Investigative Business Journalism by Alec Klein

Investigative Business Journalism Presented by Alec Klein Professor, Medill School of Journalism Northwestern University May 7, 2010

About Me Alec Klein, who joined the faculty of Northwestern University’s Medill School of Journalism last fall, is an award-winning investigative business journalist and bestselling author

Ideas Generating ideas and executing them while covering your beat

Conceiving investigative stories To begin with, you need PHOAM P:assion H:ook O:riginality A:ccess M:arket Image by flickr user marttj

The Best Ideas They usually come from beats That’s because they’re organic. They arise naturally in the course of reporting To wit: Secret bonuses at City Hall The anonymous tipster on AOL Image by flickr user MonkeyMike

Have a Starting Point This is not the same thing as a preconceived notion Rather: Consider a set of questions that need answering To wit: When cigarettes are under attack, why are cigars being glamorized? (Yachting magazine)

How to confirm the idea Let’s say you think you’ve hit on a great idea How do you check it out to make sure it’s uncharted territory? Lexis-Nexis Factiva Amazon Google The overriding question: Has it been done before?

The Big Problem: Feeding Beast But who has time to pursue investigative business stories, especially when you’re on a busy beat and your editor is breathing down your neck to file early and often?

The Ugly Truth: Rebellion—within reason Get out of the office: kill or be killed Cub reporter: worked on vacations—only time the editors couldn’t assign stories Worked on weekends Worked afterhours, after the proverbial smoked cleared from the daily deadlines Bottom-line: find time

The Wall Street Journal way Darwinian approach: only the fittest will get on Page One In the old days: Only three stories on Page One Lot of reporters, few A1 slots Mistake: Walk into your editor’s office with an ill-conceived idea

What Not to Do Such as: I’d like to do an investigation of poverty Many a times: Bludgeoned in editor’s office Finally figured out: Need to do some research before entering the torture chamber But how much research?

The Solution About 20 percent That’s enough to tell you if you’ve got a story or whether you’re going to spin your wheels The 20 percent: What’s the story? A new trend? A twist on an old idea? How will you report it and how long will it take?

Avoid This Mistake Mistake: Never show editors your raw notes Made that mistake on AOL Editor: Don’t get it, nothing here. Go back to work

The Power of the Memo Then Enron happened Editors: What was Alec working on? This time: I wrote a memo Set free for a year

Spinning Your Wheels Having a year to do an investigative business story sounds better than it is You better come up with a great piece Can you withstand making no progress for several weeks at a time? Maybe inbred

Clarity of Purpose Back to the memo It clarifies the issues. It makes editors see. They can print it. They can ruminate over it. They can forward it by e-mail to their bosses. Then they can approve it

When All Else Fails Let’s say your editors still say no Then what? Set your own agenda

The New Model The old model: the three-part series that took a year to report and runs in December in time for the Pulitzer entries The new model: write episodically WSJ did this: Word was sent out at the beginning of the year—let’s write about death The episodic approach, it’s the way of the world: The economy, the industry. Investigative reporting is expensive

The Episodic Approach Build on your beat coverage Think this way: once a month, craft a great piece of investigative reporting on the same subject Over a year, you’ll end up with 12 pieces that amount to a worthy in-depth investigation into a single topic

Examples of the episodic approach The Las Vegas Sun, most notably including the reporting of Alexandra Berzon, won the 2009 Pulitzer Prize for public service, for a series of stories about the high death rate of construction workers on the Las Vegas strip. See www.pulitzer.org Steve Fainaru of The Washington Post, 2008, for international reporting, for his episodic stories about private security contractors Kevin Helliker and Thomas M. Burton of The Wall Street Journal, 2004 for their episodic stories about aneurysms

Questions? Please feel free to contact me at alecklein@gmail.com

Interviewing techniques How to get people to open up

Columbo I was accused of being like this We’re supposed to not know Have them condescend to you “Treat me like a fifth grader” Don’t have an ego about this Need to be absolutely sure to write authoritatively

The Dumbest Question in Journalism History New at WSJ Ordered to write lead news story IBM Earnings Sweat Call analyst: What’s P&L? Cancel subscription

Ask the Obvious Question You may know the answer already To wit: How old are you? Answer: 51 Thought 52 Yeah, actually 52 If small lie, is there a bigger lie

Continue Reporting in 11th Hour AOL series: Almost a year into it Had hundreds of confidential documents Had well-placed sources Editor called me into his office Mused: Wouldn’t it be nice … Vice president of finance

Corollary to Reporting in 11th hour Ask the same question five times But in different ways At different times To wit: Do you know a vice president-level finance guy who had raised questions about AOL’s finances?

The Notebook When to use the notebook Versus When not to use the notebook When to tape record vs. When not to tape record Billionaire: I want to be able to deny I had this conversation

Thinking on Multiple Levels During the interview, you need to think about several things at the same time: The lede The images to capture The details to portray Is this the first of many interviews or a one-shot deal? Why, why, why? The cosmic point Follow up questions

Let Them Yell When people say you got it wrong, that you made a mistake, check it out thoroughly Sometimes, it can help Red Hat The Reluctant Interviewee What do you do when they won’t talk? Options: Call E-mail Letter Certified letter: know they got it, but act of war? Intermediary: someone they know

The Cardinal Rules Take chances Bridgestone/Firestone Don’t take no for an answer Surgeon General Go there Gettysburg Last Words of Advice Bob Woodward Show up early Me Show up late

Part Two: Developing sources When starting a new investigative business story, where do you begin? The onion: otherwise known as the circling effect Begin on the outside, work your way in: Family Friends Friends of friends Customers Suppliers Competitors Unions Associations Former employees Current employees Secretaries Executives

Meet People on their Own Turf At their homes Afterhours On weekends Away from places where they are monitored or overheard At bars Restaurants Bowling alleys Places Where People Network: Conventions Industry gatherings Trade shows Exchange business cards Socialize Network

Don’t forget about the gadflies Yes, they can be a bit odd But they often know their stuff because they have no other life Don’t Dismiss the PR People Example: secret bonuses But also: AT&T cable assets “You didn’t ask the right question” Image by flickr user Meg Marco

It’s All About the Spider Web Example: Anonymous tipster: “How did you find me?”

Horizontal vs. Vertical Reporting

Getting Secrets No secret It takes time Trust Willingness to protect sources Are you willing to go to jail for them?

Bartering for Information Exchange of information Once you have information they want, then you become valuable You have something to barter As long as it’s not confidential information

Background vs. Off the Record Define the terms Explain why it’s important to go on the record Move sources up the ladder Off the record On background On the record Sometimes, refuse to go off the record: why? It can tie your hands

Beware of Agreements Reading back quotes? Showing stories pre publication

My Rule Do we let sources go? Do we let them change their minds? My opinion: Let sources go Example: AOL

Another Cardinal Rule No surprises Always let them know what’s going on, even if it works against you Better for them to be angry at you before publication than after, when it’s too late AOL 21-page single-spaced letter Credit raters Removed lead anecdote even though information obtained independently

Go Back to Your Sources Repeatedly A Woodward technique You need to know when you can trust your sources Eg.: Whether FTC would approve AOL-Time Warner merger Origins: Editor: Woodward was a new reporter, too FTC threatens pre publication: Last story you’ll write Sources at the heart of the secret

Using public documents What documents to look for and where to find them

The Secret The secret to investigative business reporting is… Start with: Google Lexis-Nexis Factiva

Everything You Need to Know You don’t need to know where all the public documents are You need to know what questions to ask to find them To wit: 192.com

Hidden Depositions Baltimore Sun investigation: Supermarket bankruptcy Words of wise editor: “The good reporters know what’s missing” Thinking: I never know what’s missing Did you check for hidden depositions? Not in court record: wads of cash in brown paper bags Before the jump on A1

SEC Filings What are they? Where do you get them? Sec.gov Company Web site

SEC Filings 10k 10 Q: What’s the first thing to look for? Proxy: What’s the first thing to look for? SEC public filings only go so far What is considered “material” to investors? Material: Any information related to a particular business that might be relevant to an investor's decision to buy, sell or hold a security A company can slice its business into small sectors that don’t require disclosure To wit: AOL

New Age Documents: Alec’s Facebook Page

Lawsuits: What You Can Find Former employees Sworn testimony Copies of contracts Business strategy Where to find lawsuits State and federal suits Many online If not online, check Lexis-Nexis If not there, check Pacer for federal suits http://pacer.psc.uscourts.gov (not free) Pulling documents Big issue? Money

Bankruptcy Filings Goldmine Pacer For what? Creditors; assets; debts; lawyers; suppliers; vendors Key kinds? Chapter 7: liquidation Chapter 11: reorganization

Government Filings SEC FCC FDA Key: on almost every investigative business story, there is a government body that has some connection to it Congressional Testimony Contradictions Remember the tobacco executives who claimed they didn’t know anything about the addictive power of cigarettes?

Company Documents Company e-mail Internal newsletters Get on the mailing list, if possible Remember: Don’t steal, don’t lie, don’t break into computer system Chiquita Banana case Wall Street analyst reports

Local Government Records Property records: County or other local office Many online Good to check for: Size, details of executive’s home Other great resources: Planning department Zoning Construction Driver records Depends on state; eg. Maryland, need permission of driver for records

Private Company Records Better Business Bureau Consumer complaints Uniform Commercial Code State records, secretary of state usually; shows who has borrowed money, what used as collateral, etc. Incorporation records Usually secretary of state; records of founding of the business; who owns it; its executives; etc. Hoovers Hoovers.com

Nonprofits Can get detailed tax filings—990s—of their finances from the nonprofits themselves Or try Guidestar at www.guidestar.org

Web Sites Airplane ownership search Landings.com Finding lawyers Martindale.com Message boards, blogs Web site ownership http://www.whois.sc/ Internet archive: old Web sites www.archive.org ProfNet: e-mail queries for experts www.profnet.com

Locating People Referenceusa.com Superpages.com AnyWho.com Switchboard.com Infobel.com: international directory AutoTrack and other pay Sites: Expensive Metered Even at The Washington Post: key holder But good resource for information for investigative or beat reporting Personal information: telephone numbers Neighbors Legal judgments

Political Contributions Opensecrets.org: Center for Responsive Politics Tray.com: Political Moneyline Publicintegrity.org: Center for Public Integrity Followthemoney.org: The Institute on Money in State Politics Lobbyists and Other Legislative Resources: http://www.usdoj.gov/criminal/fara: lobbying on behalf of foreign entities Congressional Research Service: http://www.opencrs.com GAO Reports: www.gao.gov Thomas Web site: http://thomas.loc.gov/: basic legislation, Congressional reports and records

Backgrounding an individual www.reporter.org/desktop/tips/johndoe.htm Born, married, died Previous addresses, relatives, associates Lawsuits, bankruptcies, divorce, criminal, traffic Home phone Attended college Real estate Etc. Courtesy of Duff Wilson of The New York Times Truth About Criminal Records: There is a national criminal record database but it is not available to the public FBI database Public access to criminal records controlled at the state level Each state has different rules about who may access records and what records will be available Some records handled at the county level

Freedom of Information Act FOIA: the good and the bad Secret bonuses “Oh, that bonus” Reprocessors List of reprocessors No List List Names missing from list Beware: They might leave stuff out Of fishing expeditions Of unexpected costs Sample FOIA letters: www.nfoic.org/sample-foia-letters FOIA letter generator: www.rcfp.org/foialetter/index.php

Secret Documents Not public They may say “Confidential” You need to interpret, analyze, translate

They Don’t Say “Smoking Gun”

Case study AOL investigation at The Washington Post

What it was about How I discovered how AOL inflated its advertising revenue to pull off the biggest merger in U.S. history to create the largest media company in the world

The beginning Summer of 2001 Sitting at my desk Not much going on Phone rang Anonymous tipster

The mystery Didn’t give his name or number Just told me: An AOL executive had been suspended PurchasePro Las Vegas dot-com Red flag: Gambling & dot-coms

Confirmation Checked with sources; confirmed Had to do with accounting Not sure what Waltzed over to my editors, surprised that I wanted to write a story Buried deep in the business section of The Washington Post: E5 Not even my mother reads that far

Intrigue Nobody paid attention Before Enron Accounting scandals, not a big story—yet Still, intrigued Why was AOL official suspended? Who was PurchasePro? What was the accounting issue?

Digging Did what any reporter would do Started calling around Would call one person who would tell me to call someone else That someone else would tell me to call so-and-so So-and-so would tell me to call three other people

The breakthrough Eventually, I called one person “Hi, my name is Alec Klein, and I’m a reporter at The Washington Post” Before I could say anything else: “How did you find me?” Didn’t know I had found anyone until he said those very words Then I realized: found my anonymous tipster

Dingy hotels, bad restaurants Other doors opened Met more people Wasn’t glamorous Dingy hotel lobbies Bad restaurants where they wouldn’t be seen with a Washington Post reporter

One unnamed hotel Spent a lot of time in one particular hotel lobby Used public telephone So my calls couldn’t be traced back to The Washington Post Sources were afraid of being seen or heard talking to a Washington Post reporter AOL was notorious for being more secretive than the Pentagon

Strange looks Always in that hotel lobby Shoes shined Reading the paper Had cell phone latched to belt, but was always using the public telephone Would ask for change in the gift shop Strange looks Hotel thought: drug dealer

Jigsaw puzzle Story began to come together like a jigsaw puzzle Began to amass confidential documents Didn’t say “Smoking Gun” on them But pattern emerged AOL had been inflating its advertising revenue to pull off the biggest merger in U.S. history to create the largest media company in the world

The illusion AOL created the illusion of significant advertising revenue in part through questionable accounting practices For example: AOL legal case, turned it into ad revenue AOL sold ads on behalf of eBay but AOL booked the sales as its own

The largest merger ever Deals helped AOL clinch its historic merger with Time Warner If AOL had revealed some of its financial weakness, Time Warner could have pulled out of the deal

11th hour After nearly year, my editor called me into office Wouldn’t it be nice… Should’ve run for the hills Vice president of finance? Ask question five times

We had to be right As far as we knew, never before had a newspaper pointed the finger at a major company’s finances Usually a whistleblower Or company comes clean If we were wrong by an inch, all over

The letter Before my stories ran, wrote a 21-page, single-spaced letter, presenting AOL with my findings to give the company an opportunity to respond Included everything Such as: hair plants imported from South America Bumped into Dick Parsons in the AOL lobby Hadn’t even noticed him

The media killer AOL ballistic High-powered law firm to kill stories Lead attorney known as the media killer Successful in fighting the media on other big stories Involved in the famous case where 60 Minutes was prevented from airing a story about a tobacco whistleblower, which became the subject of the movie, The Insider

Called into the office Pretty nervous Told girlfriend, now mother of my children, that this might be the last story I ever write Len Downie: called into his office Didn’t actually talk about anything Smiled at each other Just wanted to know who was this reporter causing this ruckus

The meeting AOL and its lawyers came to The Washington Post Why my stories should be killed Heading to the meeting: bumped into the managing editor in the middle of the newsroom Looked at me in utter shock Had shaved Was wearing a tie Shirt buttoned all the way to the top

Smoking with Fidel Managing editor: “You look like a defendant” He was right Can’t discuss details of meeting But can tell this: Len Downie talked about smoking cigars with Fidel Castro. That set the tone

How Gerald Ford got his job Another thing: Meeting was held in the main newsroom conference room On one wall, an old print plate: “Nixon Resigns” On opposite wall, a framed classified ad, showing a picture of Gerald Ford “I got my job through The Washington Post”

Jaws of death Suffice it to say, The Washington Post didn’t back down Newspaper went ahead and published my stories Day of the first story, AOL’s chief operating officer was forced to resign Call from an AOL official: Congrats. Jaws of death

The denouement Within days, AOL confirmed the SEC had launched an investigation into AOL’s accounting as a result of my stories Then the U.S. Justice Department launched an investigation because of my stories Then AOL admitted it had improperly booked $49 million in ad revenue Then: $190 million

Prison AOL was forced to revise two years of its financial results Head of its business affairs division was locked out of his office and fired Business affairs division that was the focus of my investigation was disbanded Others went to jail

The end of AOL Ultimately, the company was forced to pay more than half a billion dollars to settle civil and criminal allegations They even removed AOL from company name No longer: AOL Time Warner Just: Time Warner

Journalism of compassion A term I invented to guide my reporting Fair checking Another term I invented Put yourself in their shoes Is it fair? Different than: Is it accurate? To wit: The paunch

Letting sources go AOL investigation Threatening letters Sources run for the hills Track them down Beg Grovel But can’t threaten Can’t coerce Only: Do what’s right

Organizing Presenting investigations on multiple platforms

Organize From the Beginning Develop your own system Be your own best secretary It’s not glamorous but someone has to do it Keeping track of mounds of documents, notepads, calls—need to be organized My system: Daily log Phone log Contact list Cork board Visualize key players Calendar Themes

The Perennial Problem The lede: Hours or days or weeks of anguish Blood on the computer Should’ve done something else Work with hands Like a farmer

Good Ledes LAS VEGAS -- Chastity Ferguson kept watch over four sleepy children late one Friday as she flipped a pack of corn dogs into a cart at her new favorite grocery store: Wal-Mart. The Wal-Mart Supercenter, a pink stucco box twice as big as a Home Depot, combines a full-scale supermarket with the usual discount mega-store. For the 26-year-old Ferguson, the draw is simple. "You can't beat the prices," said the hotel cashier, who makes $400 a week. "I come here because it's cheap." Image by flickr user Lone Primate

What Makes This Lede Work? Classic anecdotal lede Simple, straight forward Nothing fancy about it Quote that gets to the heart of the story: “You can’t beat the prices” We can do this The Los Angeles Times; that’s the lede from a series that won the 2004 Pulitzer Prize for national reporting

Trick to Ledes Me in the old days: Frantically flipping through notebook searching for the lede Not there Me now: Report the lede beforehand so you don’t have to search for it later in your notes To wit: Lede to Stealing Time--grumpy old man WSJ approach to ledes: All about the purity of the lede Must be exactly on point Not sort of the point Joke: Colon Question mark Pithy-sentence lede

When You’re Still Overwhelmed KISS Keep It Simple Stupid

Overlooked: Tone Okay, enough about the torture of writing Here’s an overlooked aspect of writing: Tone The sound of the story Rarely is it premeditated It should be THE BOY LOVES GAMES OF CHANCE. He loves slot machines and playing cards and instant-win lottery tickets. He learned at an early age to count coins, and to bet them. He learned in the hospital that money comes in get-well cards. Lisa Pollak’s story Baltimore Sun Winner of the 1997 Pulitzer Prize for feature writing

A Tone Technique Read a book or other story that reflects what you’re doing To wit: Writing about the civil war Read the classic, Killer Angels Wrote lede to reenactment of the Gettysburg Battle Using old English Should’ve mentioned it to my editors

Mastering the Information Let’s Get Down to the Nitty Gritty: Organizing the investigative business story How I do it: Divide by interviewee Annotate my own notes Develop a detailed outline from the notes Review and re-review the notes Can take days—or weeks But you have a roadmap

The Cosmic Point The nut: everyone knows the nut, right? How about the so-what graf: Otherwise known, at least to me, as the cosmic point The reason why we’re reading your story Examples: Greed Hubris Ambition The To-Be-Sure Clause: Wall Street Journal thing The exception to the rule, or the trend Up high To immunize yourself Because there’s always an exception

Time to Respond Give the company or individual plenty of time to react and respond Not enough to call the night before Call, e-mail, stop by—and repeatedly To wit: AOL Six weeks, an eternity Risk: story leaks to competitors But must be done

The New World Order One of my last Washington Post investigations in 2008: Military contracting In desert in suit (not a good idea) Carrying notepad Digital camera Camcorder

Photography for Multimedia Everything I know about photography, I owe to Steve Liss, who taught me: Now, we are all photographers When you’re shooting, take a lot of pictures—at least 100 images Camera is your notepad Record moments as they unfold Don’t wait for the perfect moment The first way you view a scene is not always the best Try different shooting angles Eye level From above on a chair From below on the floor Look for the inherent logic of the shot; eg,. a shot of giant might be better from a higher angle Don’t shoot everything from a wide angle Look for other opportunities, such as close-ups, which can have more impact Imagine, say, an expressive face

Audio We’re now all in the business of gathering audio Online audio stories Online audio with photos—slideshows All you need: A digital camera A digital recorder that can connect to a computer to download audio files Audio Slideshows: You need to show how the story begins How the subject gets from point A to B to C Show in the photos what the audio is telling The photos must match the audio So take lots of pictures Helps to ensure that images match sound Usually: you don’t want a single image to linger onscreen for more than 10 seconds For a three-minute slideshow, plan for at least 18 photos

Kinds of Sound There are two kinds of sound Natural sound, or “nats” For a slideshow, you usually need natural sound—eg., the sound of bacon frying in the background, the roar of the crowd Turn on the recorder, point it at the natural sound and capture a lot of it May help later during editing to bridge sections of your audio story Interviews Beware of loud background sound Move interview subject away from that noise Hold the recorder close to the subject, within a foot and a half Avoid talking over the interviewee: “Uh huh” et al If necessary: Nod head Beware of wind Stay away from yes or no questions Ask open-ended questions: Why?

Video Basic Rules We are all videographers now Use a variety of focal lengths and angles Establishing shot, wide, tells the viewer where the story is taking place Medium shot: takes the viewer closer to the action Tight: close up No zooms or pans Shoot and move: Zoom with your feet Limit motion of the camera; use set shots

Video Rules The rule of thirds: Divide the screen into thirds, with subject taking up one of the thirds—more visually arresting Rule of 180 degrees Which way is the subject’s nose pointing? Stay on that side Don’t switch sides Disorients viewer Jump Cuts: Common mistake Two things don’t match visually To wit: Person is in one spot; in the next frame, he magically jumps to another spot One way to avoid jump cuts: have person or action come into and out of frame before moving on

Final Phase: Fair Check Walk away from the story Put yourself in the subject’s shoes Is it fair? Go through the story line by line Different than fact checking; it’s all in the nuances

The Story Doesn’t Belong to You The story may carry your name but it belongs to the paper, Web site, television station It’s a communal project; must get buy in; editors must be on board Must be willing to let go of the language; be amenable to change One third of the investigative business story is the reporting Another third is the writing The final third is the in-house hurdles

Investigative Business Journalism by Alec Klein

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