By Stephen West
Financial journalists must be critical and not accept the statements
of major corporations at face value if the UK is to avoid a scandal
like that of Enron in the US.
That was the key message from Financial Times editor Andrew Gowers,
speaking to an audience of academics, journalists and guests at
Kingston University last week.
Gowers said: “Much of the poor
business journalism in the late 1990s involved creating celebrity CEOs
as if personalities were more important than what they actually did.”
the Enron collapse of 2001 famously came as a surprise to the
journalism community, Gowers said with benefit of hindsight the
warnings were there. “The company’s annual report for the year 2000
should have raised all sorts of alarm bells about its suspiciously low
cash flow, conflicts of interest and off-balance sheet partnerships.
The sheer complexity of the footnotes to the accounts were enough to
He said: “Enron was a great examplar of the failings within the journalistic community at all levels.”
told the audience: “A lot of the information provided to journalists
was taken on trust. Not even the most ardent Enron enthusiast truly
understood how it made its money.
“The press blindly accepted
Enron as the epitome of a new post-deregulation corporate model, when
it should have been much more interested in probing the company.”
suggested seven rules financial journalists should follow if the
mistakes made in the US in the 1990s are not to be repeated in the UK:
1. Avoid undue enthusiasm. If somebody advocates a revolutionary
business process, product or concept, journalists should speak to 20
diverse sources to test the theory and print nothing until this has
2. Train financial journalists to give them a serious level of expertise in numbers and balance sheets.
Insist that journalists develop a wide range of sources in their work.
Access to a company is highly desirable, but there are many other
sources that a journalist can tap into, including consultants,
shareholders and competitors as well as former directors and staff.
By all means write about key individuals within corporations, but don’t
allow the obsession with personalities and celebrities to overshadow
your understanding of what a company does and how well it does it.
Stand up to corporations that try to pull the wool over your eyes or
withhold information. There is always a public interest in securing
greater disclosure than the company volunteers. Don’t bow to corporate bullying.
Don’t pay too much credence to conventional market wisdom. Everyone
currently seems to be complacent that the market will not suffer a huge
“blowout”, despite a massive accumulation of risk, low interest rates
and complex financial arrangements. You should always “kick the tyres”.
Make sure you have the resources to do your job. Serious investigative
journalism costs a lot in terms of time, people and money. If you don’t
work to that ambition, you will end up rewriting press releases.