Don't Touch That Cash

FOR years now, it has been common knowledge that a large number of financial journalists are not above accepting gifts, in cash or kind, from companies for services rendered—writing nice things about them or running their rivals down. Now the Press Council of India (PCI) too has taken note. A Council subcommittee is proposing a separate code of ethics for financial journalists which urges them to refuse cash, gifts, loans, junkets, discounts and preferential shares from corporates.

Observes Justice P.B. Sawant, PCI chairman: "There is no doubt that after liberalisation, financial journalists have become more powerful and there are enough instances to show that they have been misusing their position. And this was prevalent on a scale large enough for the Council to take cognisance of it." The recommendations on the code of ethics will be submitted on March 25 to the full PCI, which consists of the chairman and 28 members. If approved, the code will be published for guidance of financial scribes. But will it be enough of an antidote? "

There were complaints about financial journalists receiving preferential shares from directors' quotas on a priority basis just to publish favourable reports about a company or reports against a rival," reveals Sawant. "We received complaints from investors as well as readers that reporting by some f i n a n c i a l journalists was obviously motivated. The code of ethics applicable to newspapers, magazines, news agencies and journalists—which has been evolved by the PCI over the years—is not sufficient to deal with cases of malpractices by financial journalists. We have been thinking for a long time about the need for a separate code for financial journalists," he says.

Says a young journalist: "Several of my college-mates were quite clear that they wanted to become business journalists. 'That's where you can make a lot of money', they would say." In the course of his work, every business writer gets insider information—an upcoming foreign tie-up, an imminent merger—that he could use to make money on the stock market. Many do so with casual impunity.

The worst offenders, and this has been an open secret for years now, are the hordes covering upcoming share issues. Gifts are today de rigueur at share issue press conferences. And demands on the companies keep rising, enough to now alarm the corporate community which started it all but are finding journalistic greed slipping out of control. A textile company thought it had it all sewed up when they offered scribes expensive suiting material at a press conference. The hacks insisted that the company pay tailoring charges too. They got it.

Many investment periodicals are known to function under a strict quid pro quo: the size of the company's advertisement decides the story length. On a good day, when a journalist has been invited for four or more press conferences, it's not unusual, at least in Bombay, to see scribes keep taxis parked outside conference venues so they can leave as soon as they have collected their gifts and rush to the next press meet (where another gift awaits them). Indeed, in Bombay today, there is a thriving secondary market in gifts and gift vouchers ( see box ).

Says the PCI subcommittee report: "Financial journalists today enjoy considerable influence over the readers' minds and therefore they owe it to them to present a balanced and objective view of a company. It has been observed that some companies are given excessive news coverage in newspapers/magazines because they have issued advertisements. Sometimes adverse reports are published of those companies which do not give advertisements to the newspapers/magazines. Again, whenever a newspaper/magazine is not happy with any company/management for whatever reason, the negative aspects of the company are highlighted, while in the reverse situation no negative aspects are brought to light." And it admits: "At the same time, there is no mechanism for raising public opinion against such unhealthy practices."

 The fallout is obvious. Doctored corporate reports harm the interests of investors, especially small investors who treat the media as the principal source of information to base their decisions on. The proposed code, apart from "ensuring clean journalism, will also help in protecting investors, complementing the work of the various investors' associations," feels Sawant. Says Suman Dubey, country representative with Dow Jones & Co. Inc., owners of The Wall Street Journal :I personally feel a lot of financial news in India can hardly be called reliable." 

Those who breach the new code will be reprimanded, as is the practice for violation of the general code. In 1994-95, the Press Council censured journalists in 19 cases and issued 22 warnings. There are three types of moral reprimand, censure being the most severe, followed by admonitions and warnings. Responsible newspapers do take reprimands by the PCI seriously because their credibility and respectability are at stake, asserts Sawant.

The key problem, of course, will be to figure out which articles are written with personal profit motive in mind. Says senior financial journalist J. Mulraj: "Views on a public issue are subjective—what I consider a good issue may be regarded differently by another. So it becomes difficult to pinpoint who is writing with vested interests." He also offers a rationalisation for the state of affairs: "Correspondents, even freelancers, aren’t paid well. And seeing peers get into FIIs with whopping salaries does cause heartburn.  The jounalist eventually self - justifies when he sees that the publishers isn't fairly sharing the huge profits he makes. And publishers turn a blind eye."

What about junkets, those all expenses-paid-for trips for journalists within the country or abroad? With more and more transnationals coming in, these are now a common feature of the business writer’s life: factory visits to Sweden, and strategy dissemination sessions in London. Says Dubey:"A token gift, or a drink or two is something that could be regarded as courtesy." But, adds he, "when it extends beyond this, it may not be a good idea to accept it." Sadly, in India, the dividing line between courtesy and corruption appears perilously narrow.

Mulraj suggests that financial journalists can be made more responsible for what they write by encouraging reader response. "Close the feedback loop to make correspondents more answerable and therefore more responsible for what they write," he says. "There could be a rating of sorts for their reports by which the best people could be actually rewarded and the worst performers punished rather than have no evaluation at all." But again, pure statistics dictate that stock-markets being, by definition, uncertain, the most well-intentioned analyst will go wrong in his predictions 50 per cent of the time. Developing a workable ratings mechanism will be a tough job. And after that comes the issue of scribes accepting that system.

Says Dubey: "While the initiative of the Press Council is welcome, it is obvious that its code of ethics can be violated. Hence, it is best left to the employers to stipulate a code of ethics in the conditions of employment itself." He adds: "At The Wall StreetJournal, for instance, norms for journalists are strict. No journalist can write about a company whose shares he owns. If he breaks this code, he loses his job."

Sawant agrees. "It should be a matter of concern for journalists as a whole that some among them are surrendering the best part of their judgement for some gains. This is tarnishing the name of the profession," he says. It is also the responsibility of journalists themselves to "spot the black sheep in the profession and take measures against them internally such as suspension or cancellation of their membership of associations, press guilds and clubs." Ultimately, he says, "social boycott is the most effective way of dealing with corruption in the journalistic fraternity." No one can disagree with that.