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 After such a scandal, these loans are likely to be withdrawn.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 is City commentator on London's Evening Standard