HIH and One.Tel disasters bring business journalism practices into question

by Mark Beirne    5 September, 2001

"How could no one grasp the scale of the looming disaster?" asked shareholder activist and journalist Stephen Mayne as business reporters came under the spotlight at the first George Munster Forum for 2001.

Held on 15 August at the University of Technology, Sydney, the forum highlighted the complexities faced by journalists reporting on the business world, but it also rasied some uncomfortable questions about the relationship between business journalists and the PR industry. Mark Beirne reports.

It was an exercise in finger pointing as journalists convened at the first George Munster Forum for 2001. The discussion stemmed from the HIH and one.tel collapses, but it was business journalism that came under scrutiny. Speaking openly about journalists' failure to expose the impending crashes of two of Australia's biggest companies until after the events, representatives from The Australian, Four Corners and website crikey.com.au drew similar conclusions.

In the early months of this year, HIH became Australia's biggest corporate disaster. Thousands of Australians were affected, resulting in a $4 billion debt. One.tel became the country's fastest loss, leaving a hole of $1.3 billion. But no one anticipated the scale of the losses. "It raises serious questions about business journalism," said Stephen Mayne, editor of independent news site crikey.com.au and a shareholder in both one.tel and HIH. "How [could] no one grasp the scale of the looming disaster?"

Mayne was quick to criticise four groups he believed were responsible for the inadequate reporting on HIH and one.tel: analysts, the media, shareholders and regulators. "Business journalism is too dominated by the PR machine," he said. "[It's] the softest part of journalism."

Absent from the forum, but still a recurring name in the discussion, was Mark Westfield, Business Editor of The Australian. Westfield was the most influential journalist in the months leading up to the HIH crash, as he attempted to expose its problems. Debbie Whitmont, in a report for Four Corners, uncovered the effects of his hard journalism. "After a series of articles, the company [HIH] spat back," Whitmont said in her report. "It called Westfield's stories 'a preposterous collection of baseless assertions' and threatened legal action."

"HIH would get into a fight with anyone who would question what they were doing," said Mayne. Perhaps it is this sort of backlash that is responsible for 'soft' business journalism? The Australian's Jane Schulze believes that another factor is 'freebies' - small incentives given to journalists from corporations seeking a good run in the media. "There's a belief that companies try to curry favour with journalists in an attempt to have them write positive stories about them," Schulze says.

Whitmont wasn't afraid to admit the limitations of television journalism in such matters. "One reason why TV reports so poorly on business stories is they're very difficult: people don't want to talk about them, there are no pictures of any interest to show you." Schulze was also eager to point out the confines of her job in the print media. She said that the Internet plays a major role in her research, and field investigations into businesses are only possible if they are situated in either Sydney or Melbourne.

Mayne offered his thoughts on the "reasonable reporting" of one.tel's demise. "The media does tend to obsess a bit about Murdoch and Packer, and you saw a lot of reporting you wouldn't [normally] get with a company of that size, because they were in there." The forum's central issues were best summed up in a statement given by Mayne during open discussion with the audience. "Business journalists are too soft, they should go in a lot harder, they get too many freebies, and they also work in too isolated an area."