The Journalist and the Whistle-Blower
It's a familiar story: After top employees at a U.S. corporation engage in a lucrative bit of skulduggery, one of them blows the whistle in hopes of bringing his employer to justice. The multinational cries, "Stop, thief!" and hires the best defense lawyers money can buy. But while mercenaries don't think twice about lobbying the government and destroying the snitch on their client's behalf, journalists are faced with ethical decisions about who will control the narrative: the whistle-blower, the prosecutors, or the businessmen who show disregard for consumers.
These days, the unchecked power of corporations has made whistle-blowing riskier than ever. For example, think of George Ventura, the corporate lawyer who secretly helped The Cincinnati Enquirer prepare an exposé on Chiquita Brands International, only to see the Enquirer retract the exposé and betray its own confidential source. Think of Jeffrey Wigand, the chemist who helped CBS prepare an exposé on Brown & Williamson, only to see CBS cancel the show. (It aired six months later.)
The latest case of a whistle-blower getting buried involves The New York Times. Outraged sources say Times business reporter Kurt Eichenwald had a chance to write a devastating book about Archer Daniels Midland, the agricultural giant that bills itself the "Supermarket to the World." He could have sided with Mark Whitacre, the whistle-blower whose taped conversations with ADM execs led the company to plead guilty to a worldwide price-fixing scheme in 1996.
But instead of scrutinizing ADM's efforts to minimize fallout from the scandal, Eichenwald painted Whitacre as a crazy guy whose crimes were more compelling than those of his employer. Published in 2000 by Broadway Books, Eichenwald's The Informant was widely praised as a legal thriller and is now headed for the silver screen.
The complaints come from David Hoech ("hake"), a crusading ADM shareholder who says he was a key source for Eichenwald's book, and from James B. Lieber, a lawyer whose own book about ADM, Rats in the Grain, was published last summer by Four Walls Eight Windows. Granted, critics did not rave about Lieber's writing style. But Lieber calls The Informant "about as pro-government as you can get," and Hoech believes the Times reporter sided too readily with the government and with Williams & Connolly, the law firm that represented ADM during the price-fixing investigation. Hoech even claims to have a smoking gun to prove it.
Hoech believes Eichenwald's book downplays key elements of the case, including the unusually lenient terms of ADM's 1996 settlement with the government, which allowed the company to keep $83.5 million in USDA contracts. The book also glosses over an unorthodox 1999 decision that sentenced two ADM execs to a mere two years each for price-fixingwhile putting Whitacre away for more than 10 years, on a variety of charges.
But that's not all. Hoech says Eichenwald is "dirty from head to toe," the kind of reporter who plays one side against the other. In 1995-96, during the Justice Department's investigation of ADM, Hoech emerged as a key source, because he had been writing a pseudonymous newsletter to ADM shareholders that chronicled the offensive behavior of company execs. He shared evidence freely with Eichenwald and others who were covering the case. But while he liked many reporters, Hoech suspected Eichenwald of "funneling" documents to Williams & Connolly as early as spring 1996.
Hoech's "smoking gun" surfaced on September 18, 1996, when ADM lawyers received a copy of a business letter from Mark Whitacre that bore the fax number 212-556-4007, a number then used by Eichenwald at the Times. While the content of the smoking-gun letter was innocuous (it merely announced that Whitacre was leaving Illinois), the letter proved immensely valuable to ADM.
A day later, ADM lawyers sued Whitacre for embezzling, a development that Eichenwald reported in the Times. Six weeks later, ADM moved to keep the case in state courtciting Whitacre's letter as Exhibit A.
In general, there's no law that says a reporter cannot provide information to sources on either side of a legal dispute. But such behavior is frowned upon because it appears to compromise one's objectivity. Remember the stink Steve Brill raised over reporters who were suspected of working as informants for Ken Starr?
The Times clearly endorses the principle of objectivity, because from 1996 until now, the company has hotly denied the notion that Eichenwald faxed the Whitacre letter in 1996. But their denials are strange. According to Hoech, on the same day Whitacre's lawyers received a copy of the letter with the telltale New York Times fax number on it, ADM lawyers filed another in its place, with the "556-4007" blacked out. In November 1996, after learning of the telltale fax number, Hoech called Eichenwald to discuss it.
"That's bullshit!" Eichenwald told Hoech in a taped phone call. "You're fucking lying and it pisses me off. . . . I have never seen this fucking letter." The reporter claimed that the number was used only for incoming faxes at the Times, then said, "Somebody is setting me up. So is the belief now that I am faxing things to ADM?"
Hoech did not find the response satisfactory. He proceeded to write letters to a Times business editor and to Gene Roberts, then managing editor of the Times. On December 17, 1996, Hoech received a letter from Times lawyer Adam Liptak, who flatly denied that the letter came from the Times.
The story of the telltale fax made its way into Lieber's book. Last July, a month before the book was published, Four Walls Eight Windows received a letter from Liptak demanding a retraction. Based on the following "proof," Liptak insisted that the fax number had been forged: (1) The number belongs to a Times fax that "does not send outgoing faxes." (2) Times faxes that do send outgoing faxes "do not print fax telltales." (3) The phone bill for "the month in question" shows no outgoing calls from 556-4007. (4) The font in which the telltale fax is printed is not commonly used by fax machines, but is the default font for Microsoft Word. Eichenwald calls the document a "forgery" as well.
The controversy surfaced again last week, when Four Walls Eight Windows publisher John Oakes told Corporate Crime Reporter that he has no intention of deleting the offending passage from the paperback edition of Lieber's book. Times managing editor Bill Keller has not responded to dozens of letters from Hoech. While Oakes sees the Times' demand for a retraction as "a blatant attempt at intimidation," Hoech hears the inescapable pounding of a guilty heart.
"When big business and the media are in bed together, you have chaos, and the rule of law doesn't exist," says Hoech, who is given to rhetorical flights of fancy.
Eichenwald declined to comment, and Keller did not respond to repeated calls.
Get the This Week's Top Stories Newsletter