Tuesday, 27 September 2016

Exaro - Notification

Exaro-related postings will remain on this blog but may be transferred to another site so that they are on the record but no longer distract from the main purpose of Position Reserved which is to review political and philosophical issues as they arise. 

As of the date of this posting, I have no further information on Exaro Holdings Ltd. There is nothing to add to the account given on July 21st other than to say that the Shareholders Meeting never took place for reasons that remain obscure. The Company, therefore, has not been wound up as of today but continues to exist under the effective control of New Sparta.

ExaroNews (the trading subsidiary of Exaro Holdings) has ceased functioning as an investigative journalism site. Exaro Holdings may or may not be wound up on whatever terms are appropriate and ExaroNews may or may not be sold on or even revived on different terms.

I have no current knowledge of any of these theoretical options and I have had no communication about the Company from the Company since the first half of August.  I await proposals from the majority shareholder when and as he or his agents can make them.

Since I resigned as a Director over failure to provide information in a timely manner, I have no rights to information except as a shareholder on equal terms to other shareholders.  I now consider this a private matter that no longer requires further public communication. Please refer all queries to New Sparta who are the majority shareholders in Exaro Holdings Ltd. 

Postscript - May 1st, 2017

Exaro Holdings Ltd and ExaroNews Ltd. were both liquidated in January 2017. I had ceased to be a Director in July 2016 and so had no information of consequence except that obliged to be provided to me as a shareholder between that date and the liquidation. Naturally, as a former Director, I co-operated fully and within the law with the liquidators. As far as I know the liquidators hold any residual assets and the former shareholders ceased to have any further rights in the matter.

We have decided not to share the detail our analysis of why ExaroNews failed, as provided to the liquidators in full. The fundamental reason was the sudden withdrawal of funds by the main shareholder (New Sparta Holdings) for reasons wholly unrelated to editorial matters and related solely to internal decision-making within the New Sparta Group. At the immediately preceding Board Meeting to the one that decided on closure, New Sparta had, in fact, promised funding until December 31st, 2016 and had agreed to a plan to provide a new co-operative approach to editorial direction as well as the formation of a Board Committee (of which I was to be a Member) to develop a revised long term Business Plan in collaboration with the new Joint Editors, David Hencke and Mark Conrad. The reversal of funding came without warning to either myself or the editorial staff but we were persuaded that new information unrelated to Exaro meant that the shareholder was reasonable in their decision from their commercial perspective.

One unfortunate consequence of the decision was that there was a serious hiatus of management after my resignation in which no one spoke for Exaro and assets were allowed to degenerate (including the loss of social media assets). There was thus no approved source for comment on exuberant claims about Exaro being made by a somewhat jubilant mainstream media that saw an irritant, an alternative model for investigative journalism, collapse before their eyes. A longstanding politically inspired campaign of denigration (equally directed at Metropolitan Police investigators), in which legitimate questions about sourcing were intermixed with downright falsities derived from a special interest position, was not contested. I (and others) had to watch idly as the wolves circled the dying creature ready to feast on its flesh which it duly did.

Having said that, without going into detail, it is my belief that some errors of judgement may have been made by the then-Editor, who had been released of his role for cost reasons only, although these seem to have been errors of judgement (the situation remains unclear) shared by the Metropolitan Police investigation into child abuse. At the time of closure, the new Editors advised that they had identified two points of possible concern (of which I have no record) and that their intention was to undertake an internal investigation and then publish that investigation on the web site, admitting any errors related to those particular points of concern. The Board agreed to this procedure and gave plenipotentiary powers to the new Editorial team in this matter. Unfortunately, that decision was made meaningless by the funding crisis within a very few weeks. 

At the time of the decision, the new Editors believed that, regarding these issues of concern, their investigation could not now take place and so no further public comment could be made on what happened or why, but the general view was that a full and frank statement on these matters would have permitted rapid reputational recovery if funding had been secured. Needless to say, no such recovery was permitted. For the sake of clarity, there can be no prejudgment of these areas of concern as, in fact, errors with the information currently at our disposal - it is quite possible that closer analysis may have resulted in a demonstration that Exaro News made no errors of judgement according to its own brief as investigative journalism web site. We simply do not know.

The final conclusions on the Exaro Project are these. First, that it was a noble experiment which, despite the issues raised in the final year, undertook important work over more than half a decade and re-energised investigative journalism 'holding power to account'. It made important enemies with far more resources and with little interest in fighting fair or with integrity. It was surprising in some ways that it fought on for so long. Second, that it was commercial and funding issues, not editorial issues (there was no impending serious court case, for example) that were fundamentally at the root of its failure - the possible but unclarified editorial problems that appeared very late in the day would have been surmountable with will and good management in the six months to December 31st, 2016. 

Those commercial and funding issues arose out of a flawed business plan which offers lessons to successor organisations. Management was weak and editorial was permitted far too much power after an initial year when it was reasonable to grant editorial full power in order to build the brand. Too much resource was poured into investigation (without check and balance on editorial decisions) and not enough into commercial infrastructure. In the long run, the business model may have been wholly unfeasible (most other similar entities rely on foundation grants) but the decisions made after the first year of operation and the lack of firm guidance by the majority shareholder and the Board (of which I was a Non-Executive Member) reduced the chances of making that model feasible progressively as each subsequent year passed. 

The decision to give funding for six months in June included not merely a revision of the business plan but a preparedness to close the business in an orderly fashion if the 'numbers failed to stack up' in the longer term. My advice to successors who do not want to rely on Foundation funds (which usually comes with a political agenda of some sort) is a) introduce a corporate governance system that constrains the Editor from treating the entity as a wholly non-commercial organisation and b) to be uncompromising from the beginning in including a commercial dimension and a strategy for exit (or sustainable short term revenue generation) from the very beginning and so ensure a strong management with authority to implement that plan. I take full responsibility for not being stronger myself in pressing for this approach although my minority shareholder status and the fact that the majority shareholder was the provider of all loan finance (and was generous in doing so) would have limited my influence in this respect. 

Finally, if something like this, publicly challenging and reputationally vulnerable, is to be closed down, I would suggest that it is a false economy to simply cut all funding and not maintain a 'de minimis' fund in reserve for preservation of the assets, the maintenance of obligations and the continued independent management of reputational fall-out. Personally, I suffered no reputational fall-out. Any attempt to attack my role was dealt with robustly and factually and, in the end, there were only two possible criticisms of the business - inappropriate handling of its closure and unresolved questions about editorial management of aspects of the child abuse story. Both required sensitive handling. The complete closure of the ability to handle such issues in a robust and factual way perhaps worked to the disadvantage of others rather than myself. What was required was a plan for closure that included reputational management.

The matter is now closed. By law, no previous shareholder or Director can speak for the Exaro brand or Companies which are now in the hands of liquidators who, in my experience to date, are highly professional. I have received no public criticism and would deal with it robustly if it came. Exaro itself as a brand suffered reputational damage that may have had some negative effects on those involved but it is more the case that its important contribution to challenging the mainstream media in a way that, for all its mistakes, represented a basic commitment to traditional journalistic values was diminished in a campaign of general denigration led by largely right of centre newspapers (although Exaro itself was non-partisan). I do not regret the experience. Many facts are now in the public domain (still available, just, on the Public Internet Archive) and some very powerful people were discomfited. If it is proven that any errors of judgement editorially caused material harm to an innocent party, then I can only regret that the Editorial Team was not permitted by the pressure of events to undertake its review and so clarify the position of the web site in those respects. That inability to review left grey areas that should have been resolved professionally. Mais, maintenant, c'est fini!