EYE ON ETHICS

Mr. Gunawardene is a writer and journalist who blogs on media, society and development at http://movingimages.wordpress.com. He can be reached on alien@nalaka.org.
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Colombo, Sri Lanka: 12 Oct. 2008.

In the well known legend, the pied pier of Hamelin played his musical pipe to lure all the rats into the nearby Weser river. When the town reneged on the promised fee, he played a different tune to entice all its children away from the town.

Modern-day pied pipers use smooth talk and convincing images instead of hypnotic musical tunes to lead people astray. And they achieve much greater coverage today, thanks to the modern media.

When the media amplify pied piper tunes, how responsible are they for the resulting damage? A current experience in Sri Lanka has revived this question.

For the past few weeks, Sri Lankans have been shocked and dismayed to learn that thousands of middle-class adults have been hoodwinked by a confidence trickster who used paid advertisements in the newspapers and on television to boost his image.

Sakvithi Ranasinghe, a populist tutor of English turned businessman, fled the country in mid-September 2008 after duping thousands of unsuspecting people to deposit money in an Ponzi-style investment scheme that offered abnormally high returns.

Media reports have variously placed the number of victims at between 1,500 and 4,000—among them are public officials, policemen, artistes and sports persons. Investigators are still trying to assess the total worth of his loot; some estimate it to be a whopping nine billion Rupees (over US$ 83.5 million).

The fall out has indeed been disastrous for the victims, many of whom have lost their life’s savings. Many ignored official warnings not to invest in a scheme that offered interest rates as high as 72 per cent per year—several times that of reputable commercial banks. Clearly, this was another case of people suspending their common sense in pursuit of quick and easy money.

Ponzi schemes, named after Charles Ponzi, one of the great swindlers in American history, pay such high returns to investors out of the money paid by subsequent investors, rather than from net revenues generated by any real business. Once the pool of investors dries up, the scheme collapses.

Since it broke, the Sri Lanka scandal has consumed a good deal of newspaper space and broadcast time. Reporters have been chronicling the plight of defrauded investors and the challenges faced by criminal investigators trying to unravel a tangled web of deception. Editorialists and TV pundits have had a field day, many exclaiming ‘I told you so!’. One editorial reminded readers that ‘Sakvithi’ in Sinhala means king of kings—and asked if this racketeer should be called the king of conmen, or Con King?

Meanwhile, the state financial regulator – the Central Bank of Sri Lanka – has sprung into action, cautioning the public to be wary of Ponzi schemes and threatening legal action against other such operators. Many see this as bolting the stable doors after the horse has fled.

Amidst the finger-pointing, arm-waving and name-calling, few have noticed the role of the media in promoting Ponzi schemes in the first place. Wittingly or otherwise, the media have helped amplify the mesmerizing tunes of pied pipers, and quietly collected substantial advertising revenue from such racketeers.

Television as the great authenticator

I was intrigued to read, buried amidst the news coverage, one victim’s saying she was led to trust the fraudster after seeing one of his many advertisements on television. “I invested Rs. 2 million (US$ 18,725) of my money after seeing him on TV. I basically believe what I see on the TV and so was misled,” she lamented.

Hers is not an isolated case. It seems that many failed to heed the common sense advice, ‘Don’t believe everything you hear or see in the media’. Indeed, the Sakvithi scandal reminds us of the media’s—especially television’s—role as the great authenticator of our times.

For several years, Sakvithi ran English-teaching programs on Sri Lanka’s state-owned television Rupavahini, as well as on some private channels. We can presume these were treated as commercial programs, for the airing of which the stations sold airtime.

Millions of young Sri Lankans strive to improve their English skills in the hope of securing better jobs in the cities or overseas. Teaching English is a lucrative industry: some tutors attract hundreds of students to massive classes held in sports stadiums and other public venues.

In the guise of teaching English to the nation’s youth, Sakvithi carefully manufactured a larger-than-life image of himself. He also took out regular newspaper advertisements in the most widely circulated weekend newspapers. Some were in full color, occupying entire broadsheet pages. These too reinforced his image as a benevolent, enterprising young businessman doing society good.

Broadcast airtime and newspaper space don’t come cheap. Over the years and across the media spectrum, Sakvithi’s custom generated tens of millions in revenue to both state-owned and privately owned media companies.

I therefore find it more than a tad ironic that the same media outlets are now peddling the tales of woe of the thousands of men and women tricked by their former, big-time advertiser.

Journalists have protested their innocence, reminding us of the divide between editorial and advertising operations in media organizations. And they are right: media practitioners and editorial gatekeepers don’t have much (or any) control over what fills up commercially-sold advertising space. But how many of their readers or viewers can distinguish the difference?

Many people experience media products as a whole, and lack the media literacy to separate news, commentary and paid commercials. Besides, the once clear demarcations have blurred in recent years.

Television’s seamless blending of news, entertainment and commercials can leave even the most media-literate people somewhat perplexed. News bulletins are sponsored variously by sellers of insurance, milk food or detergents, while current affairs shows are branded by various commercial products or services.

In newspapers, the steady rise of ‘advertorials’—product promotions neatly dressed up as editorial content—makes it harder to discern where one ends and the other begins.

It’s only during election times that Sri Lankan media companies clearly mark every political advertisement or commercial as a paid insertion. That is to safeguard themselves from accusations of supporting one political party or another (which many do anyway, in more subtle ways!).
The rest of the time, audiences are left to their own devices.

Media companies need advertising revenue to operate. Audiences need better media literacy to discern between paid and editorial content.

Journalistic vigilance

On the editorial front itself, few journalists have investigated how unscrupulous persons are using newspaper, radio or TV advertisements to trick the public to part with its money.

Says veteran journalist and media activist Sunanda Deshapriya: “It’s true that the media can’t verify the integrity of every advertisement they carry. But as watch dogs of the public interest, how is it that newspapers repeatedly carried advertisements by Sakvithi offering to pay massive interest rates that no commercial bank or other financial house could afford? Didn’t they find it at least a bit odd, if not very suspicious?”

Several years ago, a rare investigative journalist working for the state-owned Lake House group of newspapers first raised concerns about a whole range of scams exploiting gullible people through the media. In a series of articles in the Silumina Sunday newspaper, Poddala Jayantha exposed schemes that were openly soliciting money—as registration or processing fees—promising various educational, training or job opportunities.

It was recently revealed that one such article had probed Sakvithi—by then in the early stages of his Ponzi scheme. The newspaper’s editor declined to carry it because Sakvithi was a big time advertiser.

But investigative journalists and public-spirited whistle-blowers can do only so much when law enforcement itself is lax. For example, while most sections of the media were pocketing Sakvithi’s advertising revenue, the independent Ravaya newspaper published a full page investigation of his scam on 27 July 2008. But it triggered no criminal investigation, and Sakvithi happily carried on for a few weeks more. The rest of the media pack woke up to the story only after the man fled the country with his loot.

Journalists can become disheartened or restrained when the most common response to media investigations is to literally shoot the messenger—or question the messengers’ racial pedigree or political leanings. Sri Lanka is currently one of the most dangerous places for journalists to practice their profession.

Sometimes official apathy can be just as damaging. For example, when the multi-level marketing or pyramid schemes were first exposed a few ago, it took weeks and months of media pressure before official investigations were launched. These were not pursued to their logical conclusion because too many vested interests were involved. Again, thousands of people were swindled of their money. Many have been too embarrassed to admit it public, let alone seek legal redress.

Whether theirs is a Ponzi, pyramid or any other scheme, today’s confidence tricksters are increasingly media savvy. They spend part of their ill-gotten money to buy media space or airtime to build impeccable images of themselves. Media companies cannot disclaim total responsibility for these manipulations that are happening right under their noses.

More than a century and half ago, Abraham Lincoln said: “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.” Old Abe is still right, but these days with more gullible people around, it’s enough to just fool some of the people for a short while. The hoodwinkers can then laugh all the way to the bank.

A vigilant regulator is necessary, but woefully insufficient, to safeguard the public against future scams. Prompt police investigations and prosecution are crucial. And in our media-saturated times, there are at least two other key requirements: greater vigilance by the media, and higher levels of media literacy among everyone.

But there is really no substitute for common sense.