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Reuters backs down on false INBS report


Irish Nationwide chief executive
Michael Fingleton outside Nationwide House in Dublin

Irish Nationwide chief executive Michael Fingleton outside Nationwide House in Dublin yesterday

Irish Nationwide chief executive Michael Fingleton outside Nationwide House in Dublin yesterday

WORLD-renowned business newswire service Reuters has been forced into an embarrassing climbdown after publishing a report which claimed that the Irish Nationwide Building Society was in "talks with their lenders to avoid insolvency".

Their report was withdrawn after Reuters conceded that "material elements" contained in the story were incorrect.

The stunning admission came after a series of urgent communications on Friday night between Reuters and representatives of the Irish Nationwide in Dublin.

Irish Nationwide chief executive Michael Fingleton said last night: "This was the most irresponsible piece of financial journalism that I have experienced in my 35 years at the Irish Nationwide."

Reuters' original story was posted on the wires on Friday evening at 6.14pm (Irish time).

Then, at 8.31pm, the story re-appeared on the wires -- this time, however, with a strong denial from the Irish Nationwide.

According to the internal Reuters log, this story was finally removed from the system at 10.45pm and replaced by a retraction, stating there would be no substitute story.

"The error occurred because the Reuters reporter misinterpreted the source," a US-based spokesman for Reuters yesterday told the Sunday Independent. "The story was filed before Irish Nationwide had a chance to comment.

"Accuracy, reliability and integrity are at the heart of the Reuters operation -- and we deeply regret that our standard operating procedure in this case was not followed."

Reuters are now understood to be carrying out an internal investigation as to what happened.

But the promise of an investigation will do little to satisfy Irish Nationwide chief executive Michael Fingleton and his fellow directors.

Last night, Mr Fingleton lashed out at the "perpetrators" of the "totally malicious" Reuters story, describing their actions as an "attempt to sabotage" the building society.

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"The story was irresponsible, false and untrue, and Reuters have accepted that," said the building society boss. "They have admitted to their subscribers around the world that 'material elements are incorrect' in the story and that it 'contained false information'."

Mr Fingleton continued: "In the present highly sensitive economic, financial and commercial climate, the putting out of such statements is tantamount to commercial sabotage by people who are trying to undermine Irish Nationwide Building Society.

"We emphasise that the Irish Nationwide was, is, and continues to be a strong, profitable financial institution with record levels of capital and liquidity, both of which are essential in the present climate. We are rock solid."

The Irish Nationwide chief stated his intention to pursue Reuters vigorously over the matter.

He said: "Reuters have admitted that they got it wrong. They knew they got it wrong and that is why they took it down. They didn't check it in the way that you would expect.

"The society will, of course, be vigorously pursuing the matter -- including legal action.

"We believe that we have the evidence to support our case and that what Reuters did was indefensible.

"It took Reuters two hours to put up the Irish Nationwide's denial, and it was another hour-and-a-half before they withdrew the original story because, they said, 'material elements were incorrect'. They also withdrew the denial story because, they said, it contained 'incorrect information'."

Significantly, the untrue Reuters report was gleaned from just one anonymous source, with no response sought from the Irish Nationwide Building Society itself.

Also believed to be significant is the fact that Reuters published its report just one day after the international credit-rating agency Moody's downgraded the Irish Nationwide Building Society's debt and deposit ratings -- something which is becoming the norm for financial institutions in the current climate.

Reuters' long-established reputation for providing accurate and up-to-the minute global business intelligence appears, on this occasion, to have been its undoing.

Such was the potential gravity of the Reuters story, the Sunday Independent understands senior officials in Government were monitoring the unfolding situation with a view to briefing Taoiseach Brian Cowen on the matter immediately after his appearance on the Late Late Show, broadcast from Wexford Opera House on Friday.

Even as Mr Cowen waited in the green room at the Wexford venue, Irish Nationwide representatives were in contact with Reuters to correct the highly damaging record.

Asked by the Sunday Independent on Friday night if he was concerned that such potentially harmful rumours were being reported, the Taoiseach said he was unaware of the content of the Reuters article.

Asked if he would concede that such a report had the potential to cause damage, Mr Cowen said: "As I said to you now, I don't know anything about it, so there's no point in pursuing it when I don't know anything about it, and I've said that the company says there is no basis to it, so I really don't think that it's helpful for me to talk off the top of my head when I don't anything about it. That's only fair, isn't it?"

Pressed on the matter further, Mr Cowen said: "Rumours and unfounded rumours are not good at all. They shouldn't happen. So, I think it's important for me not to speculate on the basis that what you say appears to be a rumour. I don't want to add to it whatever, because I don't think it'd be very sensible."

Asked if he had any concerns in relation to Irish banks, Mr Cowen said: "The Irish banking system is well capitalised. There has been no indication whatever that there is any difficulty there. The financial soundness of the banks is not in question. There is always dialogue there to make sure that we know exactly what the position is."

Asked if he expected the Irish people to be fully confident in the banks they did business with, Mr Cowen said: "I think the point has been made by the Regulator and the Central Bank in their various reports, that the Irish banking system is well capitalised."

The Taoiseach's sentiments on the stability of the Irish banking sector were echoed by Finance Minister Brian Lenihan yesterday on RTE Radio's Saturday View.

Responding to charges by economist David McWilliams that Irish banks had engaged in "explicit and delinquent policies" in lending to "people who couldn't afford the houses they bought", Mr Lenihan was strident in his defence.

"I don't accept this and I think this is very dangerous. The Central Bank chairman gave evidence to a parliamentary committee this summer and clearly indicated that stress-testing had been done on all the Irish banks and there was no danger at all -- Irish banks are not exposed to the sub-prime problem which US banks are exposed to. There is exposure in the Irish banks, but they made it clear they can accommodate it. The analysts of the different firms that look at bank shares and bank performances have said the Irish banks can weather this crisis," Mr Lenihan said.

Fine Gael deputy leader Richard Bruton voiced his own concern in relation to the banking system, imploring Mr Lenihan to examine the stress-testing models used by the Central Bank and Financial Regulator.

Mr Bruton said: "Confidence is the core of banking and that has to be protected. We have to make sure that the confidence that is expressed in our banking system by the Central Bank is firmly based.

"I think it would behove the minister to look hard at these stress-testing models to see if they are robust enough to pick up any difficulties in a timely way so that we can anticipate them.

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