Locking Up Journalists: A Sign of the Times?

Also: The no-holds-barred internal communications of Sam Bankman-Fried, and the curious case of the cardinal, the Pope and the kidnapped nun – with a side order of what appears to be money laundering.

Locking Up Journalists: A Sign of the Times?

Russia’s imprisonment of Evan Gershkovich may seem like a one-off, but it is a threat to all of us.

I will never forget the first time I was locked up and interrogated as a journalist. I would go through it more than once in my career, but the first time was the hardest and it affected the rest of my life – not just in how I felt about my work, but my overall sense of security. 

I was investigating human rights abuses on the Isle of Jersey, a UK Crown dependency and $2 trillion tax shelter. I was detained for questioning, photographed, fingerprinted and then locked in a room under Heathrow Airport for more than 12 hours, with the guards threatening to hold me indefinitely while they shouted expletives and rooted around in my luggage. By no means a fun time and I doubt anyone afterward felt very proud of themselves.

Today, UK laws don’t even allow a suspected terrorist to be locked up that long. But back in 2011, it was more of a free-for-all and it took some time to challenge and overturn a travel ban the UK attempted to saddle me with – thanks to some help from the UK Parliament and members of the international press.

In the end, I prevailed, but one of the truisms of journalism is that tackling thorny topics from the ground up is patently high risk and will not create change as swiftly as incremental efforts from the top down.

Twelve hours in a windowless basement is nothing compared with what 31-year-old American journalist Evan Gershkovich is now going through. As of this writing, Gershkovich, who has been covering Russia for The Wall Street Journal, has been imprisoned for exactly two weeks following his arrest by Russian security services. The Journal said he dropped out of contact with his editors while working in Yekaterinburg, about 800 miles east of Moscow. 

I can only imagine how he must be feeling. The toughest part about detainment is the uncertainty – you have no idea what will happen or how long the process will take – the lack of freedom, the disorientation, and your acute awareness of the total lack of safety.

As is often the case with targeting journalists, the reason given for Gershkovich’s arrest on March 29 by Russian officials was not remotely related to journalism: He was charged with espionage. After his arrest, the Kremlin stated he was caught “red-handed.” 

Russia’s FSB security service claimed Gershkovich, the son of Soviet Jewish emigres, had “collected information classified as a state secret about the activities of a Russian defense enterprise.” 

Gershkovich and the Journal have categorically denied that he engaged in any illegal activities, or was acting on instructions from the U.S. to spy on Russia, as the FSB claimed. The newspaper is calling the charges “false and unjustified” and demanding Gershkovich’s immediate release.

Gershkovich is thought to be the first American journalist charged with spying by Russia since the fall of the Soviet Union. Espionage in Russia can result in a prison sentence of up to 20 years.

The White House condemned the detainment “in the strongest terms” and confirmed Gershkovich has never spied for the U.S. or worked for the government. In a rare show of unity, U.S. Senate Democratic and Republican leaders Chuck Schumer and Mitch McConnell blasted Gershkovich’s imprisonment in a joint statement. “Journalism is not a crime,” they said. “We demand the baseless, fabricated charges against Mr. Gershkovich be dropped and he be immediately released.”

The Russian Ministry expressed strong distaste over the “fuss” the U.S. was making over Gershkovich, dismissing the pushback as “hopeless and senseless.” Gershkovich has been ordered to remain in detention until May 29. His case is now being handled by the U.S. State Department’s Office of the Special Presidential Envoy for Hostage Affairs, which is tasked with negotiating the release of hostages and Americans wrongfully detained in foreign countries.

In the meantime, Russia’s hostility toward foreign journalists has had a continuous chilling effect on the dwindling ranks of reporters who have remained in the country to cover the invasion of Ukraine and other issues affecting Russia. Gershkovich’s most recent article in the Journal, bearing the headline, “Russia’s Economy is Starting to Come Undone,” could not have made the Russians very happy. It detailed the nation’s declining economy, how the Kremlin was grappling with “ballooning military expenditures” against the demands of social spending, and quoted one oligarch saying, “There will be no money next year.”

What Gershkovich’s imprisonment will mean for journalism remains to be seen, but foreign journalists in Russia are now on notice that they are vulnerable if they engage in acts of reporting. Some media organizations, such as Bloomberg News, have already pulled out of Russia entirely, joining a growing list of companies making a clean break from the country, from Accenture to Zurich Insurance Group.

It is said that maintaining a strong civil society helps guard against corruption in many countries, but academic research shows this linkage only holds true when a society can generate enough public pressure to enforce frameworks of good governance – and that depends on the press being free.

As of the end of 2022, an estimated 532 journalists were imprisoned due to their work, with China (and Hong Kong) leading, and Myanmar, Iran, Vietnam, Belarus, Syria, Saudi Arabia, Egypt and Turkey the next-biggest offenders, in that order, according to Reporters Without Borders.

All of which is a good reminder that without a free press, holding power to account becomes increasingly difficult, posing a threat to all of society.

‘Such Is Life’ Lessons from SBF

How Sam Bankman-Fried’s words keep coming back to haunt him.

Whenever I read another story about Sam Bankman-Fried, the disgraced founder and former chief executive of cryptocurrency exchange FTX, I cannot help but think of a poignantly unnerving piece of short fiction by Willa Cather titled, “Paul’s Case.”

In it, a young man embarks on a journey to escape the trivialities of life in pursuit of the exotic and extravagant. But they are experiences he cannot sustain and they eventually prove to be his undoing.

The story, like that of Icarus, is tragic, so there is no comeuppance involving a public shaming, jilted Wall Street investors, or the Federal Bureau of Investigation struggling to make sense of the protagonist’s laptop. (After all, Cather published her piece in 1905 – laptops and crypto were still a good ways off — although it is entertaining to think of what she would have made of Bitcoin.)

Still, the story has some pungent SBF energy, depicting a young man attempting to rub elbows with those he wishes to emulate, without being very much like them: 

“When Paul came to dinner, the music of the orchestra floated up the elevator shaft to greet him. As he stepped into the thronged corridor, he sank back into one of the chairs against the wall to get his breath.

The lights, the chatter, the perfumes, the bewildering medley of color – he had, for a moment, the feeling of not being able to stand it. But only for a moment; these were his own people, he told himself.

He went slowly about the corridors, through the writing-rooms, smoking-rooms, reception-rooms, as though he were exploring the chambers of an enchanted palace, built and peopled for him alone.”

That was Paul’s case. In Sam’s case, the enchanted palace was his company, FTX, ensconced in a $40 million oceanside penthouse, sealed off from prying eyes in the Bahamas and peopled by his colleagues and friends. And he was not a young boy, but an adult in his 30s accused of cheating investors around the world of billions of dollars while casting himself as a dedicated philanthropist and humanitarian.

Since FTX’s bankruptcy in November, questions have swirled around the events leading up to the exchange’s collapse, but this week a 45-page report from FTX’s new chief executive, John Ray III, offers a dose of de-mystification and some startling new details.

After interviewing former FTX employees and scouring through terabytes of electronic data and more than one million documents, Ray and his team unearthed correspondences from Bankman-Fried and his sentinels that, it has to be said, hammer home not only just how blasé SBF felt about running a $32 billion crypto empire, but also how he found its total lack of governance to be … humorous?

In a June 2022 portfolio summary that sought to model cryptocurrency positions of FTX’s Alameda Research trading arm, one communication stated that personnel should “come up with some numbers? idk.” As in, they should gin up the numbers.

An internal communication from Bankman-Fried stated that Alameda was “hilariously beyond any threshold of any auditor being able to even get partially through an audit.” 

Also from Bankman-Fried: “Alameda is unauditable. I don’t mean this in the sense of  ‘a major accounting firm will have reservations about auditing it’; I mean this in the sense of ‘we are only able to ballpark what its balances are, let alone something like a comprehensive transaction history.’”

Then he added: “We sometimes find $50 million of assets lying around that we lost track of; such is life.”

The report includes a wide range of other details about how FTX’s control failures created an environment where a handful of employees held “virtually limitless power to direct transfers of fiat currency and crypto assets and to hire and fire employees, with no effective oversight or controls to act as checks on how they exercised those powers.”

At the same time, Bankman-Fried, when asked about his long-term vision for FTX by venture capitalists, told them, “I want FTX to be a place where you can do anything you want with your next dollar. You can buy Bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”

It sounds like that was exactly what FTX executives were doing.

The report further stated that FTX employees, particularly Bankman-Fried, “deprioritized or rejected advice to improve” FTX’s control framework, exposing the company to “grave harm from both external bad actors and their own misconduct.”

Summing it up, Ray said, “FTX Group failed to implement appropriate controls in areas that were critical for safeguarding cash and crypto assets” and that the company “was tightly controlled by a small group of individuals who falsely claimed to manage FTX Group responsibly, but in fact showed little interest in instituting oversight or implementing an appropriate control framework.”

Bankman-Fried, who has pleaded not guilty to the charges filed against him, faces trial in October. Such is life?

The Vatican’s Money Problems

The curious case of the cardinal, the Pope and the kidnapped nun. With a side order of what appears to be money laundering.

Financial malfeasance isn’t just for Wall Street. It’s also beleaguering the Pope, whose name was recently invoked during the ongoing trial of Giovanni Angelo Becciu, a defrocked cardinal accused of embezzlement and abuse of office. The Vatican, it turns out, is quite the busy place.

The story gets gloriously weird, with the cardinal embroiled in a failed $200 million property deal in London’s upscale Chelsea neighborhood, as well as efforts to pay up to $1 million to free a Colombian nun captured by al-Qaeda-linked militants.

No doubt it would make a decent blockbuster Harrison Ford film – or perhaps you’d want Jude Law, since he’s already played the Pope in that HBO series that got canceled. It would be reason enough for a reprise.

Without getting too far into the weeds – and this is a deliciously weedy yarn you might want to read more about here – the cardinal attempted to persuade Pope Francis to sign statements confirming that he acted with the Holy See’s approval when he splashed out Vatican funds in the London property deal that lost the Vatican hundreds of millions of dollars and, separately, paid a woman who claimed she could secure the kidnapped nun’s freedom, but instead spent hundreds of thousands of dollars on personal travel and luxury goods. (The nun was eventually released in 2021, but it doesn’t seem the travel or luxury goods purchases helped.) 

The Pope, being a canny fellow, was not having any of it. “Evidently and surprisingly, I have been misunderstood by you,” he wrote in a letter to the cardinal. Responding to the cardinal’s entreaty for explicit approvals, the Pope said, “I regret to inform you I cannot comply with your request.”

In a case involving the Vatican bank, private banks and even global banks, Becciu is the first cardinal to face a criminal trial in a Vatican courtroom. He faces charges of defrauding the Vatican, reportedly involving funds from the Catholic faithful around the world intended for the poor and needy.