How False Statements are Undermining America
from Martha Stewart to Bernie Madoff
James B. Stewart
We live in an era of truthiness and alternative facts. That makes me wonder if ether the title or the cover image of this book will be recognized by all but a narrow, possibly aging, swath of the public.
For those who don’t know the author, James B. Stewart has been found between hard covers for just about 25 years now. A Page One editor at The Wall Street Journal, his first book, Den of Thieves, focused on the then fresh financial scandals of the late 1980s–Boesky, Milken and that crowd.
Since then he’s published several volumes on subjects as various as Disney‘s internal strife and a medical impostor. He’s readable and thorough and if he lags the pack timing-wise, he usually finds something new to contribute. That’s the case with the current volume.
One could characterize the book as a collection of prevarication’s most recent hits. That would be unfair to Stewart’s stated purpose, though, even though there’s some truth to it.
Stewart thinks, as does a nearby commentator, that there’s a general problem with the whole concept of truth. Specifically, he finds the evidence in the behavior of famous individuals when they confront the legal system. Four recent cases of egregious falsification serve to illustrate his point.
He begins with Martha Stewart, the doyenne of domesticity and presumably no relation. Ms. Stewart, you may recall, had a bit of an insider trading problem. But that’s not why she went to jail. Insider trading is a nasty business and she clearly received non-public information. But it’s a gray area since she wasn’t, strictly speaking, an insider and merely inferred the need to trade from non-public information.
No, as with Watergate, the crime was in the cover-up. Stewart and her broker concocted a story that didn’t stand up when key witnesses–Douglas Faneuil, the broker’s assistant , as well as a traveling companion/close friend of Martha’s among them–truthfully testified to what they’d witnessed.
Stewart’s own assistant, also testified, that she’d seen Martha alter a computer record of the orignal phone call that set this farce in motion. Presumably even Martha realized that was problematic since she almost immediately ordered that the original be recovered. Really, not her finest moment.
There is a school that says Martha was railroaded but in the end character always tells. Martha stopped talking with all the people that didn’t join her dance against the federal government and had a public airing of some pretty petty dirty laundry. So what did she gain by embracing a lie?
The other big celebrity here is Barry Bonds. Born into baseball royalty (his dad was Bobby Bonds., a star for the SF Giants), Bonds, in his 40s, broke Hank Aaron‘s career home run record. MLB and the San Francisco Giants organization along with the fan base rejoiced.
By that point an investigation of BALCO, a lab providing performance enhancing drugs to a range of athletes, was well on its way to being a full-fledged scandal. As part of the investigation Mr. Bonds had testified in front of a grand jury.
Just like Martha, that’s where he blew it. No one will know the thought process he engaged in prior to giving his testimony but we can all see his answers to direct questions. Those aren’t pretty, just a repeated string of denials that he had ever used any such product or received it from any middlemen. Unlike the Stewart case, Bonds’ personal trainer–the bag man–maintained his silence.
Others, though, among them his spurned, long-time paramour, were not so tight-lipped. Bonds was indicted and convicted of obstruction of justice although that charge was overturned. His reputation, never stellar, hasn’t really recovered.
Then there’s Bernie. As in Madoff, a man who seemingly had no need for or understanding of the truth. We’ve met him before and it’s not worth going into the details again. What’s new here is the details of the investigation in New York. (Our last visit was through the eyes of Harry Markopolos, the man who figured out Madoff was running a Ponzi scheme before anyone else did.)
First, while the most detailed flag about what was probably going on was raised in Boston, the SEC in New York got more than a few warnings including one from a very serious hedge fund. All went unheeded.
Second, some lower level employees with concerns were ignored. And some were allowed to indulge themselves in what struck me as subjective reactions to people rather than an objective assessment of facts. (It’s probable they were considering the investigation’s impact on their career paths.)
Nobody even considered calling the Department of Justice when they were lied to during an official investigation. Talk about regulatory capture and its costs.
Which brings us to the final case, I. Lewis ‘Scooter’ Libby. You may recall that Mr. Libby was Chief of Staff to Vice President Cheney during the George W. Bush Administration. Mr. Libby became embroiled in the search for whomever it was in the government that disclosed the identity of a CIA operative, Valerie Plame, to the press.
Mr. Libby, it turns out, did not. At least not to the reporter that first printed it. But his testimony during the investigation was contradicted by enough witnesses that he was indicted and convicted for perjury. A lawyer, he lost his job and his ability to practice although the President did commute his sentence.
For me, Libby’s was the one case that was not like the others. I read the section closely and I still can’t tell you whether he outright lied, mis-remembered or just confused things. I know, the powerful don’t own up to weakness but honestly, Washington comes across as a shark tank where no one speaks truthfully and the perpetrators of the original offense swam free.
There’s another reason this example was the weakest: in the other cases the offense was apparent and left a record. Martha made the trade. You can see the before and after Barry for yourself above. Bernie ripped off scores of people and institutions. What the hell did Libby get but a peck of trouble?
I don’t disagree with Stewart. The heroes in these tales are the few people who told the truth. As for the rest, shame on you.