My five-month investigation into Bernie Madoff's missing billions, a story no newsdesk wants to run - Press Gazette

My five-month investigation into Bernie Madoff's missing billions, a story no newsdesk wants to run

Corrupt Austrian bankers used a network of dodgy shell companies to help ponzi fraudster Bernie Madoff hide around $12bn which has yet to be tracked down.

This is the claim made by freelance journalist Michael Leidig in a book – Pyramid Games – which he has published himself today. Based on hundreds of highly confidential documents provided by a whistleblower it claims that, far from acting alone as he alleges, Madoff had a network of international co-conspirators.

Here Leidig writes exclusively about his five-month investigation for the first time and reveals how he has insulated himself from libel risk by getting the whole book tabled as a question and call to action in the Austrian Parliament today (thus attracting privilege). He also details how no newsdesk could be persuaded to run with the story

"POLIZEI…You must come to the station IMMEDIATELY." The sort of thing no one wants to hear, especially not at midnight, shouted down the phone in German. I struggled to get my own German reply together, and to find my phone at the same time, it's dark outside, what the hell was the time anyway? As I started to form a reply in German in my head, and to shout back: "Do you know what time it is? What have I done?" The line went dead.

My name is Michael Leidig. And I am a journalist.

It means I live strange hours, deal with strange people and get my hands dirty with strange stories that I just can't seem to leave alone.

I am not tied to any newspaper, I run a NAPA accredited news wire agency and that makes me a glorified freelance, but a freelance nonetheless. 

When six months ago I was handed hundreds of highly confidential documents that showed the inner workings of a major European bank and widespread evidence of corruption, I knew it was a big story. And I also knew it was one that I couldn't touch. My clients – whether it’s the now defunct News of the World, the BBC or the Sunday Times Insight team – know me as a crime writer. Nothing fancy, just the standard mobsters and fraudsters. 

The foreign desks know me, and keep the money coming for me to carry on.

Sometimes I might deal with the home desk, or features, maybe even the magazine sections. Business desks though have always been a maverick part of the newsroom, they don't seem to follow the same rules as the other desks. Maybe that's because the business desk is where the money is, a lot is spent on trying to get a mention in the pages they control, so the desks usually only work with people they know. They need to filter out the PRs.

This story was a classic business story, there was a conspiracy of bankers behind Bernie Madoff, the Wall Street trader who pulled off a $65 billion pyramid scheme, and then claimed he had acted alone. It was always going to be a long haul, every one of the documents was in specialist financial German, and I failed my 'O' level maths twice. I declined to take it, and went back to working on another project dealing in corruption: a botched kidnapping investigation which had allegedly been covered-up by the Austrian Justice Ministry because an election was coming up. 

And bizarrely, that led back to the bank informant, and a mountain of evidence that it is now routine in Austria for any politically sensitive case to be buried, and concreted over, especially when an election is due. I agreed to take the case, and that meant finding a newspaper to run it, and pay the bills, and that meant in particular the legal bills. I was sure it would run, and I agreed to work with the respected investigations unit of a UK national. Two weeks into it they pulled out because it was "too American".

But by that time I had got my teeth into the story, it was just too big. I decided to carry on. 

As the Bernie Madoff story unravelled itself in the paperwork it was clear I needed to find a financial expert, I signed a contract with a German journalist, Herman. When he saw a fraction of the files, he said: "I don't think you realise how big this is?" He was probably right. Three days later we had a meeting with our informant, or rather we were supposed to. He didn't show. Herman was terrified, expecting the whistleblower had been arrested and security services were on their way. The next day Herman didn't turn up, and I never saw him again.

But I did have a lot of other contacts. I managed to get some of those I trusted from previous stories together to form a panel to evaluate what we had: legal and financial experts. I travelled round Vienna interviewing people, checking the value of the material. Some of it was known, the big victory was getting access to official files through a back door, documents that in some cases matched what I had. 

The investigators though didn't have the full documents, not in every case, but I did. The pages the investigators had were filed by the bank, but why had they not filed the whole document? If you had the full version the answer was obvious. And the pages they had filed and others I had collected showed the files had been gathered by a bank insider to present to the board, a man code-named the Last Mohican, were 100 per cent genuine.

But Vienna is like a village, everyone knows what everyone else is up to, and it is also the spying capital of the world. I've had a few run ins with the spooks before, like when I was looking into the Gadhafi family and their Austrian connections a few years back, but mostly the sort of tabloid non-Austrian stories we covered meant we were largely left alone.

I don't have any proof that this story was any different, I can only point out that this is the first time in living here since 1993 that I've ever had a problem with late-night phone calls. Or the fact that I had my office burgled on the one day when, after a 14-hour shift, exhausted, I had left my personal laptop and my regular business machine, and also my offline machine with all my confidential notes in the office overnight. They were not the newest machines, but they were the only three stolen of the dozen laptops that had been lying around.

But I had spent a fortune encrypting and password protecting them all, and they missed my off-site back-up files, so the investigation carried on. I am not a conspiracy theorist, I don't believe the threatening phone calls, office break-ins and so on were related, but they were a worry and a distraction.

That people were aware what I was doing was clear. I had an offer to fly business class to America to meet with certain people and discuss my book, or rather the paperwork for the book. It was not the trustee, and no concrete figure was mentioned, but the suggestion was that it would mean there would not need to be a reason to work too hard in the future. In America, there is a law that allows those that expose fraud to get a percentage of anything recovered. With the $65 billion Madoff fraud, even if that was only the paper value and the real value of the hard cash without fake profits was nearer $20 billion, it was still a lot of money.

However, the paperwork was not provided to make me rich, it was also not provided so it could destroy the financial institutes that had been manipulated by those named in the paperwork, or even really to help those who lost out get their money back. The informant told me he wanted justice, and I simply wanted to be the one to tell the story.

With more and more people waking up to what I was doing, I needed to get the case finished, and published. But then came the problem. This was not a one-line story, and if you are on a desk it was one where you needed to spend time making a decision. I spent 10 days chasing one UK national in between writing, only to be told "not one for us" by a newsdesk person I'd never heard of who it was clear had spent only minutes looking at it. The Americans were logical, but they told me they did not use freelances, the business there is different, they said.

It seemed that the only way to get this story out was through self-publishing. It was always going to be hard to tell as a feature because of the volume of material, but as a book it could work. There were an estimated three million people affected by the Madoff fraud, a lot of people that might want to know what I had and who would be prepared to pay for it. .

I feared that the many contacts I had worked with were not going to see a result. They had also put themselves at risk, some were senior officials, they did it because they wanted to make a stand.

I could never afford the legal costs to publish this alone. But then I met an Austrian MP,  Hans-Joerg Jenewein, and he agreed to table a parliamentary question about my research, and immunise it through Parliamentary privilege.

Today that is exactly what happened. In many ways this is a new type of journalism and publishing, jublishing if you like. There was no professional sub-editor, just Michael Leidig. In fact the interviewer, researcher, reporter and translator were all Michael Leidig. It should not normally be possible to turn a complete project like this round in five months. I would not advise it.

The fact it has a State guarantee for the allegations for all media, criminal and civil legal actions does not mean I believe this should become the new way to publish and avoid the legal risks.

There are courts to make decisions on guilt, and prosecutors to prepare the evidence, and it is only because that system has broken down now that this last, final resort emerged. Austrians, and the world, have a right to know the facts, and to judge.

Obviously using a political party to do that will raise the suggestion that this is a political plot, even if it should be clear to anyone that reads it that it is an unbiased work.

The other side has a lot of money, the best lawyers, the best PR teams, and anything else money can buy. I published my book without the backing of a media group, I do not even have legal insurance. Anyone who says I was paid by bank rivals, victims or politicians can judge for themselves how much the information inside would have been be worth without the need to put myself or my family at risk.

During the instigation I saw concrete proof of one legal firm paying 25,000 Euros for one document. And I know how well my former investigative journalist friends are doing working now for private firms preparing reports read by a handful of directors.

I could have handed it over to the same lawyers, or travelled to America for a deal, or without risk seen that it was put on WikiLeaks. But Wikileaks is irresponsible, it does not care about the impact of what it releases, the vast amounts of paperwork we had gathered touched on many different matters but it was and is not the aim to destroy the bank. The other scandals it dealt with involved the same people, spreading it further would serve no purpose. Those named now by Parliamentary privilege will be cleared or convicted on their Bernie Madoff connections, and bringing other allegations will not change that.

Now that the project has been finished, all the paperwork has been shredded anyway, all the digital files erased and hard disks formatted to protect my sources. I can have them back, but only if I need to defend myself against a possible legal action, something that my lawyer Philip Jakober may have overlooked? Maybe nothing will happen, maybe nobody will read this? If that is the case I will no longer have the time or the money to ever do its like again.

If it was not for the fact I have a family, there would be no hesitation and no regrets. But I do and I am worried. What do I want? The purpose of writing this is not to get people to buy the book. But I don’t want it to be ignored. I want people to share the story, to discuss it, and for a verdict to be delivered not behind closed doors, but in the court of public opinion. Only if that happens is anything going to change.

And I want it shared, because if there is one thing I do know from my journalism, it's that making something like this public is the best way to level the playing field.

And finally, if having a family is a reason not to do this, it’s also a reason to do it. I have spoken to my son, aged eight, the message is that it’s not just a question of having values, it’s a question of living them as well. Austria is now my home, which means our home, and I don't want to be just another person that doesn't speak out. I want to give a voice to those who share my views, and to drag the dirty, rotten secrets of those with something to hide out into the sunlight.