A troubling suspension at Bloomberg News

The crisis grows over a China story that hasn't run

When in a hole, the best course is usually to stop digging.

Instead, Bloomberg has deepened the intrigue surrounding a story about corruption among Chinese elites that unnamed Bloomberg employees had insisted to The New York Times and the Financial Times, among others, was shelved at the behest of top editor Matthew Winkler. The sources had said that Winkler on a conference call with the reporters gave as a reason his concern that the story might prompt Chinese leaders to kick Bloomberg out of the country, a rationale that, if true, many find problematic, including me.

Winkler and Bloomberg insist adamantly that the story in question—said to detail the ties of China’s richest tycoon to Chinese leaders—was simply not ready and was only postponed until it is. Bloomberg has declined to comment on the conference call but says editorial reasons were the sole criterion for decision-making on the story.

As I wrote at the time, the sources—whoeverthey are—were taking unusual career risks by making their grievances public, even on a non-attributed basis. There is little personal upside to such a move, and the small number of people involved increased the risk that one of the sources could be outed. The Times, for instance, named the two lead authors on the unpublished story, Michael Forsythe and Shai Oster, who had previously done prize-winning work in 2012 on the wealth of China’s ruling families.

Now, via Keith Kelly at the New York Post, we learned that Bloomberg has suspended Forsythe without pay. What’s more, “he is expected to be dismissed, sources said.”

Bloomberg declined comment to me. I was unable to reach Forsythe, who Tweeted this:

There’s a lot, obviously, we don’t know—but that’s a problem in and of itself. Bloomberg’s hallmark—from its see-through headquarters to its entire corporate rationale—emphasizes transparency above all else. It was a key talking point, for instance, in its justly famous, successful lawsuit against the Federal Reserve’s secretive emergency lending programs during the crisis.

When it was faced with an internal crisis this summer over concerns that reporters were inappropriately using data about clients’ use of Bloomberg terminals, the company responded with an overwhelming campaign of internal scrutiny and public disclosure. It was a textbook case of how to handle a knotty internal problem.

In this case, it is, for all appearances, going in the opposite direction. The facts are different. The issue is sensitive, involving unpublished material and personnel decisions.

But suspending a reporter who is already involved in a very public controversy without further explanation is the opposite approach, in some ways very un-Bloomberg-like, and one unlikely to end the crisis.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.