This is the fifth and final installment in a five-part series on Australian business journalism. Read part four here.

The watchdog is the watchdog, you might say, and it is certainly true that debate about the role of business journalists would be very different if there was broad agreement that our corporate regulator, the Australian Securities and Investments Commission (ASIC), was doing its job.

The opposite is true, and the business journalists Crikey spoke to were unanimous in their view that the performance of ASIC has for years been abysmal. ASIC chairman Greg Medcraft’s recent gaffe about Australia becoming a “paradise for white collar criminals” came as a sorry confirmation of journalists’ bitter experience speaking to the victims of fraud about inaction by the regulator. Asks Ben Hills: “For Christ’s sake, whose fault is it? It’s Medcraft condemning his own incompetence.”

Trenchant ASIC critic Michael West told Crikey:

“It’s not a matter of the watchdog missing corporate collapses, they’ve missed the collapse of entire industries. There was something like $15-20 billion blown up in mortgage funds, a generation of wealth was wiped out by the guys from City Pacific, MFS, LM … the only thing that tempers the behaviour of these people is the media, because the regulator has failed so badly. I’ve had angry battles with them for years. I took them [information about] Storm Financial six months before it collapsed. ASIC gave it a ‘clean bill of health’!”

Hills goes back to the beginning, when Henry Bosch was head of ASIC predecessor the National Companies and Securities Commission, which had just been established.

“I’ll tell you how corporate regulation started off. It started with coppers. [The NCSC] recruited a number of people from state police forces, they used to be called the companies’ squad, and they were extremely good at their job. Criminals are there to be prosecuted and to get convicted and to be punished. There was none of this bullshit about ‘oh well … we’ll do an out of court settlement’. There is only one thing that corporate crooks understand and that’s prison, and it’s almost never happened in Australia”.

What’s more, the regulator does not respond, even when journalists expose wrongdoing. Veteran journalist Trevor Sykes, looking back over all his years writing for the Australian Financial Review, says:

“Let’s put it this way, since ASIC was formed, [I’ve] been writing first every week and then every month and I’d say in at least half the columns I’ve pinpointed something going wrong in some company. To the best of my knowledge only about two or three of those have ever been investigated by ASIC. I don’t even know if they read the column. You wouldn’t think they did … for all I know they are asleep at the wheel”.

If journalists are to perform a watchdog role scrutinising business, however, what are the parameters and boundaries? The rights and responsibilities? Business journalism certainly throws up unique ethical dilemmas. None of the journalists interviewed owned shares, for example — although some were more open to the idea than others, as long as it was disclosed as is clearly required under the journalists’ code of ethics. Is the code enough? When he was at the Sydney Morning Herald, Ian Verrender recalled, there was a requirement for the editor to keep a register of any journalists’ shareholdings. A similar obligation exists in the UK where the Press Complaints Commission has published a best practice note on financial journalism. Although the Australian Press Council has never published guidance business journalism, its recently revised General Principles include for the first time a separate principle on conflicts of interest that goes beyond disclosure, requiring that reasonable steps be taken to ensure they do not influence published content.

Few interviewees were aware of outright corruption among business journalists over the years. Trevor Sykes, after five decades in the industry, says he personally has never been offered a bribe but he did know of isolated cases of corruption back in the late 1960s, and a couple afterwards. Sykes and Gideon Haigh recalled a quite widespread practice of journalists receiving shares in public floats in the 1980s. At The Age, then business editor Stephen Bartholomeusz put a stop to it, says Haigh. Verrender was aware of one journalist, later a fund manager, who was given shares in a float and promoted it. Younger journalists such as West and Adele Ferguson had never seen the practice.

It is not only the journalist whose motives can be tainted, of course. Publishers can come under commercial pressure and newspapers are certainly more vulnerable as they have lost the “rivers of gold” of classified advertising revenue that happily came with absolutely no strings attached, editorially.

When David Jones’ chief Mark McInnes was forced to resign after admitting sexual harassment in 2010, Ian Verrender wrote a sensational column revealing that the executives exploits were “legendary … numerous women, none of whom are DJs employees, have detailed similar advances to your columnist”. What Verrender didn’t say, is that when he was business editor he had at times come under pressure not to run anything damaging on such a major advertiser, when someone higher up the chain at Fairfax admitted if an offending piece was run they were going to get the “usual call” from David Jones.

“We’re dying for the lack of ad revenue … but at the same time we’re running PR campaigns for free. It’s absurd.”

At the height of the financial crisis, two days after the Lehman collapse on September 15 2008, Adele Ferguson (then at The Australian) wrote a strong piece on market fears that Macquarie Bank would struggle to refinance $5 billion in debt within six months “at a decent price”. Macquarie put out a statement denying the “false” report but its shares plunged 20%. The next day Ferguson was surprised to find herself attacked by Crikey’s founder Stephen Mayne, and also by Eric Beecher, chairman of Crikey’s publisher Private Media, who wrote in Business Spectator that it was a “highly irresponsible” attack on “one of the pillars of Australian finance”. Beecher questioned where the power of the media should properly end. It was an unedifying debate: Macquarie was the most prominent advertiser on Business Spectator, in which Beecher held a stake, and a subscriber to the Mayne Report. News’ spokesman Greg Baxter hit back, demanding an apology from Beecher and Mayne, which was not forthcoming. Richard Ackland’s Justinian picked over the stoush a few weeks later, concluding that Ferguson might have over-egged her report but Beecher and Mayne were guilty of a “precious over-reaction”. The whole episode led to an ASIC investigation into “rumourtrage” — sparking a debate about reporting false rumours — which was ultimately shelved.

The thing was, Ferguson was right about Macquarie. In fact the bank was in dire straits — and a 2010 investigation by the Sydney Morning Herald’s Michael Evans and Ian Verrender would confirm this was Macquarie’s “brush with death”. In our interview for this series late last year, Ferguson told me:

“Crikey came down very hard on me. Beecher accused me of single-handedly trying to bring down Macquarie [but] it was all true — banking analyst Brett Le Mesurier did the numbers and Macquarie had $42 billion in funding with a maturity of less than a year. The fact was they had short term debt that needed to be rolled over and in hindsight Macquarie was in trouble, that is obviously why they were so sensitive. If I had made a mistake they would have either sued me or called for a correction. They didn’t. They put out an ASX statement that was misleading. Shocking really.”

Mayne tells Crikey that at the time he thought it was akin to crying “fire” in a theatre. Beecher, for his part, is adamant: “I have never argued anyone’s case because they are an advertiser. Ever.”

Given the commercial pressures, it is all the more surprising that newspaper publishers churn so much public relations material — a horror trend, more insidious than advertising (I have previously called for a “fightback”against PR in this industry piece).

“We’re dying for the lack of ad revenue,” said West, “but at the same time we’re running PR campaigns for free. It’s absurd”.

Business is especially vulnerable to churning press releases, as it is often held captive to the ASX announcement cycle by major listed companies. As Haigh told Crikey:

“Your agenda is set by the regime of continuous disclosure. Companies have found out just how useful disclosure can be, because you completely inundate your audience, create all manner of distractions for them. Continuous disclosure was an antidote to lack of disclosure in the 1980s but companies learned to make it work for them. There’s a line of [economist] Herbert Simon about an abundance of information creating a poverty of attention — that certainly applies where business journalism is concerned.

“An interesting and I thought pretty telling indictment of the business press back in 2004 came when James Hardie was spinning off its Medical Research and Compensation Foundation and in course of Jackson inquiry some emails came to light from James Hardie flack, Greg Baxter, to the effect that the best way to handle the announcement was to make sure that it was positioned in the business pages rather than the news pages because the business pages would report the Foundation simply as a business transaction whereas if you got into the news pages it might get a little bit unpredictable. I thought that was a telling indictment of how captive the business press had become.”

Under the pump, trying to keep up, business reporters churn stories because it is easier than investigative reporting in the time available.

University of Melbourne academic Andrea Carson charted the decline of corporate investigative reporting in this country in this 2014 paper. Interestingly that paper fell out of a larger unpublished doctoral thesis, which found that investigative reporting on other subjects was on the rise. Corporate investigation is too risky, she wrote: “There is no guaranteed story at the end when the subject you are investigating has deep pockets — both in terms of pursuing litigation and denying future advertising dollars”.

There is no doubt the threat of litigation is an increasingly powerful deterrent to corporate investigation. Ferguson, who wrote an unauthorised biography of mining mogul Gina Rinehart, Australia’s richest person (worth $22 billion last year) found herself facing jail for her trouble, sued to reveal sources along with The West Australian’s Steve Pennells. Rinehart was also the largest shareholder in Fairfax Media. The threat against Ferguson carried weight, but to its credit the publisher backed her to the hilt.

Backed by the MEAA’s Press Freedom campaign, Ferguson wants law reform:

“Last year I had three writs to get my sources. It’s getting beyond a joke. They really have to have uniform shield laws. The problem is the legal costs. When you’ve got media empires that are stumbling, even if you’re right and you’re going to win the case, it can cost millions. Writs are cheap. I had eight writs on the Ian Lazar story. Andrew Wily filed seven. It’s ridiculous. It took over a year.”

Amid the lawyers briefings and court appearances, Ferguson kept filing.

““You can’t let them intimidate you or else you can’t do your job. It drives you nuts. But you just fit it in.”

The toughest business journalists accept litigation as part of the job, almost a badge of honour. Verrender says it was ever thus:

“If you’re going to go out on a limb, if you’re going to try and bring them to account, you’re going to run into a wall of money that’s designed to bring you down. There’s going to be connections between that person and somebody in the management of the company that you’re working for, there’s going to be favours pulled and ultimately you end up thinking the management thinks you’re incompetent because you might have made some little mistake … there’s always going to be some little chink that they can hone in on and say ‘see, the whole thing’s inaccurate’.”

There is not, of course, a simple dichotomy between access and accountability journalism. “It’s not one or the other,” says Ferguson:

“I will dig deeper, and always have. Get past the spin. But I think I’ve also got access. I do have a pretty good contact book. You can do both. If you do a good job exposing wrongdoing, you earn the respect of business.”

Despite the pressures, some business journalists are embracing the future and doing it all — in print, online, and broadcast media — and there is no better example than Ferguson herself, who has taken on the world’s richest woman, the country’s biggest bank — including in an award-winning investigation between Fairfax and the ABC’s Four Corners — and received this year’s Gold Walkley in recognition of her achievements.

For Verrender the role of journalists holding business to account is almost self-evident. “I don’t think you need to formalise it or hold it in such a lofty way. You just look at it, my job is to find out what the truth is.”