Reuters Investigates

Fridge Fires

Last Friday’s special report about faulty refrigerators started with a fire in a London tower block. After oil and gas correspondent Tom Bergin read about the fire he started to investigate the actions of Arcelik, a Turkish company that made the fridge the London Fire Brigade pointed to as a possible cause. There seemed to be inconsistencies in the company’s version of events.

“What I found interesting was uncovering who knew what, when. As soon as one constructed a timeline, it was evident that the EU guidelines had not been followed, even as those involved claimed to be guided entirely by these guidelines,” said Bergin. “That was probably the most interesting and rewarding because the rules were designed to protect people.”

As our story shows, Arcelik was informed by the London Fire Brigade some of its Beko fridges could pose a fire risk years before it informed its customers. When the company did take action, it decided to send out letters and did not follow EU suggestions to use the media to alert consumers to possible dangers.

The British press had not investigated whether Arcelik’s behavior constituted a breach of EU or UK regulations and Bergin believes Arcelik’s effective stonewalling, and newspapers’ disinterest in small stories like domestic fires, stopped the national press from digging deeper into the faulty fridges.

“It takes a great deal of time…Stonewalling often can be very effective, unfortunately, and we live in a country where the libel laws are so restrictive that even suggesting a company has behaved inappropriately poses big risks for news organizations,” he said.

Bergin was the invited to Arcelik’s British headquarters after the company realised Reuters was investigating the story – as far as we know the only British journalist to visit.

“A few weeks into it, it was quite clear to them that we were putting the time and effort into the story that meant we would quite likely come up with a compelling account of what happened and that we understood the rules, that we were making investigations in many different sources…Simply stonewalling wasn’t an option in the face of our persistence.”

from Global News Journal:

Tragedy or stagecraft: N. Korea’s food crisis

Tim Large, editor of Thomson Reuters Foundation’s AlertNet humanitarian news service, gives the back story to his special report Crisis grips North Korean rice bowl <http://www.reuters.com/article/2011/10/07/us-korea-north-food-idUSTRE7956DU20111007> . Any opinions expressed are his own.

Malnourished children presented at a clinic in North Korea during a guided tour of a disaster-hit province. (Reuters/Tim Large)

Could a malnourished eight-year-old really look like a three-year-old? Were the 28 orphans in the primary school clinic really so stunted by years of hunger that they had the bodies of toddlers, as the authorities claimed?

Or had they been assembled here for our benefit, infant imposters wheeled in to add poignancy to North Korea’s appeal for food aid?

Western nutrition experts who have worked in the country for years assured me that such extreme stunting was absolutely the norm.

Remember the Philly trader?

Back in May, Matthew Goldstein wrote about commodities trader and hip-hop promoter Tyrone Gilliams in the special report “A fame-seeking Philly trader’s rap falls flat.”

Today Gilliams was arrested on charges of running a $4 million investment scam.

Time to re-read the original story, which detailed allegations by Ohio businessman David Parlin that Gilliams used some of Parlin’s money to sponsor a glitzy black-tie charitable event in Philadelphia attended by rappers and local politicians.

Federal authorities began investigating Gilliams soon after the Reuters story was published, according to people familiar with the matter who declined to be identified.

Matt will be keeping track of the case as it plays out.

from Unstructured Finance:

Debts no honest man could pay

By Matthew Goldstein

For months now we've been hearing a lot about the $14 trillion in debt owed by the U.S. government. But there's been far too little talk about the almost equally high debt tab owed by U.S. consumers.

The Federal Reserve recently reported that total outstanding debt owed by U.S. consumers was $11.4 trillion, down from its third-quarter 2008 peak of $12.5 trillion. At that pace, it could take years for U.S. consumers to delever, or in plain English--reduce the debts they owe on their homes, credit cards, autos and student loans. But when it comes to the staggering sum of consumer debt in this country, it's pretty clear that time is not on our side.

In fact, the longer it takes for consumers to pay-down their debts, it simply means demand for homes, autos and other big ticket goods will remain lax. And that means the unemployment rate won't get much lower than its current 9 percent rate anytime soon. In fact, with all the signs pointing to a double-dip recession, unemployment could very well inch higher in the next few months.

In our Special Report, "A "great haircut" to kick-start growth, we take a look at one radical measure for speeding-up the process of consumer deleveraging, which involves some sharing of losses by banks, bond investors and borrowers. Jennifer Ablan and myself found a growing number of economists, analysts and even some institutional investors who are craving for a creative solution to the consumer debt woes plaguing the U.S. economy.

Our story doesn't discuss the mechanics for instituting a great haircut to jump start the economy. The specifics of just how to spread the losses around is a subject for a later day and is something that can be dealt with at the negotiating table. But hopefully our story, which you can read here, will get the discussion rolling.

Here is the PDF version of the story with interactive graphics.