Exclusive: Chinese authorities conduct unannounced 'inspections' of Bloomberg News bureaus

December 2, 2013: 12:56 PM ET

The unusual visits follow a controversy about an investigative article involving a Chinese billionaire.

By Peter Elkind and Scott Cendrowski

131202123909-bloomberg-hq-620xaFORTUNE -- In what appears to be a conspicuous show of displeasure, Chinese authorities conducted unannounced "inspections" at Bloomberg News bureaus in Beijing and Shanghai in the final days of November, Fortune has learned. The visits followed media reports that Bloomberg cancelled a year-long investigation on financial ties between a Chinese billionaire and government officials.

Bloomberg has been described in press accounts as canceling the article to avoid antagonizing the Chinese government. According to those accounts—which are disputed by the company— Bloomberg News editor-in-chief Matt Winkler explained his decision to kill the story by comparing it to self-censorship in Nazi-era Germany, saying it would allow Bloomberg to avoid being expelled from China.

Instead of soothing the government, Winkler's reported comment appears to have stirred anger. During the visits, Fortune is told, at least one Chinese official asked the company for an apology from Winkler.

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Bloomberg has publicly insisted that its 2,500-word article was merely delayed -- not cancelled -- because it was "not ready." Meanwhile, Mike Forsythe, the award-winning lead reporter on the project, who is suspected of leaking word of the company's actions, left Bloomberg News after 13 years at the company.

Details of the inspections, conducted on the same day at the news bureaus in Beijing and Shanghai, are sketchy. It's unclear how many officials were present or what government agency they represented. Different sources say, variously, that the visits were characterized as "security inspections" or "safety inspections." But journalists inside Bloomberg view the appearance by civil government officials (they weren't police) as an act of intimidation -- precisely the reaction Bloomberg was eager to avoid.

Winkler referred questions to a company spokesman, who declined to comment.

Last year, the Chinese government reacted strongly to an award-winning Bloomberg investigative series on the private wealth accumulated by the families of top public officials. China has refused to grant journalist visas to Bloomberg and, according to the New York Times, has ordered some companies not to lease Bloomberg terminals.

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