Shining a light on spin-doctor hype

By Peter V O'Brien

Friday 14th May 2004

The search for a latter-day Diogenes has moved from the always fertile political field to encompass business and finance.

Diogenes was the fellow who wandered the streets of Athens carrying a lamp in daylight looking for an honest person.

Rather ironic, considering he fled his native city after accusations of mucking about with (counterfeiting) the local currency and remorsefully discarded his material assets.

A Reuters' article about rogue currency trader Nick Leeson, reprinted in the Dominion Post of May 8, sparked those thoughts.

Leeson was responsible for the collapse of UK investment bank Barings 10 years ago when unauthorised and uncontrolled deals in Singapore cost Barings £790 million.

He apparently reformed and is living anew in Ireland, also ironic in view of the long-running investigation into alleged political and associated business corruption during the "ould sod's" economic spurt.

Leeson was said to express "disbelief" at rogue trading in Australia's National Australia Bank (NAB) and the US Subsidiary of Ireland's Allied Irish Banks.

He, like others, faulted oil company Royal Dutch Shell's action in deliberately suppressing a known downgrade of oil and gas reserves.

On and on it goes, even in New Zealand, where companies and other organisations use spin doctors to "smoothe the truth" (insert whatever alternative suits your cynicism), automatically deny reality and attempt to control potential damage.

The political system was famed for such activity for years. It produced more examples of the technique in recent times.

Customs denied its department officials vilified an official of the Israeli Jewish Agency at Auckland International Airport while allegedly detaining him for three hours, searching him and dismantling a cellphone. Agency official Shay Hermesh said he was travelling on a diplomatic passport. Customs disputed that.

Someone smoothed the truth. Either it was Customs, protecting officials' backsides, or Hermesh, who possibly had a special agenda.

We will see, but again we had automatic ministerial defence of officials, an unsatisfactory Pavlovian response, which earlier in the year saw then immigration minister Lianne Dalziell forfeit her warrant.

Official control reached a new Yes Minister Sir Humphrey high with the revelation Ministry of Foreign Affairs and Trade (Mfat) officials expected to accompany National leader Don Brash on his proposed trip to the US, China and the UK.

They would apparently "smoothe the way," "advise" Dr Brash and take notes of discussions which would get back to the government.

What nonsense.

It was unnecessary to have a political stance to note Dr Brash was Reserve Bank governor for many years, consequently attended meetings of international central bankers and accumulated more diplomatic, political and business contacts than many MFat officials.

Smoothing the way became a business technique before the 1987 sharemarket crash, when hyped-up "investment" companies worked hard to persuade people there was some rationality behind their house-of-cards' crossholdings in other groups.

Recent company reports refined the process.

Telecom, for example, issued reports and other statements showing it could do no wrong and lamenting attacks on its operational philosophy.

New Zealand Exchange (NZX), the arbiter of purity in corporate announcements, indulged itself in expressions such as the company being "delighted" at various new listings.

A corporatised stock exchange has a coldblooded mission to increase listings and consequent exchange revenue. Being "delighted" is spin-doctor hype.

Similar comments applied to the carefully constructed statements about company profit downgrades, of which we had several in recent weeks.

The New Zealand experience was nothing compared with NAB's antics across the water.

Directors have come and gone, current chairman Graham Kraehe advanced his retirement date under pressure from institutional shareholders (with an appropriate spinned announcement) and apparent dissident director Catherine Walter threw in her cards.

Walter's resignation statement was five bland sentences, including "I do not propose to make any further media statements on these matters."

The NAB saga showed spindoctoring at its worst, leaving shareholders in New Zealand, Australia and elsewhere with unanswered questions about offstage boardroom action.

Do not be surprised if you see a fellow with a lamp walking Melbourne's Collins St, Sydney's O'Connell St, Auckland's Queen St, Wellington's Featherstone St or Nick Leeson's new home in Ireland's County Galway, near to Galway City's Eyre Sq. Your man's search could be futile.

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