Opinion: US media give NY PROs an easy ride

If Refco, the much-troubled New York derivatives broker, had been a British company operating primarily out of London, the PR handling of its problems would surely have been a great deal better.

The American press are rarely quick out of the gates; they are far too deferential and this colours the way  financial institutions react when something goes wrong.

US firms' instinct is to bluff  and to pretend it is business as usual. Enron did that for months, as did the mutual fund and insurance broker  industries when first attacked by New York attorney general Eliot Spitzer last year. So it was according to script when Refco last week said that a 'missing' $430m had been paid back by its former chief executive, a development unquestioned by the US press.

Similarly the firm said it had ample liquidity to continue trading, but anyone with  a hint of knowledge of prime brokerage knows that operations are financed with huge loans that are rolled over on a weekly basis. After such a scandal, these loans are likely to be withdrawn.

Everyone in London knows this, so the PR handling of such a case here would be entirely different. The only way out is to make a complete confession, promise a full and open investigation and try to persuade the world that there are no more nasty surprises around the corner. But this is not the American way – they give the reins to lawyers, who are so terrified of shareholder litigation that they refuse to admit anything.

Thus  New York was mortified when Bruce Carnegie-Brown, the UK head of insurance broker Marsh, promised to publish the results of an investigation into the extent of American-style problems in London.  That could never happen in the US, because while PR may have originated there, it is now out of tune with the financial world.

anthony.hilton@haynet.com

Anthony Hilton is City commentator on London's Evening Standard

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