Caleb Newquist has a great post up at Going Concern showing how important it is for news organizations to publish primary documents, rather than just report what’s in them. He’s reacting to Boris Groendahl’s story at Bloomberg, headlined “HSBC Was Told About Madoff ‘Fraud Risks’ in Two KPMG Reports.” The story is pretty clear: KPMG warned HSBC twice — once in 2006 and once in 2008 — that there might be fraud going on chez Madoff.
But Groendahl and Bloomberg have posted neither the 56-page 2006 report nor the 66-page 2008 report: they’re telling, rather than showing. And they’re raising all manner of questions by doing so. Here’s Newquist:
What if the “risk factors” listed are just standard boilerplate risks that are included in every single one of these reports? If that’s the case, then KPMG was slapping in the applicable information as it related to BLM, handed it over and collected a nice fee. Maybe KPMG was all over this but there’s no way to know because A) Bloomberg didn’t republish the reports in full; B) Other KPMG teams close to Madoff are getting their asses sued which means they either ignored the risks or couldn’t get a hold of these two reports…
Did KPMG warn HSBC or not? This Bloomberg story seems to think so but there are is a lot of evidence that KPMG was just as clueless as as everyone else.
All these questions could be settled very easily by simply publishing the reports alongside the story.
There are three main reasons why news organizations don’t do this. The first is that they promised their source they wouldn’t; the second is that they’re worried about being sued for copyright violation; and the third is that they don’t want to give away to their competitors information which they worked very hard to obtain.
But the fact is that if you’re going to publish a story saying that KPMG warned HSBC about Madoff, and you have the proof, and you don’t supply your readers with that proof, you’re doing them a disservice. Groendahl and Bloomberg should try as hard as they can to get those reports up online. And if any of my readers have them, feel free to send them over: I promise to post them immediately.
Felix Salmon is a financial writer, editor, and podcaster. A former finance blogger for Reuters and Condé Nast Portfolio, his work can be found at publications including Slate and Wired, as well as his own Substack newsletter.