On February 15, Pakistan became one of only four countries in the world that make tax records public. The other three are Norway, Finland and Sweden. A year ago, no one would have thought this was possible. Pakistan, after all, is a cesspool of corruption and a paragon of opacity. But check the website of the Federal Bureau of Revenue and you’ll find prominently displayed there a link to the Parliamentarians’ Tax Directory. Click on the link and you’ll get a PDF that lists how much income tax each and every member of Parliament paid in 2013. On March 31, a similar listing will be made publicly available for the tax payments of all citizens.
How in the world could this happen in Pakistan?
A large part of the credit should go to the intrepid Umar Cheema, founder of the Center for Investigative Reporting in Pakistan (CIRP), which in the past year published two well-documented reports that showed tax evasion on an epic scale. The success of this project inspired me to take up this blog again after several months of inactivity. It’s not always that investigative reporting makes such clear and dramatic impact. So it’s a good time to revisit a question that’s often asked: What kind of reporting makes an impact? What stars must align for reforms to follow in the wake of an exposé?
In the past two weeks, I have been lecturing my students about the importance of crafting the investigative narrative and engaging readers. Good narratives make impact, I said. Yet the two reports that the CIRP has published are densely written, numbers-packed pamphlets, each about 70 pages long. There are no sexy graphics, no stunning multimedia, no gripping and polished stories. The prose is dry – they could well have been written by the World Bank. Moreover, the reports confirmed what people in many developing countries already know: The rich don’t pay taxes. And yet they captured the popular imagination and forced the government to do the unthinkable. Why?
Pakistan is a basket case in terms of tax collection. It has one of the worst tax-to-GDP ratios in the world – just nine percent, worse even than Afghanistan’s 11 percent. Three years ago, the finance minister told parliament that Pakistan’s ratio was second to the bottom among 154 countries. Yet nothing was done.
In December 2012, the newly formed CIRP released its first report, which showed that two-thirds of Pakistani MPs did not pay taxes. Neither, it said, did the high-living, polo-playing, playboy President Asif Ali Zardari and more than half his Cabinet. The findings got wide play in Pakistan’s free-wheeling press. Perhaps it was the specificity of the details, the fact that it named and shamed and put precise numbers that showed the extent of the tax evasion – the report caught fire and stoked the public anger. (I wrote how that project was researched in an earlier post.)
Nonprofits have been touted as a possible alternative to the collapsing business models of for-profit news. But a study released this week by the the Pew Research Center points to the fragility of that model and also to the need for a more concerted effort to shore it up.
The study identified 172 nonprofit news outlets throughout the U.S. – two-thirds of these were launched only since the 2008 financial crisis. While the recession has accelerated the closure of newspapers and the downsizing of news staffs throughout the country, it has given rise to a boom in nonprofit news. Today 41 states have at least one nonprofit news organization.
Nonprofits have attracted a lot of attention partly because of the innovative and high-impact reporting some of them have done. Pro Publica celebrated its fifth birthday this month, with two Pulitzers under its belt and an impressive track record of trailblazing investigative journalism. The Center for Public Integrity and the International Consortium of Investigative Journalists, meanwhile, have been making waves worldwide with the release of a series of stories on offshore secrecy. And last month, the little-known Inside Climate News, a Brooklyn startup with an eight-person staff, was awarded the Pulitzer for its investigation of an oil spill.
So can bad (financial) times be good times for news?
Not in the U.S., which has seen a diminution of newsgathering capacity since the recession began. Nonprofits have picked up some of that slack by producing a range of news – from general interest reports to investigative projects to more focused reporting on topics like environment or education. But the Pew study says that most of these operations are small, with paid, full-time staff consisting of five or fewer people. Most of them, the study says, use unpaid volunteers; nearly a quarter have no paid staff at all.
The nonprofit boom seems have already plateaued, with 25 new nonprofits being formed in 2010-2012, compared with 46 in 2008-2009. In addition, while three-quarters of the 93 outfits surveyed by Pew had received startup grants of about $100,000, only less than a third had those grants renewed. Most nonprofits rely mainly on foundation funding, although a number earn money from advertising, events and the sale of stories. Most of them, however, do not have the resources to invest in business development. The financial outlook for many of them remains uncertain, although most of the nonprofit news leaders surveyed by Pew were optimistic they would be solvent in five years.
The situation in the U.S. closely mirrors that state of nonprofits elsewhere in the world. A recent survey by David Kaplan of nonprofit investigative reporting centers worldwide shows that most have budgets of less than $50,000 and five or fewer people on staff. Like in the U.S., some of these nonprofits wield clout disproportionate to their size, producing or enabling high-quality, high-impact journalism that holds wrongdoers to account.
The truth is that throughout the world, nonprofit news outfits have been sites for editorial innovation but not – or at least, not yet – for business innovation. Nonprofits have been largely driven by journalists fired up by an editorial or crusading mission, not a business goal. The vast majority are dependent on philanthropic support and would likely not exist without it. If nonprofits are to be models for how independent and deeply reported news is going to be produced in the future, there needs to be much more investment in thinking about – and experimentation with – revenue models.
About a third of all countries in the world now require officials to publicly disclose their assets. Institutions like the World Bank and the OECD see this as a good thing. Asset declarations, they say, are crucial tools for fighting corruption and holding officials accountable. As an investigative journalist in the Philippines, I found asset statements vital to digging into conflicts of interest and the illegal accumulation of wealth by those in public office. Asset statements are mother lodes of information – and journalists in Russia, South Africa, Bosnia and Thailand, to name only a few, have found them crucial to their investigations of official wrongdoing.
There is as yet no global consensus on the merits of asset transparency. Last week, Chinese authorities detained six anticorruption activists who had been demanding that senior Communist Party officials declare their wealth. The demands come in the wake of exposés in the U.S. press, including a report that recently won the Pulitzer Prize, on the billions – yes, billions – illegally amassed by the so-called Red Nobility.
But the pushback on official disclosures comes from an unlikely quarter as well.
Last Monday On April 15, President Obama signed a law that reversed a provision in The STOCK Act of 2012, which required members of Congress, legislative staff and senior officials of the executive branch to post their financial disclosures online. As my former student Sasha Chavkin pointed out in an informative piece for the Columbia Journalism Review, the 2012 law also came on the heels of scandal – a 60 Minutes exposé on insider trading by congressmen.
For some time now, critics of asset transparency have been saying that wealth disclosures are unnecessary violations of privacy. Rather than disincentivizing corruption, they say, disclosures only provide fodder for “asset porn.” More importantly, the National Academy of Public Administration (NAPA) in Washington, DC said in a recent study that these disclosures, if posted in online databases, pose dangers to law enforcement and national security. NAPA also asserted that asset disclosures have “limited value” in terms of detecting conflicts of interest or insider trading.
On April 15, for the first time ever, French government ministers were required to publicly declare what they own, in what has been called a historic Great Revelation or Le Grand Déballage. Like elsewhere, the demand for wealth disclosure was stoked by scandal. First, an exposé on the French muckraking site Mediapart, that alleged that the budget minister, Jerome Cahuzac, had an undisclosed – and untaxed – account in the Swiss bank UBS. In March, the minister was forced to resign and is now facing tax fraud charges. Then, just weeks later, Le Monde and the International Consortium of Investigative Journalists revealed that President Francois Hollande’s close friend and campaign treasurer, Jean-Jacques Augier, had secret investments in two offshore companies in the Cayman Islands.
The asset declarations, posted on a government website, were seen as an attempt by Hollande to repair the damage from the scandals. The French president is now proposing to extend the mandatory disclosures to the entire parliament and other elected officials. This is quite revolutionary. France has so far bucked the transparency tide, even if most EU and OECD countries now require public disclosures of official wealth and the World Bank preaches the virtues of asset transparency to its clients in the developing world. As the BBC reported, French resistance remains fierce:
Can the worst of times for media and political freedoms in post-Soviet Russia also be the best of times for watchdog reporting?
Elizaveta Osetinskyaya, the editor of Forbes Russia, the most prominent business magazine in that country, seemed to think so. It’s a paradox, she said. The Russian media is confronting some of the most formidable political and financial challenges it has faced since the fall of communism. Yet she thinks investigative reporting has never been more vibrant nor its quality better. “Nowadays you can’t hide anything,” she said,” the declarations of officials, their assets overseas, you cannot even hide your offshore accounts.”
“Second,” she continued, “Western [media] brands came to Russia in the end of the 1990s and the early 2000s, bringing high standards and technologies for investigative journalism. I started as a journalist in 1995. A lot of investigative pieces at that time came from leaks from oligarchs. This is not the way I would prefer to find information myself. Nowadays that is more possible than before. Third, despite more restrictive laws, there are now more clear and transparent rules [for businesses and for officials], such as international standards of accounting. Now we have a lot of databases. We have information about tenders. You can find a lot of information about the schemes of private companies. Fourth, there are a lot of independent bloggers who help us do our jobs.”
Osetinskaya was speaking at Columbia’s Harriman Institute, which brought in brought in five of Russia’s leading muckrakers in a forum last week. Put five Russian investigative journalists together in a room and you’re bound to have fireworks. The consensus: Vladimir Putin is bad news for for the Russian press. Since his election to a third term last year, the State Duma has recriminalized defamation and passed new laws that would authorize state censorship of critical websites. There is now far less tolerance for critical reporting than there was during the previous president, Dmitry Medvedev. At the same time, violent assaults on journalists continue.
So it was no surprise that others didn’t quite share Osetinskaya’s optimism. Elena Milashina has been for 16 years an investigative journalist for the independent newspaper Novaya Gazeta, where she continues the work of her slain colleague Anna Politkovsyaka, reporting on Chechnya and also investigating attacks on journalists. Last year, Milashina was attacked and beaten up by unknown men while on her way home. The beatings were so severe, she suffered a concussion, 14 blood clots and a broken tooth.
It’s possibly the biggest single leak of documents in the history of investigative reporting. This week, the Washington, DC-based International Consortium of Investigative Journalists released a series of stories based on 2.5 million documents that its director, Gerald Ryle, had obtained while he was still doing journalism in Australia.
In the last 15 months, 86 journalists in 46 countries have been poring over the document cache. ICIJ, housed in the Center for Public Integrity, coordinated the investigation from DC, using a secure messaging system to communicate with a worldwide team of journalists and free- text retrieval software and programmers in three continents to mine the information from the documents (for more, read this account of how this amazing project was put together).
In recent years, there’s been great work done on the offshore economy, including astounding estimates made by economists, advocacy groups, international financial institutions and academics of the trillions of dollars of global wealth that is stashed in offshore havens. What makes the ICIJ’s exposé such a blockbuster, however, is that it names names, in effect puncturing huge holes in the armor of secrecy that makes offshore havens so attractive.
The ICIJ reports this week expose an array of individuals, including politicians (everyone from a Kuwaiti sheikh to Imee Marcos in the Philippines to members of the Azerbaijani ruling family), businessmen, criminals, and even a songwriter and art collector who have stashed their assets overseas. Up till now, those assets – at least those in 120,000 offshore companies and trusts now on ICIJ’s database – were cloaked in secrecy, kept away from the prying eyes of journalists, government regulators and tax collectors. But no longer.
Offshore companies are not illegal. There are legitimate reasons for housing a company offshore. But because offshore havens guarantee their clients secrecy, they have become natural havens for corruption, organized crime and tax evasion.
In a tweet last night, ICIJ said it is contemplating making a public release of its data. If that happens, more secrets are likely to emerge as journalists and others who were not originally part of the collaboration dig into the data and find their own stories. This indeed could be bigger than Wikileaks’ “cablegate,” not just in terms of the size of the leaked documents (Wikileaks had about 250,000 US State Department cables) but also in terms of the international journalistic collaboration. (Disclosure: I am a member of ICIJ and my former organization, the Philippine Center for Investigative Journalism, was part of the Offshore Project). Read the rest of this entry »
Last week, David Kaplan, the director of the Global Investigative Journalism Network, argued that we can make a more effective case for investigative reporting if we explained more forcefully the good that it does. After all, investigative reporting is costly and risky, and as the resources for it dry up, we need to show it’s worth the investment of time and money. The evidence is there, he said in a recent post, citing a recent Transparency International survey of 3,000 businessmen in 30 countries, the majority of whom ranked investigative reporting as the most effective anti-corruption deterrent.
Businessmen are supposed to be realists. So it’s quite astonishing that, as the TI survey showed, they’re putting more faith in journalism’s power to counter corruption than in national anti-bribery laws and international conventions. Is there in fact empirical evidence for such faith? Or are the businessmen not so much impressed by the power of reporting as they are cynical about the effectiveness of anti-corruption laws?
Since the 1990s, academics as well as organizations like the World Bank Institute and the UNDP have run regression analyses using TI’s Corruption Perception Index and Freedom House’s freedom of the press ratings. The data have consistently shown that for the most part, countries with a freer press have less corrupt governments or, to be more precise, governments perceived to be less corrupt. Thus, Daniel Kaufman, the World Bank Institute’s
director former director for governance, stresses the importance of a free press and of investigative reporting in particular:
Basically, the capacity of some countries of engaging in a freer way in full disclosure through the media, coupled with the capacity of undertaking investigative journalism, can make a huge difference. That raises enormously the reputational risk and, therefore, the reputational cost for the corporate sector of engaging in these practices. Similarly, it raises the costs for the public sector and the politicians.
The Institute’s conclusions, however. are based mainly on survey data; that is, on the perception of, rather than actual, corruption, which is difficult to measure. Moreover, it’s hard to isolate the impact of a free press or watchdog reporting from other factors that may be linked to the control of corruption, such as independent judiciaries, respect for civil liberties, and the strength of civil societies and political parties. Academic studies have found that countries with independent courts and responsive bureaucracies also tend to be less corrupt.
This is hardly a surprising insight. We know that watchdog reporting can be most effective in countries where there are independent courts, responsive governments and empowered citizens. Without them, the work that journalists do is unlikely to lead to reforms. Russian journalists, for example, can publicize corruption at the highest levels, and they have, but that has not improved governance under Vladimir Putin. The same can be said of countries like Azerbaijan, or perhaps even Malaysia or Thailand. Individual stories may cause a policy reversal or drive a corrupt official out of office, but it’s generally hard to hold political or bureaucratic elites accountable if they enjoy impunity. How many times have I heard journalists complain that their exposés founder on the shoals of public and state indifference? That the politicians whom they’ve proven guilty of malfeasance are elected to office again and again?
Read the rest of this entry »
I was in Rio de Janeiro earlier this week to take part in a discussion on freedom of information hosted by the Columbia Journalism School. During the meeting, which was part of the launch of the Columbia Global Center in Rio, journalists, activists and academics debated Brazil’s freshly minted Access to Information Law. Signed by President Dilma Rousseff in 2011, it’s a pretty robust law. “Brazil is a patrimonial society where giving out information is not part of the exercise of power,” said Paulo Sotero, a former journalist who is now director of the Brazil Institute in Washington, DC. “The law changes this paradigm.”
Brazil was the 89th country in the world to have FOI legislation. These laws have been hailed as potentially revolutionary: When officials no longer have monopoly over government information, transparency can tilt the balance of power in favor of citizens. But can they change journalistic practice as well?
In Brazil, as in other places where the rule of law is weak and politics is factionalized, there is an entrenched culture of journalistic leaks. Competing political factions routinely use the press to launch damaging exposés on the corruption or other wrongdoing of their rivals. The publication of well-timed leaks from politicians are a long-established political ritual and part of the arsenal of politics. As conduits for leaks, journalists benefit from a culture of selective secrecy. Unsurprisingly, except for the likes of Abraji, the investigative reporting association, and a couple of leading Sao Paolo papers, Brazilian journalists were not the prime campaigners for an FOI law.
Brazil is not unique. Journalists are not always torchbearers for freedom of information laws. Accustomed to having privileged access to information because of their press passes, they are not always enthusiastic supporters of laws that would democratize access.
But, said said Fernando Rodrigues, a leading investigative journalist and former Abraji head, that culture may be changing. The new law, he said, has already powered a number of journalistic exposés. “Tons of documents” have been released because of FOI requests from news organizations, he added, and many publications have made those documents available on their websites. Many of those stories, featured on the website of the Forum for the Right of Access to Public Information, have to do with public spending, including reports on the outsize salaries of civil servants and police and military attachés. Read the rest of this entry »