member, Joe Kelly, had set up a new company called DAMsmart and been given an indefinite loan of the machines that Mr Flanagan had given to the archive on behalf of Seven, his former employer.

DAMsmart then tendered for work at around half the cost Mr Flanagan was charging. "Effectively, they created a competitor for me by loaning him a machine so he had few of the costs I had in setting up my machines," Mr Flanagan said. "So he had a company that was being subsidised financially by the government. "I was the only person in Australia doing this work, with assurances from the archive that they'd use my services. And then my competitor could do the same work much cheaper by using the machine I'd given the archive. It's incredible! This has ruined my finances, my health and my life. I don't know that I'll ever recover." Mr Kelly, the general manager of DAMsmart says he entered into a legal, binding contract with the archive, approved by the Attorney-General and, as far as he is concerned, there was nothing wrong with it. "We donate equipment to archives, galleries and museums but you can't then dictate what the recipients do with it," he said. "The [archive] was trying, I guess, to come up with a flexible new commercial arrangement that enabled them to do more digitalisation work in an era of lower budgets and dwindling funding.

"They should be congratulated on doing something different, and coming up with a creative solution … This is just professional jealousy from John Flanagan." Mr Flanagan has already won one battle, forcing the archive to release the contract with DAMsmart which it had previously refused to do, and then only agreed to with key elements redacted and the demand he sign a non-disclosure agreement. He refused and finally scrutiny of the unedited contract revealed that the rival company and the archive had paid each other $60,000 a year – effectively cancelling out all costs – for the loan of the machine, in return for some much less specialised transfer work. "It was a very dodgy contract, a sham contract in a way that was used by one person to his own benefit," Mr Flanagan's lawyer, Alison Drayton of Drayton Sher Lawyers said. "No one else was doing what [Flanagan] was doing at that time and, if this deal hadn't been struck, who knows what he would have earned?" A report by the Ombudsman in 2015 criticised the archive's contract with DAMsmart, its lack of conflict of interest protocols in dealing with its former employee, and its inadequate handling of Mr Flanagan's complaint.

The report added that, while the Ombudsman couldn't order compensation, Mr Flanagan could pursue legal action. "It's a terrible look," Mr Loebenstein said, who is leaving his post this month. "We would today never have entered into a similar deal because it doesn't have the level of transparency that we aspire to. We have since improved our processes to ensure that we don't enter into arrangement of that sort again." Although he sympathised with Mr Flanagan's position, he said he couldn't pay public money for possible losses. "I can't spend taxpayers' money on what's a broad claim," he said. "It's his right to pursue legal action against us but we are very happy to meet him and work through the issues with him." Meanwhile, others in the industry have been appalled at how Mr Flanagan was treated.

"This is something that was done in a very back-handed way, so the archive was actually helping the rival business to John's," said Bruce Josephs, former owner of the video digitisation business DVD Infinity. "I think he put many tens of thousands of dollars into his equipment and building up knowledge and spare parts, and he ended up losing his business and his health and everything he'd acquired over many years of hard work because of this." Robert Angel, the co-owner of Film and Tape Services, probably the largest videotape digitisation business in Australia, was also surprised at the arrangement. "It didn't seem very fair to me," he said. Mr Flanagan said the results have been catastrophic. "They've ruined my life and they have to be held to account for this."

The national archive was established in 1984 to store and maintain more than 2.3 million items of television, film and radio works, as well as documents, photos, posters, scripts, costumes, props and memorabilia.