Dan McCrum, Stefania Palma, Olaf Storbeck and John Reed of the Financial Times are the 2020 winners of the Impact Award for Distinguished Financial Journalism for their series of courageous and persistent reports that exposed a massive fraud at the heart of one of Europe’s top technology companies.
Wirecard was once Germany’s fintech star –a payment processing company that replaced Commerzbank in Germany’s blue-chip DAX 30 stock index and seemed poised for international dominance of its business. At its peak, Wirecard had a market value of $28 billion and attracted an investment from Japan’s SoftBank, one of the world’s largest technology investors.
In June, the company collapsed into insolvency, just days after revealing a $2.1 billion accounting hole at the core of its business. The disclosure meant that much of its business was nothing more than a fiction, and that the company hadn’t been nearly as profitable as it had claimed to investors. Its shares are now nearly worthless, its former CEO has been arrested on suspicion of false accounting, and German financial regulators are wondering how they could have missed such a massive fraud.
None of these revelations should have surprised readers of the FT, who for years have been given inside access into Wirecard’s business by McCrum and his colleagues. They began raising questions about Wirecard’s accounting practices as early as 2015. In 2019, the FT doubled-down on its reporting by revealing details of an internal investigation by one of Asia’s most eminent legal firms which indicated that Wirecard had been inflating its revenues for years. The revelation prompted police to raid Wirecard’s Singapore office. Additional FT reporting prompted Wirecard to appoint a special auditor to examine its books and culminated in June’s revelation that much of Wirecard’s business didn’t exist.
That might have been the end of the Impact Award Committee’s deliberations, had it not been for the fact that Wirecard falsely accused the FT’s reporters of colluding with short sellers in an effort to bring down its share price – claims which were found to be groundless by an outside law firm appointed by the FT to investigate the allegations. Despite the immense pressure brought on the FT, the paper continued to publish its Wirecard reports.
The FT’s courageous and persistent coverage exemplifies an important aspect of this award: Most journalism awards are limited to honoring news coverage in the previous year. The Impact Award recognizes that some of the finest journalism often doesn’t generate significant impact until years later. When Wall Street Journal veteran Tom Herman proposed the idea for this award several years ago, he suggested calling it the “Cassandra Prize” after the mythical Greek princess whose name has become synonymous with forecasters whose accurate warnings of future disasters are ignored. Investors who chose to ignore the FT’s Wirecard reporting did so at their peril.
These are just a few of the reasons why New York Financial Writers’ Association is proud to name McCrum, Palma, Storbeck and Reed as the 2020 recipients of the Impact Award. The award committee also chose to recognize two finalists for the prize. Full citations are below.
Winner: Wirecard by Dan McCrum, Stefania Palma, Olaf Storbeck and John Reed of the FT
For years of persistent in-depth reporting that uncovered a huge financial fraud at Wirecard, one of Europe’s top technology companies. The Financial Times and its reporters persevered in the face of fierce opposition from Wirecard executives and disregard by auditors, financial regulators and investors that finally ended as Wirecard collapsed into insolvency.
Finalist: “UVA Has Ruined Us” by Jay Hancock and Elizabeth Lucas of Kaiser Health News
An excellent example of a story that had immediate, measurable impact on thousands of lives affected by the University of Virginia Health System’s aggressive billing and collections practices. Hancock’s and Lucas’s reporting prompted UVA to change debt collection practices that damaged so many persons, correcting a wrong that violated one of the medical profession’s central tenets: first, do no harm.
But for CNN’s dogged reporting, the public would have no idea how often users of the popular ride-hailing app Uber have reported incidents of sexual assault – 5,981 times, to be exact, in 2017 and 2018 alone. After CNN’s expose, the company grudgingly disclosed the figures and altered its practice of silencing victims with forced arbitration clauses and non-disclosure agreements.
About the Impact Award
Established by the New York Financial Writers’ Association in 2019, the Impact Award honors a story or body of work by business journalists whose reporting spurred impact, irrespective of when the story or stories were published.
The inaugural recipients of the Impact Award were Carrick Mollenkamp and Mark Whitehouse for their 2008 reports, published in the Wall Street Journal, which first demonstrated that the world’s most important interest rate benchmark, Libor, was becoming unreliable. The news stories helped expose a global interest-rate manipulation scandal that led to Libor’s pending demise.
In 2020, the Association set up an nomination process for the Impact Award, which will be given out each year by the Association to honor financial and business reporting that makes a difference.
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