Reserve Bank leak and MediaWorks

In March a journalist from MediaWorks leaked information about an OCR announcement that could potentially have resulted in insider trading, and another MediaWorks employee passed the information on to a blogger.

This was a serious breach.

Journalists had been brief on impending announcements so they cold prepare stories on the condition secrecy was maintained until the official announcement was made.

Yesterday the Reserve Bank issued this press release:

Reserve Bank takes action after investigation confirms leak

Thursday, 14 April 2016, 2:15 pm

Reserve Bank takes action after investigation confirms leak

An independent investigation has confirmed that highly sensitive and valuable market information on the March Official Cash Rate (OCR) cut decision was leaked by a journalist ahead of the official release, the Reserve Bank said today.

Following the investigation, the Bank will tighten its procedures for the release of confidential information. The Bank will discontinue embargoed lock-ups for news media and analysts ahead of announcements of interest rate decisions, Monetary Policy Statements and Financial Stability Reports.

The investigation by Deloitte’s forensic unit found that, contrary to the rules of the lock-up, information on the Bank’s decision to cut the OCR was transmitted by a Newshub Mediaworks reporter to several people in the Newshub office from the media lockup for the Monetary Policy Statement on 10 March.

This information was then passed on by another person in Newshub Mediaworks, well before the MPS official release, to an economics blogger. The blogger only alerted the Bank to the leak after the MPS was officially released.

Deloitte was assisted in its investigation by Mediaworks’ legal team, who undertook an internal investigation, uncovered emails that confirmed the leak, and reported these to Deloitte.

Governor Graeme Wheeler said: “The leak is a serious and disappointing breach of many years of trust. It created the opportunity for improper gain on financial markets and damage to the integrity of the Bank’s communications. I am extremely disappointed that the information was leaked initially and then communicated more widely.

“The fact that several people outside the Bank, who had access to the information improperly, failed to alert the Bank immediately, was irresponsible and left open a significant risk that the Bank could have closed down quickly with an immediate official release.”

No evidence has emerged that the leak gave rise to any financial market impact.

The Bank has considered alternative arrangements relating to information security. However, none completely mitigated the technology and human risks, said Head of Communications Mike Hannah.

“We have reviewed the procedures of several central banks. None provide lock-ups for analysts prior to major policy announcements, and the few that provide embargoed lock-ups for media representatives take extensive measures to control the media environment in the lock-up that are not viable for us. Most central banks do not provide embargoed lock-ups.”

Mr Hannah said that from the 28 April OCR statement release, the Bank will issue OCR and MPS statements via its pages on Thomson Reuters and Bloomberg screens at 9:00am, as is currently the case, followed by release on its website and to email subscribers. In the case of the quarterly MPSs and six-monthly FSRs, the release of a news release and these documents at9:00am will be followed an hour later by a press conference.

“The decision not to provide lock-ups for media or analysts means that these parties will receive the information at the same time as other financial market and public audiences.”

More information: Investigation into leak of March 2016 OCR announcement

MediaWorks issued their own press release:

MediaWorks Response to Reserve Bank Statement

Thursday, 14 April 2016, 2:07 pm

Mark Weldon, Group CEO, MediaWorks said: “MediaWorks unreservedly apologises to the Reserve Bank for this incident. Once MediaWorks was aware a leak had taken place, it conducted its own investigation to determine whether the leak had come from within MediaWorks and self-reported that to the Reserve Bank.”

Regarding the specifics of the matter, Richard Sutherland, Acting Chief News Officer, said: “The leak was caused by a failure within News to follow proper process and changes have already been made as a result. We are addressing the breach with those concerned and new policies and training will be implemented moving forward.”

There was a strong response on Twitter from journalists from other companies who were very annoyed their privilege of lock-up provide information in advance had been removed.

Some suggested that MediaWorks only should be penalised, which is a fair point.

Others said that much stronger action would be appropriate from MediaWorks, with sackings amongst the suggestions.

It was pointed out that if a Reserve Bank employee or politician had leaked information like this the media would be all over the story, they would have identified the people involved and named and shamed them.

Instead they muttered on Twitter where it was also suggested that they protect their own.

Except Rob Hosking from NBR who was scathing. See next post.

 

Leave a comment

2 Comments

  1. I guess the journalist who has breached the agreement with the RBNZ and his superiors in mediaworks, are all well trained and qualified Journos sporting journalism degrees/diplomas – says a lot about how kids are training in their responsibilities when comes to reporting ethics….

    Reply
  2. Missy

     /  15th April 2016

    Of course the media protect their own, they won’t be out to crucify the people responsible for this, unlike if it was a public servant or politician – another example of why media in NZ cannot be trusted.

    This is disgraceful behaviour, not just by Mediaworks staff members, but also by the NZ media in general. Note, this is not the first time that NZ media have leaked – or attempted to leak – information they are asked to keep to themselves for a certain period of time (not forever, just until official announcements can be made). I sometimes get the feeling many of the younger members of the media are more interested in ‘breaking’ a story, rather than actually reporting, analysing and generally providing good information. So many seem to be more tabloid level journalists, rather than serious journalists.

    Reply

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