Investigating Scandal in Big Businesses and Corporations

Sarah Beth Costello
April 6, 2009

aigThe world may never be free of corruption, but journalists possess an important responsibility to act as watchdogs in order to prevent unconstitutional errors and crimes – especially among power holders.

The American International Group (AIG) has been in the news for months now concerning scandal, corruption, misappropriation of funds etc. AIG had been struggling with financial difficulties for months The largest insurer group in the world was experiencing drastic losses in the stock market. In early 2008, many financial institutions were experiencing “credit crises”, however, AIG refused to acknowledge similar struggles.

Despite AIG’s claim, the company was nearing the brink of bankruptcy, and owed billions of dollars to other banks (Goldman Sachs and Merrill Lynch for instance). Because of the seemingly inevitable end to AIG, the government provided a bailout for the company to repay their debts and prevent the enormous company from going under.

A great deal of controversy ensued over the course of the past couple of months that have bombarded newspapers with conflicting opinions concerning the AIG and the government’s role. Recently, new issues arose when it was discovered that AIG was using the bailout money from the government to give raises to employees.

Using Available Documents and Agencies in an Investigation

In his book, “The Investigative Reporter’s Handbook,” Brant Houston discusses “Investigating For-Profit Businesses. There aretips007 plenty of resources available to reporters when investigating companies. One important document is a proxy, which is the notice a company extends to shareholders to inform them of annual meetings in order to enable shareholders to participate in important matters.

A proxy documents the salaries “of the chief executive officer and four other highest-paid officers.” It discloses the amount of stocks owned by company leaders, business among chief executives, the salary of the auditor and information concerning “board meetings and attendance.”

Houston writes that a proxy, and other documents, can be used to conduct thorough background research of a company. Journalists are not the only ones on the lookout for corruption and scandal. There are dozens of agencies that exist to ensure ethical practices and good business occurs.

The Federal Trade Commission is an example of an agency created to promote capitalism and competition and “guard against deceptive business practices.” The Consumer Product Safety Commission was established to ensure safety in companies as well as in products.

The Small Business Administration is another agency that provides grants and loans for small businesses that are unable to procure loans elsewhere. There are many other agencies that exist for multiple reasons from preventing pollution to ensuring worker safety.

Following a Paper Trail

Practically every business possesses a paper trail of some sort that can be located at local courthouses or city halls. Documents may include business licenses, property assessment, tax records and tax liens. In addition to these documents, reporters can purchase credit ratings and other information about a business through Dun & Bradstreet. This organization also provides information concerning the promptness and timeliness of paying bills by businesses for a fee.

A reporter should always strive towards human sources. Paper trails are necessary for this reason. “Written records lay the foundation for a business story, but human sources are essential to provide the detail and road maps for stories,” said Houston.

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