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Joel Etienne, Kevin Yang and Sophia Sunat New Realm Studios, on Sept. 9, 2019.Fred Lum/The Globe and Mail

A Canadian film company is accusing the federal government of interference after an arm’s-length, not-for-profit corporation suspended funding for its completed docudrama about the row between Ottawa and Beijing over the detention of Huawei executive Meng Wanzhou.

The Toronto production company, New Realm Studios, said Tuesday that the Canada Media Fund is in breach of a finalized contract and that Ottawa and the CMF are penalizing it for its association with former Donald Trump aide Stephen Bannon, who is helping with U.S. distribution.

Days before the English-language teleplay Claws of the Red Dragon was set to air on the cable channel New Tang Dynasty Canada (NTD-Canada), the channel’s U.S. counterpart announced on Aug. 23 that Mr. Bannon, a vociferous critic of Beijing, would join the project as an executive producer, acting in the capacity of U.S. distributor.

New York-based New Tang Dynasty, which supports Mr. Trump’s confrontational approach to Beijing, retains the U.S. rights and hoped that Mr. Bannon’s experience and contacts in the film business would help them find channels free from the kind of political interference that would arise if they had partnered with a multinational corporation.

According to New Realm, widely disseminated news of Mr. Bannon’s association with the docudrama prompted discussions between the federal government and the CMF, whose officials subsequently notified the producers of the suspension on Aug. 28.

In their view, Mr. Bannon’s U.S. citizenship made the production ineligible for the $200,000 subsidy.

They also raised questions about his character.

"At the beginning of the conversation, [the CMF] said they got questioned by the government of Canada,” said producer Sophia Sun, who spoke with a panel of CMF officials. “They told me that, unfortunately, they have to cease the funding pending an investigation first. We were supposed to receive that money just around that time.”

Ms. Sun said the CMF’s point person on the call, director of programs and policy Rod Butler, did not specify which government official or ministry he had spoken with.

The federal government did not directly address questions about whether Ottawa had interfered in the funding for the docudrama.

Instead, Simon Ross, press secretary to Canadian Heritage Minister Pablo Rodriguez, said the CMF is an independent organization responsible for making its own funding decisions. “We will continue to respect its independence,” Mr. Ross said, referring further questions to the fund.

In response to a series of queries from The Globe and Mail, the CMF, which receives its funding from Ottawa and private broadcasters, issued the following statement: “Given the ongoing, internal review of the project’s eligibility, the CMF can’t speak about the possible outcomes of this evaluation,” said Valerie Creighton, the CMF’s president and CEO. “Funding has been paused until CMF completes its review and is satisfied that the project meets all eligibility criteria. Non-Canadians in key creative roles would render the project ineligible for CMF funding. The subject-matter of the content does not affect a project’s eligibility.”

In conversations with Mr. Butler, Ms. Sun said, he apparently voiced concerns about Mr. Bannon’s nationality. In order to receive funding from the CMF, a production must be fully homegrown – part of a point system called 10 out of 10, in which all the main people must be Canadian. With Mr. Bannon attached to the project as an executive producer – suggesting he helped make the teleplay – the project was no longer eligible for a subsidy.

The producers argue they had filled the requisite production quotas and that the CMF had already signed off on it. Mr. Bannon, they say, was involved solely for the purposes of U.S. distribution.

In regard to this role, Canadian Broadcasting Regulatory Policy stipulates that “[t]he duties of foreign executive producers shall be limited to noncreative, non production-related functions. Such functions could include arranging financing and foreign distribution.”

According to Ms. Sun, Mr. Butler also raised Mr. Bannon’s character as an issue. “If there’s a murderer, and you put him on the show as executive producer, what would the funder think?” she recalled him saying. ​

The CMF would not confirm the account. The Globe also queried Mr. Butler.

“Mr. Bannon is involved on the U.S. side for the purpose of distribution, which is very common in this business,” said Joel Etienne, an executive producer of the teleplay. “They should know that. We did all the production here. The production is 100-per-cent Canadian and was completed before Mr. Bannon signed on.”

Documents provided to The Globe and Mail show that on July 30, the two sides agreed that the CMF and NTD-Canada shared domestic rights and that NTD-U.S. had distribution rights.

A human-rights lawyer who recently lost the Conservative nomination bid for the riding of York Centre, Mr. Etienne says Ottawa and the CMF have deliberately conflated production and distribution for political purposes. “What is the government’s business in getting involved? Clearly this is interference and censorship.”

The two-part teleplay depicts the travails of a Chinese-Canadian journalist covering the diplomatic fallout of a Chinese executive’s detention in Vancouver. The reporter is threatened with reprisals against her parents, who are visiting China, unless she backs off. And to complicate her life, she lives with an ambitious businessman who works for the Huawei-like company depicted in the teleplay. As part of its ripped-from-the-headlines content, a dead ringer for former ambassador John McCallum struggles to free two Canadian expats in Chinese custody.

In an interview with The Globe, Mr. Bannon said he has held five screenings in Washington for select groups of 50. “To a person,” he said, “none of the people there knew about the Canadian hostages held in China.”

In response to the CMF pulling funding, he said Canadians should be really proud of this film. “It’s a great way to access the story, and they put it together on a shoestring budget. It’s about everyone’s search for the truth, just like the journalist’s own search. It’s about well-meaning people who awaken to the threat of Huawei."

Mr. Bannon, who said he has no financial stake in the project, said he aims to expand on it with five additional episodes that involve a grand jury in the Western District of Washington State, which indicted Huawei on 10 counts of intellectual-property theft.

Editor’s note: An earlier version of this story described the Canada Media Fund as arm's length regulator. In fact, the CMF is a not-for-profit corporation. It does not receive receive money from private broadcasters but instead from cable, satellite and IPTV distributors.

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