More on Markopolos, Bernie Madoff and the Wall Street Journal

Jason Linkins patiently combed through all the emails and other documentation released by Bernie Madoff whistleblower Harry Markopolos the other day, and the result is a definitive, blow-by-blow account of Markopolos's dealings with the Wall Street Journal in the Huffington Post.

As I observed in an update to my earlier post, former WSJ managing editor Paul Steiger told Editor & Publisher that he didn't know that Markopolos approached his paper. Indeed, the E&P story questions whether the newspaper received a tip from Markopolos at all:

Former Wall Street Journal Managing Editor Paul Steiger said he does not recall the tip a Journal reporter supposedly received about Bernie Madoff three years ago, and adds he "highly doubts" it happened.

Excuse me? Is he saying that Markopolos did not approach the Journal, that his testimony is false?

Anyway, as recounted by Linkins, who based his account on the voluminous supporting documentation released by Markopolos, the whistleblower struggled throughout 2006 to get the Journal's attention, and actually kept the faith through 2007. I repeat: 2007! The man's patience was extraordinary.

First 2006:

Markopolos stayed on the hook with the Journal through 2006. In August, he finally mentions that he's "meeting with the WSJ in two weeks," a meeting he secured after threatening to take the story to "Ben Stein over at Barron's." An "immediate response" from the WSJ, with a meeting set-up, was his reward.

Even still, the next reported contact with Wilke was at the end of September 2006. Wilke was still working the story at that time, but it's telling that in his September email, he captures the effort as one "to get the Bernie Madoff Story up and running."

In November 2006, Markopolos said the following in an email to a third party:

"[Wilke] said that his editor thinks that hedge fund scrutiny will increase now that Democrats are in power and greenlighted John's investigation starting in January.

I guess we wait and see what transpires...the guy does top shelf corruption stories, but everything he investigates in on a schedule."

Yeah, I guess so. Makes you wonder, reading this, if there was more than one person in the Journal's Washington bureau, or more than one person covering finance at the Journal.

Then came 2007, and Markopolos was still being led around by the nose:

By January 2007, Markopolos had detected further disturbing news on Madoff, still sending the news to Wilke like shock and awe: "Bernie Madoff purported to deliver 8.45% to his investors in 2006...It didn't happen because it is mathematically impossible."

The defibrillation didn't help. By February 2007, Markopolos is sounding a downcast note: "The Wall Street Journal's John Wilke has been a huge disappointment. Obviously they were the wrong choice. Eventually Bernie will blow up and everybody will say, 'I told you so.'"

Nevertheless, at the end of June, Markopolos is back in touch with Wilke, encouraging him to go out on strike: "Keep it up. Murdoch would be poison for the paper." If Wilke continued to be a "disappointment," Markopolos didn't let on. His Murdoch criticism was larded with praise for the paper and its "insightful financial journalism" and the need to preserve it.

So, at some point, Wilke manages to get back in Markopolos' good graces. But movement on the story seems to grind to a dead halt soon after. For months, the collected emails from Markopolos are mainly filled with gallows humor on the coming disaster, shared with the handful of contacts with whom he'd been pursuing the investigation.

Since the Journal is unlikely to ever explain itself, I'll try to offer my guess as to what why a top investigative reporter and his editors dropped the ball so terribly:

They didn't believe Markopolos.

It's that simple. I can't think of any other possible explanation, and I don't think that any other one has any chance of being credible.

© 2009 Gary Weiss. All rights reserved.