Panel Discussion: Business and Economics

May 1999

Business and Economics Raise Special Problems

Paul Solman, Reporter, The NewsHour With Jim Lehrer, Moderator

We've been talking about this among ourselves - and maybe everybody thinks this, but we think we know it better than other people - that this is a unique beat. It is not more unique, surely, than nonprofits, as we've learned last year and again here today, but there are unique problems with regard to sourcing implicit in what we do.

Now, in terms of what I do, there are two kinds of problems with sources, even though I don't investigate in the terms we've been talking about today, but explain. One is in the nature of TV itself, and I separate that into physiology and egomania. The second is the nature of the beat itself, the business and economics beat, and that's what we're going to be talking about.

Necessity to Pause and Think

Byron Acohido,

Reporter, The Seattle Times

[A 1977 graduate of the University of Oregon School of Journalism, Acohido worked at the Everett, Wash., Herald and The Dallas Times Herald before joining The Seattle Times in 1987.

[Specializing in aviation safety since 1988, he began tracking problems with the Boeing 737 rudder controls after a 737 crashed in Colorado Springs in 1991. He intensified his focus after a similar crash in Pittsburgh in 1994.

[Cultivating insider sources, scouring public documents and amassing aviation databases, Acohido wrote some 60 breaking news stories about 737 rudder problems leading up to a five-part series, Safety at Issue: the 737, published Oct. 27-31, 1996.

[The series described the interplay between lax government oversight and aggressive corporate legal maneuvers during investigations into several similar crashes and near crashes. Less than 24 hours after the series was published, Boeing admitted for the first time finding a serious problem with the 737's rudder system, and subsequently announced plans to make improvements to the world-wide fleet of 737s.

[The Times received scores of letters and email expressing appreciation for the series. A Seattle reader, Ruth Boggs Matthews, commented: "This is journalism at its highest level, and sadly, its rarest. You wrote the truth . . . disregarding the hazards and vulnerability of confronting both the giant Boeing and the FAA."

[Acohido's peers agreed honoring the 737 series with 11 journalism awards including the Pulitzer Prize for Beat Reporting, the George L. Polk Award for Transportation Reporting, the Worth Bingham Prize for Investigative Reporting, the Selden Ring Award for Investigative Reporting, the Headliners Award for Public Service and The Associated Press Managing Editors Award for Public Service.

[After taking a year-long sabbatical to teach journalism at the University of Alaska Anchorage, Acohido returned to The Times in June 1998 and joined the newspaper's special projects team. He now writes about corporations and technology.]

I'd like to talk about something I heard Murrey Marder mention last night, and I think it ties in to all the themes we've heard so far today. We're dealing in a complicated society and we're trying to cover complicated sources under deadline and competitive pressures, and what Murrey said that really rings true is that the best thing we can do is to pause and think. I'm a believer in public service journalism, in serving the readers, and my belief is that what we can bring to bear on behalf of the readers is our intelligence, the ability to sift all this stuff and at the end of the day connect the dots and help the readers make sense of it.

I have been a business reporter since about the mid-'80’s, after doing virtually everything else, and the last 10 years or so, most of my time has been spent on covering a large corporation, the Boeing Company, as a business reporter, and a big slice of that has been on the product liability side, product safety side. I didn't design it that way, it just turned out that way.

The nut of that story really is sort of a recurring theme, it's the same story over and over. It's basically the interplay of a powerful amoral corporate force manipulating a pliable government watchdog agency. So what I thought I'd do today to stir things up a little bit is focus on one specific case.

Focusing on Flight 800 Crash

For your assistance in following the comments of the speakers, you may open a chronology of the coverage of Flight 800 in a separate browser window by clicking here.

The point of looking at this TWA 800 coverage, which I really don't think has been workshopped enough, or not at all at any of our own trade press, is how do we avoid getting sucked into this dynamic or this corporate force which is powerful and smart and very motivated to manipulate whatever it can.

First of all, it manipulates the government agency that is supposed to be the public's watchdog, and along the way if we're not vigilant we get manipulated as well.

What are the things we can do to avoid that? We've talked about them over and over today - seek out the stakeholders involved; try and use experts; the people affected directly by whatever issue you're covering; seek out the plaintiff lawyers. Even though those guys have a bad rep, I think they're motivated properly a lot of times and they're striving for the small guy, usually, and they're working on a commission basis, and a lot of them are smart, a lot of them are doing the same thing we're doing, trying to connect the dots to get to a point.

Tap Internet, Use the Technology

Another thing we can do is make use of the powerful technology that's available to us and tap into the Internet and E-mail and all this stuff, and look at the historical record. Take the time to pause and check the clips, check the developing coverage, see what doesn't make sense and what does make sense, and try to figure out where you want to go next.

I've done that increasingly. We have these hard drives where you can stack six years' worth of work, or more. Divide up your files and log all the stories that everybody publishes chronologically, or whatever system works for you, so that you get this feel of what is out there, because what happens is if you're not aware of that, then it's like quicksand, the corporate forces and different agendas take over again. It's amazing how the press will repeat spin. I think this TWA case is a really good example of how powerful these forces are, and how we've got to be aware of it.

The reason I did this chronology is I think it'll keep us on track and show you quickly what happened with this coverage. I got sent out to East Moriches the night of the crash and got there the next morning. It was a big media circus, one of the biggest ones I've ever been around. What was important when I got there was what I didn't know. I didn't figure this out till later, but what I did not know is a lot about the 747 aircraft. I knew about all the weaknesses that have been written about it. I wrote about a lot of them, about its weak cargo door lock, the weak fuse pins on the engine, the weak structural members. So I knew a whole bunch of stuff of what possibly could have come into play but I knew nothing about fuel tanks. I never had any reason to write about fuel tanks.

How Fed Rivalry Affects Coverage

The other thing I didn't know that turned out to be a key is that I knew very little about the FBI and about FBI politics. I did not know, for instance, that at that point in time the FBI was reeling from a Time magazine story that basically raked its lab services over the coals for screwing up the evidence on the Oklahoma City bombing of the year before, and of course the Atlanta Olympics were just on the horizon. So there was this heightened awareness about possible terrorist activities which the FBI was keying in on, and at that point in time looking for a way to exploit that to help improve its image.

So when I got to the scene it was really interesting. What happened was James Kallstrom, the head of the New York Bureau of the FBI, took command of the scene. Legally he's not supposed to do that, it's supposed to be the National Transportation Safety Board, except if it's a criminal investigation, but they had no proof of that.

So he just instantly cast this image that they didn't know, but it probably was a terrorist activity, a bomb, and started making statements that were like, "We don't know what it is, but if it was a terrorist, we will get that dirty son of a bitch," stuff like that.

FBI Linked to Times, NTSB to Washington Post

Really, I don't have it in hard evidence, but I think this chronology shows you…maybe you can read between the lines. I think what happened was over the course of the next year the FBI, the New York Office, through James Kallstrom - took The New York Times on this background-only basis to float trial balloons and to manipulate coverage for its agenda. Whereas the NTSB took Don Phillips - well, he didn't have to take him, he's been covering them for years - of The Washington Post under wing and was battling with the FBI.

So they had these different agendas for different reasons, wanting to put out different spins, and what happened was really amazing. With these two leading publications chasing these two competing spins, that drove the coverage.

Meanwhile, here I am off on the wrong coast trying to ask different questions that made sense, trying to think about this stuff. The first thing I asked was, "Orange fireball, Lockerbie, what's up with that?" At that point, first of all, I went to seek experts who knew this stuff who were one level of independence detached from this, and found out that orange glows, which were established, didn't happen when you blew up aircraft. In fact, at Lockerbie, there was no orange glow, it broke the arc raft structurally and then it hit the ground. You have to ignite fuel to get this orange glow.

Editors Needed Pushing

So I had to push against the editors who wanted to run the wire stuff up high and not mention this, because nobody was talking about fuel tanks. But I did, with my editor's help, three days later, get a lead that said orange flames are more consistent with fuel tank blasts.

As a result that led to me other sources who helped me run with a string of stories about another crash similar to that, and I broke the story about this Iranian aircraft that actually was a sister aircraft that blew up 20 years earlier. We ran with that for a while. In the end it wasn't on target but it was in the right direction.

But right away, right at the scene, right there, I knew you would see these red herrings and I always wondered - every crash is like this, you see these red herrings. My theory - and I'm not a subscriber to conspiracies, but it happens every crash - you get these red herrings and the only people that benefit by these red herrings is the corporation.

And here they are. They show up. July 26th, wrong information. Some source tells AP there's only a 5 to 10 percent chance that the sound recorded at the scene was structural breakup. That's going to be proven wrong.

Boeing Plants a Falsehood

Then July 27th, unnamed source tells The Washington Post the center tank was 20 degrees too cool. That's Boeing all the way, that's their corporate product liability lawyers. That's wrong, dead wrong. They know that's wrong, but they still plant it.

July 29th, here's a glimmer of truth. Aviation Week, which is the trade bible of the industry - here's what Av Week did, I could have done this, I kick myself. They went and looked at the British report on Lockerbie and actually read the thing, and you can do that right now, I could have done it the day after. It's on the Internet. It's AAIB, which is the equivalent of the FAA in Britain. They have a nice web site, they have the reports all logged in there, you can download with pictures and everything, it takes you right down to what they said about the recording, and guess what? The recording was nothing - the last sound wasn't a bomb, it was the structure breaking up and it was similar to the sound that blew up over East Moriches.

August 9th, a few weeks later, we get around to pulling together the story about everything else that is wrong with this aircraft historically, and a lot of these things were right in the area where the breakup was happening, so that's legitimate, and we just sort of walked through all those possibilities.

Bomb, Bomb, Bomb, Wrong, Wrong, Wrong

August 9th, New York Times. Now here we go, here's where the FBI is getting fed this corporate stuff - my theory - but where else is it going to come from? On that point there, why would the New York Times not be more insistent about checking this stuff out? I don't know. Competitive pressures? Laziness? I don't know. But this is one of a series of things that happened.

They report that this debris that was picked up bolsters this bomb theory, and if anybody was in New York - I was tracking this stuff every day, it was bomb, bomb, bomb, every story was about this bomb for months, which turned out wrong.

Then slowly the truth starts sifting to the top and Av Week reports there was lack of cratering or melting parts. Bombs leave very distinctive evidence, and I soon found that out, and none of this distinctive evidence was turning up.

Meanwhile, Don Phillips at The Post was getting fed the spin from the NTSB, but Don - I know him well because we meet at all these crash sites, I talk to him from time to time and he did the responsible thing; he put it in context. He balanced it out, and you'll see when we flip this page over how this thing climaxed into this ridiculous coverage.

August 21, another thing I did, and you can do this over and over again, was to go to the documents, the records that are out there, the historical records, and as the fuel tank became more and more of a likely thing, I went in and checked the records for fuel tank problems, and I found years of stuff. It didn't surprise me because I've done this over and over. They were fixing leaks in fuel tanks, these fuel tanks were susceptible to blowing up and susceptible to ignition sources.

Traces of Explosive Device Found?

Now, here's the first of two really outrageous things on this coverage - August 23, 1996, a decision somewhere is made to leak this stuff. What happened, I'm deducing, is the FBI and the NTSB got this piece of evidence that was crucial and they decided, okay, no one will get a heads-up on this lead, we'll both announce it. So the NTSB, background source, leaked it to Don Phillips at the same time Kallstrom and the FBI leaked it to The New York Times. Actually The New York Times had a team working on this.

This is The Post: "Washington - A tiny trace of a chemical associated with plastic explosives has been found in the wreckage of TWA Flight 800, law enforcement sources confirmed last night. But the discovery was 'not enough to say there had been an explosive device' aboard the plane…"

The New York Times, exact same information: "After a prolonged, confounding search of the ocean floor, investigators have finally found scientific evidence that an explosive device was detonated inside the passenger cabin of Trans World Airlines Flight 800, senior federal officials said."

They're talking about the same evidence, they're talking about traces of nitrate found on scattered pieces of metal from different parts of the fuselage.

Well, interestingly, on our coast where we picked it up, we picked up The Post story and ran it and our competition picked up The New York Times and ran it. It was amazing.

September 3, the AP comes in and - well, here's Boeing not even leaking the stuff, being up front about it, asserting that any vapor explosion could not have been powerful enough to tear the airplane apart. Wrong.

Then here we go, September 21, The LA Times. I don't know how they got this story, but all this information about traces of bomb, no traces of bomb, oh, finally traces of bomb, so it must be a bomb. Remember now, you had a couple hundred of the top federal agents investigating this thing for three months, and this had slipped by everybody until The LA Times got this piece of information, that a few weeks, I think it was, before the disaster, they had used the plane on an exercise for explosive-sniffing dogs, so that explained why this scattered traces of nitrate had been around the airplane. This piece of information escaped everybody while The Times is going with this bomb theory.

Then Av Week on the 23rd comes in with a little more of a glimmer of truth about the - in reality, after they checked it out, [they found that] the remnant fuel in there could cause an explosion, a very big explosion. On October 21, Av Week got a leak about this test they did when they ran the air conditioning pack under the aircraft for the same amount of time this plane was sitting on the tarmac at JFK and found out - guess what? With the remnant amount of fuel and the air conditioning packs running for two hours, you heat the remnant and fuel enough above the flash point, to where all you need is a milli-joule of spark. You could, like that, and it would ignite.

So the story we heard earlier was wrong, again. This is not real hard science, this is stuff that somebody was trying to obscure for as long as possible.

More and More It Looked Like an Accident

March 10th through March 14th. This was an amazing week. When I saw this week unfold I kind of knew what was happening. I knew that they had gotten most of the aircraft out of the ocean and that more and more they were focusing in. They were piecing the center tank together and it was more and more looking like an accidental explosion in the fuel tank. Something ignited these hot vapors.

That week, in fact, the chairman of the NTSB was scheduled to testify before Congress about the general danger of this stuff happening on all aircraft, and about some recommendations that the NTSB were working up what airlines could do. It would cost money but would make the aircraft less susceptible to blowing up, the fuel tanks blowing up.

That same week, Av Week decides to run, rehash really, an account of the National Guard helicopter pilots who had a view of this aircraft. This is old news, but they rehashed it in great detail, about this white flash this ex-Vietnam pilot saw, that may or may not have been a rocket streak, may or may not have been burning aluminum falling away from the airplane when people bothered to look because of this flash in the sky.

Now, Pierre Salinger, who was the press secretary for JFK, former ABC News man, had already discredited himself back on November 8th. Two weeks after the crash a retired Pan Am pilot with a lot of time concocted a conspiracy theory and floated it on the Internet. It got vetted, everything added to his conspiracy theory.

But somebody printed that out months, months later, November 8th, and in secrecy handed it to Pierre Salinger when he was in his cups in a cafe in Paris. [laughter] He held a press conference, and Reuters and people ran with it, and it took a couple days for people to figure out it was the same thing that was vetted.

Salinger Won’t Give Up

Now, he's not done. The same week the NTSB chairman is scheduled to address Congress, he holds another press conference. It turns out this same guy somehow gets this radar tape, supposedly, that tracked this stuff that had a mysterious missing thing on the bottom that is explainable. So now he has a press conference and floats this information in Paris Match and puts it on the web.

The third thing that happened is this guy who just went through this trial in New York. He gets seat fabric and waves it around saying, "Here is evidence of a bomb." Well, the chemicals, magnesium, whatever it is, that's on the seat fabric is the same thing as used in seat fabric glue, but he didn't mention that.

How did these pieces of evidence get out there? Who's floating this stuff in a closed FBI investigation?

In the same week guess who reported on [NTSB Chairman] Jim Hall report to Congress? We didn't even report on it. It didn't even surface. I went back and found it on Bloomberg. They reported on it, and nobody ran with it.

Follow the Money Trail

Like I said, I don't believe in conspiracies, but this is a case that if you look at who has the motivation to do what and you follow the money, you see people getting manipulated. A lot of this, the point for us with sources is that this kind of stuff shouldn't have happened this late in the game. If people would just track what's being written, go into other web sites where you can get information that helps you piece together what the truth is more likely to be, we would better serve readers and preserve our credibility.

May 11th, I was driving toward the story that was finally told in detail. Here is the sequence of events and the logical evidence that adds up, and there was a lot of logical evidence that added up that showed the center fuel tank blew up.

Q.& A.

Why Was Salinger Taken In?

Solman - I have a couple questions. One is, why do you think Salinger, not why did he, if he was in his cups, perhaps it's understandable, and if he was in Paris in his cups, perhaps more understandable, but why he went with this, but how did he become for a while - I know from my own just casual perusal as a consumer of this information - the source on this story?

Acohido - Again, we could have checked this out. It turned out that Pierre Salinger had a known susceptibility to being manipulated like this. In none other than Pan Am Lockerbie 103, if you went back and checked the clips you'd see he played the same role in Pan Am 103, when the conspiracy theory came up about the CIA connection and this, that and the other, and him having a plant and this guy, it wasn't in Germany, it was in Africa. He somehow was manipulated to be the source for that, which was discredited later.

A Boeing-Salinger Link?

Solman - You keep alluding to the possibility, probability, I don't know what the right word is, of Boeing being behind lots of these leaks. You keep saying you don't subscribe to a conspiracy theory here; do you think Boeing for example played a role with respect to Salinger?

Acohido - I don't have any proof of that. I don't have any evidence.

Solman - You're sounding like a source.

Acohido - Another thing I'm saying is I've seen this happen over and over and over again. The last three crashes of 737 rudders, two of the crashes, they should have had flight data recorders with sophisticated evidence that would have shown exactly whether that rudder screwed up not. This is like the 32nd crash this decade of these airplanes, including Ron Brown's crash. The last two, one in Indonesia, and now one in Turkey a month ago, the tapes turn up destroyed, or unusable. And it's not just that aircraft. I could go on and on. It's all sorts of weird stuff happening, and the corporations play hardball. It might not be the corporate guys, they may just look the other way, but it's the defense attorney guys, really. They're not above setting up sub rosa espionage groups that are insulated from the company. I'm starting to sound like a conspiracy theorist.

Conspiracy a Possibility

Solman - I guess [the question] - and you're scaring the hell out of me [laughter] is what's happening here. I'm sure I speak for many of us in the audience. I hate to press this point but I'm sitting here and I'm the moderator, so I guess I can. Do you actually think that there's a real likelihood that that's what's going on in these situations when these tapes don't turn up?

Acohido - I think it's a possibility, yeah. Why not? There's multibillions at stake.

Solman - As we've gone through the day, the first panel was "government hates us," and then we find out why the Army hates us, and then we find out why nonprofits hate us. You can imagine why business hates us. And we've all on this beat experienced that.

White-Collar Crime Is the Beat

James McNair

Reporter, The Miami Herald.

 

[In my current position at the Miami Herald, I cover most of the large corporations in South Florida with more than $1 billion in revenue, as well as white-collar crime. The latter portion of this beat mainly involves investment scams of a wide variety, including penny stock scams, commodity futures scams, Internet-related scams, infomercial scams, newsletter scams, sweepstakes scams, consulting scams and psychic hotline scams. I've also had occasion to write about sleazy multi-level-marketing companies, call centers that treated their employees like automatons, and promoters who solicited money for one business scheme or another but used it to subsidize their lifestyles and hid the rest offshore until the heat died down.

[I joined the Herald in 1989 and covered high-tech companies in the region for seven years, along with financial frauds as they came along.

[I have been a reporter for 21 years. My first job after graduating from the University of Kentucky in 1978 was with the Coalfield Progress, a semi-weekly in Norton, Va. After that, I drifted to the Kingsport (Tenn.) Times-News, the Danville (Va.) Register (where I became a business writer in 1984), the Palm Beach Post and the Fort Lauderdale Sun-Sentinel.

[I was told that I had won a first-place prize for investigative reporting from UPI in 1982, but never received any proof. After several fruitless calls to UPI, I settled for a UPI clipping of the alleged act of journalistic distinction.]

It is fun covering this white-collar crime beat. South Florida seems to be the place for that kind of thing, although you see these Internet scams emanate from all over the country now.

I think South Florida's just a place where people want to live after they've ripped off everybody in New York [laughter] and Pennsylvania, and wherever else, and they take their ill-gotten gains and buy a half-million-dollar house in Boca Raton, they're not paying any state income taxes, and the regulators down there and the FBI and the U.S. Attorney's Office are too busy keeping up with drug smugglers and public corruption and immigration violations. They've just got their hands full, they haven't got the time to deal with these white-collar criminals, and I think the white-collar criminals know it. So they're having a field day, and there I am.

I don't wait for law enforcement to take any action against these companies. You read about them on stock message boards on the Internet, you see their infomercials on TV late at night, investment opportunities in the classified ads. Invariably, these companies will take to the PR wire and put out press releases that sound pretty impressive, but then you take a hard look at these companies and they're penny stocks and there's really nothing there. Then you do a little research on the president and you find out he was booted out of the securities industry in New York, or some other state.

So it's a lot of fun and it kind of breaks up the monotony to cover these kinds of companies.

No Obligation to Talk to the Press

But getting on point, as to sources, I'd love to have the dilemma of being chummy with sources, because unlike most of you other reporters who cover government, we business writers don't hear enough from sources other than the corporation or what moves on the news wires. It's in part because corporations really have no obligations to reporters. You can't walk into a corporation. I know Michael Moore does these lobby interviews at Exxon trying to donate money to them and they send security and he's out of there. We've got no right to set foot on a corporation. They have pretty much put out the word to their executives and their employees that they're not supposed to be talking to the press.

CEO’s have no obligation to talk to the press. How often do we get a CEO? Half of what you read from a CEO in the press, unless you're The Wall Street Journal or The New York Times, is a canned quote. You just can't get the CEO to the phone, you can't ask him tough questions. At annual meetings, the PR people will head you off as you make your way to the CEO. So they play that little game.

This is all unfortunate because I think what we're seeing in the business world now gives occasion for more watchdogging than ever before. When I tap unofficial sources, I try to find out early on what axes people have to grind, whether I'm calling them or they're calling me. We get calls from people who've been ripped off in investment schemes or business deals, or maybe they've been laid off, fired, or mistreated on the job in some way.

More Names Than the Tipsters

If I decide that there's a bigger story there, as in hundreds of investors losing out on a fictitious Internet company or an entire workforce being subjected to extraordinarily harsh working conditions, I try to gather as many names as I can of other investors, customers, or workers so that the story doesn't hinge on the word of one person I spoke with in the first place.

I also look for disciplinary histories of people - lawsuits, judgments, tax liens, bankruptcy filings, government regulatory actions, and I try to find out what happened to people's previous ventures.

This is all common sense. I know you're looking for anecdotes here of reporters walking up to that fine line of taking the bribe or falling under the influence of a corporation. I can't really say that's happened. It's almost disappointing. I should have been offered a bribe by now; I must not be doing it right. [Laughter] But it just hasn't been that overt. We develop a lot of sympathy for people who've been ripped off, people who've been laid off, who are being fined for not doing the right thing in their seven-dollar-an-hour telemarketing jobs.

Checking on the Psychics

One kind of funny example was when I did a big piece on the Psychic Readers Network in Fort Lauderdale. This is the company that runs the 1-800 TV spots late at night, sometimes 30-minute infomercials if you stay up till 3. This is the number one psychic hotline in the country. They outlasted Dionne Warwick's company, Psychic Friends.

It's a branch of a publicly traded company in New York, so I had access to a lot of financial information. I'm not sure how I got wind of the story, I can't remember now, but the CEO lives in a $3.5 million waterfront house in Fort Lauderdale, so okay, there's a lot of money coming in, and sooner or later I got tapped into the network of psychics. These are mostly women who are working in their homes. They're not employees, they're independent contractors, and they don't know each other. They are working in their homes and their compensation's being squeezed by the company. And they can't strike, they can't organize, they can't protest, except one at a time, and in the meantime the CEO is this barbarian who is abusing them in his weekly pep talks and conference calls with all the psychics around the country.

So as I tap into these people, I get these tales of woe. These poor psychics are just being abused by this guy. They used to make this much money and then they changed the compensation tables and now they're making this much, and then they did it again and they're making less, and they're giving good advice, they're really helping people and they shouldn't be treated like this. Okay, tell me more. Give me some names of other psychics.

The stories started sounding the same and I'm trying to stay independent here, but I want to be nice to these psychics. Every one of them says, "My power is real, they hire a lot of people off the street, but my powers are sincere, I help a lot of people."

Situation Apparently Unchanged

I wrote the story. Maybe I helped their cause, but not really. They're in the same boat. I get E-mail from one or two every now and then and the situation's the same, although the parent company had to take an $18 million write-off on that business because for some reason people quit calling their psychics. The price went from $4.99 a minute to $5.99 a minute and there were all kinds of promises of free minutes that were never delivered and regulators got in and the phone company's quit passing along the charges, and things really went bad for the company that bought that psychic company.

But otherwise, I've been accused of being unfair after the fact on several occasions. I've been accused of conducting a vendetta on behalf of an Iranian businessman who got ripped off by a self-touting franchising expert who never delivered anything to anybody but excuses.

I've been accused of being intimate with a woman who quit her telemarketing job because employees were fined if they forgot to ask certain information on the phone.

I've been accused of making disparaging remarks about a company at a party prior to publishing a negative story on that company.

This was all smoke, post-publication, and that's as close as I ever get to selling out, yet some business reporters never even get that close to those kinds of experiences, until you look at what temptations await business writers in the ordinary course of a day.

This is where I have a problem with the motives of sources. In 15 years on the business desk, I have to say that reporters' independence is under attack constantly by corporations that aim to have news slanted a certain way, if not ignored altogether. The opportunity for payoffs is certainly there. "If you want tickets to a sporting event, no problem, we take reporters to games all the time." "If you need review copies of software, no problem, we'll just put you on the mailing list and you'll get everything we put out." "If you want to take a close look at the corporations, we've got a company shuttle going to North Carolina every day and, hey, the chairman just happens to be going on a dove hunt this week, do you want to go with him? You can join him." Those are some of the more obvious material gains that await a reporter who's going to go bad any day.

But payoffs often arrive in more latent ways and unexpected ways. I remember once that Volvo, out of the blue, I didn't even cover Volvo or auto manufacturing, called me up and asked me if I wanted to test drive some new 740 or 760, for a week. I don't know why, but they were having an event and they wanted some publicity. I took a pass, but one of the sportswriters jumped on that one. [Laughter] It was a pretty good drive.

Cheese and Chocolates for the Press

Another time, Siemens, the big German telecommunications company, commemorated a big contract with Ameritech, the phone company in Chicago, by sending reporters a giant slab of cheddar cheese in the shape of Wisconsin. [Laughter] What can you do? It's couriered there, the courier's gone, there's a slab of cheese sitting there. Hey, everybody, hungry? So we split it up in the office.

W.R. Grace, at their annual meetings in Boca Raton, used to put chocolates on reporters' chairs at the annual meetings, and that was because at that time Grace owned a chocolate factory in Wisconsin - it's where Jeffrey Dahmer worked; they always play that down. So these freebies sitting on the seats were a product demo, sort of related to the business at hand. I think I gave that one away to the office, too. People like me in the office. [Laughter]

But business reporters give away their independence most often without accepting any forms of gratis or goodwill that shows in their stories. These are often nothing more than rewrites of a corporate press release, which is a carefully crafted, heavily lawyered statement notorious for its omissions and distractions.

Emphasis is often placed on so-called operating earnings that don't take into account the cost for plant shutdowns or inventory write-offs that, in my book, have everything to do with operations, but many reporters who are thrust on the business desk without any financial training don't know any better and when corporations speak of rationalization of operations, reporters don't always know to ask how many workers are going to be laid off.

When corporations hire investment bankers who examine options to enhance shareholder value, that item might be buried or omitted in the story when it's probably the lead. The company's for sale.

Which Analysts Are You Quoting?

Some corporations, weary of being at the mercy of a reporter's pen, try to steer reporters to analysts with favorable opinions. This is a new one. Not only that, they lean on the analysts to return the phone call. They know that the reporters have a hard time getting the analyst to the phone, unless again you’re at The Journal or The Times. If The Miami Herald or some other regional calls for an analyst, they typically blow us off. The rate of returned phone calls is very low.

But the corporations want these analysts with buy recommendations to get back to the reporters so they can say something good about the corporation and get its stock price moving, so the corporations lean on the analysts to return the reporters' phone calls. That really hasn't happened yet, though. The analysts just don't really want to talk to us.

Corporations browbeat reporters for calling analysts with negative points of view, and some reporters eager to ensure their continuing access to the company play along, which of course deprives readers of opposing viewpoints necessary to help people decide whether to invest in a company or not.

If anything, business reporters need to thrust themselves more frequently into situations where getting too close to sources is a possibility. I'd love to hear from everybody. The employees, they're so insulated; the shareholders, how do you find a shareholder? How do you find those people?

At a time when many business sections have been dumbed down into how-to manuals for choosing a mutual fund, picking the right computer, and running a small business, American newspapers could stand business reporters who actually leave their offices and develop first-name relationships with sources.

Solman - You see, we do have special problems or opportunities, and it is amazing. Maybe we'll talk a little more about it. If you're in a TV crew, as I've been now for 20-some odd years and you go to a place, an ethical issue that you run into is the issue of seeming to be rude by not taking the T-shirts for your kids. It's like, "Well, we're all friendly, please, take these," and you go, "Wait a second, I don't do that." There are all these gradations and it's an interesting set of issues, I think. At any rate, it's been interesting to try to resist.

For John McQuaid and the Q&A, Turn to Page Two.