Katrina Brooker, who recently joined LinkedIn from Bloomberg News, published a Q+A with renown financial fraud reporter Roddy Boyd, who claims to be the last of his kind – noting, “The forces that a company can deploy against a journalist now, the muscle they can apply is 100 times stronger than it was seven or eight years ago. Back then, if a journalist started asking a company questions and it decided to start smacking that journalist around, it really would raise eyebrows. Editors would start pulling other reporters on to the story and say, ‘Hey go take a look. ‘We asked one question and they threatened a lawsuit? We’re going to investigate.’
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Do you really consider yourself the only reporter doing financial fraud investigations?
There is not really anybody else dedicated to investigating all corporate, all financial fraud journalistically as a living — on the not-for-profit side. Some others dip into it from time to time but I don’t really see anyone else is doing it full time.
Once a year there is company that steps into a bear trap. They get into trouble and it becomes open season on them. I am not talking about that company. I mean going after a large name that is not already in trouble.
A lot of people will do a “There could be trouble…” types of pieces. Or people are willing to write about smoldering embers after a business crashes. There are so few journalists out there that are really going to write anything painful to a company that is an ongoing business — before the lawsuit hits or before the real trouble starts.
Why do you think that is?
The forces that a company can deploy against a journalist now, the muscle they can apply is 100 times stronger than it was seven or eight years ago. Back then, if a journalist started asking a company questions and it decided to start smacking that journalist around, it really would raise eyebrows. Editors would start pulling other reporters on to the story and say, ‘Hey go take a look. ‘We asked one question and they threatened a lawsuit? We’re going to investigate.’
Those days are over. I saw Spotlight last night. And to be able to take a team of reporters, and give them seven months to work on a story — and then they say we need another six weeks on top of it and we are going to be suing to open documents in 3 or 4 different places — that world is done. And companies know it.
That sounds ominous. What do you mean by ‘companies know it’ ?
The power dynamics have changed. Now when I make an initial phone call, I’ll introduce myself, saying here is what I am looking at. I am not going to short your stock. No agenda here other than journalism. I’ll lay all that out and the second call an hour later, the company will have inside and outside counsel, forensic accountants, crisis PR firms. I have been on calls with dumpy companies that had six or seven crisis people on the phone. And we are not even at the point of interviewing.
Then they send you these threatening letters. It used to be a badge of honor when a company sent you a letter. I never had to give a crap. Now my lawyers say we have to report that to your insurance carrier. Then your insurance carrier says we’re dropping you. Or we have to hike your premium by 400%.
Have you ever been sued?
Yes. I caught a private equity fund manager that was a fraud. I caught him red-handed. He made up a Ph.D, he made up a masters, I nailed him. And I got sued. He ended up dropping the lawsuit but it cost me.
Some donors will tell you ‘We love what you’re doing, keep up the good work but with all these threats of litigation, we can’t donate.’
You have been reporting relentlessly on Valeant all this year. What got you interested?
Valeant got on my radar screen because it has been a contentious stock with lots of back and forth for a year now. You have Bill Ackman on one hand, and the famous short-seller Jim Chanos, on the other hand. I was sort of looking at these Olympians throwing crap at each other and at first I thought what could I possibly add here. Then I got a tip. A friend of mine said I ought to look into Valeant’s distribution networks. So I did and I found Philidor.
What made you suspicious enough to dig into it?
I’m a pretty good investigator, I’m a pretty good detective and I found I couldn’t figure out who owned this company, who owned Philidor. Nothing made sense. It was like I had a bowl of jello but I don’t have a bowl — I’m just carrying it in my hands. I knew this company was up to something.
My first story was “The King’s Gambit.” I put it out and all of a sudden Andrew Left and short-sellers start writing about it. And then it took off.
Andrew Left got a lot of attention when he published a report comparing the company to Enron. That kind of took over the story for a while. How do you feel about that?
His business model is in some ways trying to usurp the journalist’s role. It bums me out because people don’t see that what I am doing is very different than what he is doing.
He throws out some allegations and that becomes the story.
The journalist’s role is highly constrained. When you are calling fire in a theater you have got to be dead accurate. To that end sometimes I have to leave some sexy shit on the table. For that Valeant story, I had a lot of stuff that emerged later. I had their handbook — it [read] like a guidebook for how to lie to insurance companies. I had that and I referenced it but I didn’t have all of it. I couldn’t exactly prove it so I didn’t publish it.
A short-seller doesn’t have that criteria.
Are you still reporting on Valeant?
I’m still on the story. It’s weird. I think now the real story is how this company built itself. The primary defense mechanism Valeant has is its opacity, its complexity. And that doesn’t happen by accident. Mike Pearson [its CEO] built this company to never ever be picked apart. That only is done for a reason. I might die in this lifetime before the reasons are found out. Mike Pearson might die before the reason surfaces. But I feel very strongly that the reason does exist. I can’t imagine that at the end of the day it is a great reason.
And I’ll leave it at that.