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ALEX BRUMMER: Investigative journalism is a public good

A public good: Assiduous journalism brought down fraudsters at fintech pioneer Wirecard and embarrassed German authorities.

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

  • The role journalism plays in cleaning up business is central to Wirecard’s exposure
  • The film tells the story of how they brought down the Wirecard scammers.
  • It also demonstrated how investors, auditors and markets can be misled.

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

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

Roberts is not forgiving of warts, but what shone through was The Chief’s commitment to accuracy, careful reporting, and never giving up. Newspapers are often obsolete for what they do.

The latest Economist spoofs UK headlines for ‘Pravda’ journalism in coverage of Queen Elizabeth II’s death. A fuller reading reveals acres of material ranging from royal complicity in colonialism to criticism of that royal scoundrel, the Duke of York.

Investigative and campaign journalism is a public good. The work of this document on the revolting prosecution of postmasters and postmistresses by the higher-ups of the Post Office helped reverse a grave injustice. Similarly, campaigns on top dollar pay, 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 business is central to the documentary Skandal! Bringing down Wirecard, released by Netflix.

The film tells the story of how assiduous FT journalism, backed by a determined publisher, Lionel Barber, brought fraudsters at fintech pioneer Wirecard to collapse and embarrass German authorities. He also showed how easily serious investors, auditors and markets can be fooled if they don’t want to believe something.

Wirecard was, for Germany, the gateway to becoming a major player in a high-tech world dominated by Silicon Valley. It was a brilliant undertaking that showed that Teutonic capitalism was much more than designing what were, before Tesla, the best cars in the world. In pursuit of the Wirecard flaws, FT reporters, led by lead detective Dan McCrum, traveled to the Philippines and beyond. They established that income from the Pacific was a pipe dream.

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At every stage of their investigation, the FT team faced formidable obstacles and intimidation. In 1990, when The Guardian (where I worked) was conducting an investigation into the corrupt bank BCCI, one of my colleagues was hit by an oncoming car.

During the Wirecard investigation, the phones of FT reporters were tapped. In addition, well-known legal firms sought to silence the FT for trying to bring down a large company. In Germany, politicians take a dim view of hedge funds and short sellers, who profit from falling company share prices. As this paper found in the financial crisis, the latter are often the smartest investors.

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

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And the all-too-familiar relationship between the FT journalists and some unsavory characters from the south of France, who made millions of euros after receiving information the paper would soon publish, might come as a surprise. In this case, however, the end may well justify the means.

There are some important takeaways for financial detectives. The stronger the complaints from PR and lawyers, the more likely it is that you are getting closer to the truth.

It is often an unequal fight when it comes to large corporations. But don’t be intimidated and don’t give up.

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