Wednesday, February 28, 2007

Sexing Up Crocus

There's a cynical saying in modern journalism that one shouldn't let the facts get in the way of a good story.

The recent media feeding frenzy over the Crocus Investment Fund (or CIF to those who actually read the auditor's report) is a good illustration of this maxim in practice.

With the Opposition stepping into a big cowpie over alleged "withholding" of material from the Auditor General, we try to hang on to some hope that Manitoba's journalists haven't completely given up on their responsibility to pursue truth, not just a sensational headline. In that spirit, here's a recap of what we actually know about the recent developments on the Crocus file:

1) The government did exactly what the leaked cabinet document recommends -- saying "no" to Crocus' request for a relaxed set of rules - thereby protecting taxpayers and Crocus shareholders.

In fact, the document says that if the government had done what Crocus asked, the liquidity and pacing concerns would possibly get worse in the future.

However, as it turns out, as the auditor's report actually shows, the liquidity problem that was raised in 2000 never actually occurred.

2) The issues in the leaked document -- whether the Fund would have enough cash to pay back investors without selling off some of its investments (liquidity) and whether there should be changes to how often someone could invest in the fund (pacing) -- were not the reasons why the Fund ultimately failed. Crocus failed because its shares were overvalued -- something the auditor determined the government had nothing to do with and the cabinet document doesn't discuss.

3) And of course, the Auditor General did indeed have the cabinet document in question when he looked at Crocus. Jon Singleton may not remember it, but his former Office has verified that it was part of the evidence they considered when they wrote the report that cleared the government of any responsibility for the Fund's failure. The auditor's report also clearly states that the liquidity and pacing issues -- which were in the Cabinet document -- were well-known by the government in mid-2000 (before the Cabinet document's date of November 2000).

So here's what the big story boils down to:

* there's a document written by government Finance officials advising the government to protect taxpayers, which the government did;
* this document contains information that everyone who actually followed the issue already knows -- because it was reviewed and reported on by the Auditor two years ago; and
* this document is about a totally different issue than the one that led to the collapse of Crocus --- overvalued shares.

Let's face it. The real issues surrounding Crocus is boring. Reporting on "liquidity", "pacing" and "valuation" does not make for front page copy.

It's much more exciting to cover the misguided memory of a former auditor, the overheated imaginations of the Opposition who sexed up the relevance of a leaked 6 1/2 year old Cabinet paper -- and who have constructed an elaborate conspiracy theory that more properly belongs on Art Bell's late night radio show than any respectable news program.

The media has a responsibility to do more than tell a good story. They are trusted to tell the truth -- even when it's desperately unsexy.