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City Desk
10 October, 2008  
Be nice to the brutes

Ms Derivative, our market analyst, was dismayed at the precious way The Australian and Crikey carried on over MacBank. Amid all the sound and fury what was the story all about?

Things can turn pretty hideous when reptiles of the media fall out.

Apologies and retractions are demanded, there’s the rustle of libel threats and the sound of sabers rattling in their scabbards.

We’ve heard and smelt some of this brimstone during a highly entertaining wrestle between the people at Crikey and The National Rupert.

The row began last month when The Oz’s business journalist Adele Ferguson wrote about the challenging refinancing issues facing Macquarie Bank.

“Australia’s biggest investment bank, Macquarie Group, took a pummelling on the debt and equity markets yesterday on fears that it would struggle to raise more than $5 billion in debt in the next six months.

“The stock closed seven per cent lower at $36.80 as its subordinated debt blew out to 500 basis points and its senior debt ballooned to 320 basis points, indicating the riskiness the market is now attaching to the stock and its capacity to refinance debt, sell assets and maintain earnings.” (Macquarie in the spotlight amid $5bn refinancing fear, Sept 17.)

imageThe bank itself issued a denial saying its capital was quite peachy.

Quite apart from that the article caused a stir at the Melbourne HQ of Crikey.

The website’s founder and business writer Stephen Mayne (pic) responded by saying Ferguson’s article was outrageous and inaccurate.

ASIC was aroused from its usual torpor and boldly suggested it might take a dim view of people who spread false rumors and manipulate the market.

See what a bark from MacBank can produce.

The following day, September 18, Crikey opened the throttle with an editorial, asking:

“Where does power end and responsibility start? That’s a timely question for Mr Rupert Murdoch and the editors of his local flagship, The Australian, as they ponder the impact today of their ‘quality’ journalism on the fate of one of the pillars of Australian finance, Macquarie Bank.”

A clearly distressed Crikey continued:

“Macquarie shares have lost some 25 per cent of their value in two days in the wake of a highly speculative, highly questionable, highly irresponsible and highly damaging story by Adele Ferguson in The Australian yesterday…

“Words are bullets when it comes to making claims about the stability of a major financial institution like Macquarie, and not even the largest and most robust bank could withstand the impact of false or negative reporting in a toxic, rumour-fuelled environment like the one we find ourselves in today.

“Through its journalism, The Australian and its owner could be singly responsible for undermining confidence in Australia’s largest investment bank and, as a result, in the Australian financial marketplace.”

In his own business email to clients, Stephen Mayne said:

The Australian has been running a vicious campaign against Macquarie ever since the bank sued it for defamation in 2006 and for the past three days the paper has been recklessly fear mongering about its financial strength.”

The defamation case commenced two years ago after some fearless articles by finance writer Michael West about Macquarie Bank’s ill-fated Beaconsfield mine in Tasmania.

West has since migrated to Granny Herald but the defo decision is reserved in the ACT Supreme Court.

imageThe next day (Sept. 19), Ferguson turned down Crikey’s requests to make an apology to Macquarie Bank and produced another MacBank piece under the headline: Macquarie mauled as hedge funds attack.

This prompted Crikey proprietor Eric Beecher (pic) to pick up his pen and file a feisty response – Send in the clowns: panic, papparazzi and The Australian:

“Yesterday in Crikey we drew attention to the The Australian’s story earlier in week, which alleged Macquarie had to refinance $45 billion of debt by March next year and would have difficulty raising $5 billion in debt in the next six months. It was a story based on questionable information that was never checked with Macquarie. A story that carried a tone of alarm about Macquarie’s future funding capacity and contained the word ‘fears’ in its headline and opening sentence.The writer didn’t offer Macquarie the opportunity to reply to the hand grenade it was about to lob on its front doorstep during probably the most volatile week in financial markets since 1929.”

He reported that News Ltd lawyers had sent Crikey a lengthy apology to be published in the website’s next edition.

“We declined the offer,” he said.

Beecher also complained that Crikey editor Jonathan Green had been the victim of an unseemly paparazzi attack by The Oz:

“We were also subjected to The Australian’s distinctive approach to quality broadsheet journalism last night. When Crikey editor Jonathan Green declined an offer to pose for a photograph for The Australian, the paper posted a photographer outside Crikey’s office to wait until Jonathan emerged, then chased him down the street to snap his picture against his wishes.”

Tut, tut.

News Ltd unleashed its resident flack merchant, Greg Baxter. Baxter, best known for massaging the media on behalf of his previous employer, the morally flawed asbestos gorilla James Hardie, fired off a chipper missive to the Crikey team, which began:

Crikey was incredibly agitated yesterday about coverage in The Australian of one Eric Beecher’s largest advertisers, Macquarie Bank.

“Coming to the defence of an advertiser is admirable in management, but not such a good look editorially.”


Crikey has campaigned long and hard against Adele Ferguson since she came to work for The Australian. She deserves an apology. A large grovelling one.”

Spare us, please.

Mayne returned to the fray and in the process drew attention to the hydra-headed connections, straddles and conflicts:

  • Macquarie paid $1,000 for a group subscription to The Mayne Report last year.
  • Over the past few months Macquarie has been the most prominent advertiser on the Eric Beecher backed site Business Spectator.
  • Macquarie is suing The Australian for defamation. As part of this, Macquarie personally sued Fairfax commentator Michael West when he was at The Oz driving the Beaconsfield coverage.
  • Macquarie played hard-ball against RiskMetrics when it first took on the bank’s remuneration and governance structures in the listed funds.

  • Macquarie cut off Wilson HTM banking analyst Brett Le Mesurier from contact in 2006 when he produced critical reports on the bank.

  • The SMH business columnist Liz Knight, who has produced balanced work about Macquarie, is married to Macquarie’s long-time media analyst Alex Pollack.

  • ABC radio’s Stephen Long has produced numerous anti-Macquarie stories. 

  • Mayne has a long history of sparring with News Corp and Rupert Murdoch at the company’s AGMs. He’s now accepted a $20,000 advance from News Corp’s Harper Collins division to write a memoir of sorts.

  • Macquarie rejected Mayne’s nomination for its board in 2006. 

  • Mayne has been running for the ASX board on an anti-Macquarie platform. He believes Macquarie director Peter Warne shouldn’t be on the ASX board, given the governance mess inside Macquarie’s listed vehicles.

    Some of these interrelated details could suggest the editorial flaming was inspired more by self-interest or enmity than sound news values – something that is unheard of in the media.

    Amid all the fury and threats there was surprising little analysis from either The Oz or Crikey.

    Ferguson may have over egged her report, but really all she was saying was that Macquarie might have difficulty raising $5 billion “at a decent price and decent length of time”.

    She added:

    “Macquarie is in far better shape than Babcock, with better assets and a more diversified portfolio of businesses, but is increasingly coming under pressure to see assets.”

    However, Beecher and Mayne blew their wigs with a precious over-reaction – “one of the great financial institutions” has been besmirched, etc.

    When have they given other grasping, fee gouging, financial institutions an even break?

    One of Crikey’s own readers, James Craig, made some preceptive comments that were lost in the heat:

  • MacBank’s model was criticised last year by analysts in the US.
  • Riskmetrics suggests the whole infrastructure packaging caper is suspect.
  • The bank’s former CEO took $50 million in benefits with him when he retired.

    That’s enough carry on for now.


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