ALEX BRUMMER: Investigative journalism is a public good

ALEX BRUMMER: Investigative journalism is a public good – it’s often an uphill battle when big corporations are involved, but don’t give up

  • The role journalism plays in cleaning up business is at the heart of Wirecard’s expose
  • The film tells the story of how Wirecard fraudsters were brought down
  • He also demonstrated how investors, auditors and markets can be deceived

There have been few more influential newspaper owners than Lord Northcliffe, founder of the Daily Mail and Daily Mirror and owner of The Times and The Observer.

His life story, told in Andrew Roberts’ biography, The Chief, portrays a meticulous reporter with a passion for campaign journalism.

Roberts doesn’t spare the warts, but what stood out was the leader’s commitment to precision, thorough reporting and never giving up. Newspapers are often outdated for what they do.

A public good: Hard-working journalism caused fraudsters at fintech pioneer Wirecard to crash and embarrass German authorities

The latest economist spoofs British headlines for ‘Pravda’ journalism in coverage of the death of Queen Elizabeth II. A fuller read reveals acres of material ranging from royal complicity in colonialism to criticism of that royal miscreant, the Duke of York.

Investigative and campaign journalism is a public good. The work of this article on the repugnant lawsuits against postmasters and postmistresses by senior Post Office officials has helped reverse a grave injustice. Likewise, campaigns on big paydays, private equity and foreign takeovers have drawn attention to the unedifying failures of modern capitalism.

The powerful role that financial journalism can and does play in cleaning up deals is at the heart of the documentary Skandal! Knock Down Wirecard, published by Netflix.

The film chronicles how the FT’s diligent journalism, backed by a determined editor Lionel Barber, led fraudsters at fintech pioneer Wirecard to crumble and embarrass German authorities. It also demonstrated how easily serious investors, auditors and markets can be fooled if they don’t want to believe something.

Wirecard was Germany’s gateway to becoming a leading player in a high-tech world dominated by Silicon Valley. It was a brilliant undertaking that demonstrated that Teutonic capitalism was much more than just designing what were – before Tesla – the best motor cars in the world. Searching for Wirecard’s flaws, FT reporters, rounded up by senior detective Dan McCrum, traveled to the Philippines and beyond. They established that revenue from the Pacific was a pipe dream.

At each stage of their investigation, the FT team encountered formidable obstacles and intimidation. In 1990, while The Guardian (where I worked) was investigating the corrupt bank BCCI, a colleague of mine was hit by an oncoming car.

During the Wirecard investigation, the phones of FT journalists were tapped. Additionally, well-known law firms have sought to silence the FT for trying to bring down a huge company. In Germany, politicians frown on hedge funds and short sellers – who profit from falling corporate stock prices. As this paper has seen in the financial crisis, the latter are often the smartest investors.

In Wirecard’s investigation, it was intrepid short sellers from New York to France who provided the leads and route to the documents that brought down the lender. Skandal is not a skillfully made docudrama in the tradition of The Big Short.

And the all-too-familiar relationship between FT journalists and some unsavory figures in the south of France – who made millions after receiving information the paper was soon to publish – might raise eyebrows. In this case, however, the end may well justify the means.

There are big takeaways for financial sleuths. The stronger the complaints from PRs and lawyers, the closer you are likely to be to the truth.

It’s often an uphill battle when big companies are involved. But don’t be intimidated and don’t give up.

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