June 20, 2002
The word is out. After a trial that dragged on for six weeks, the Arthur Andersen accounting firm was convicted of obstruction of justice in the Enron debacle. Justice Department investigators exposed important new evidence of Andersen's illegal behavior and how the firm's lucrative relationship with Enron undercut the auditor's legal responsibility to serve as public watchdog for investors. Yet it is more than a little ironic that the prosecution had little to do with Andersen's errant accounting, which, after all, is the heart of the matter. Rather, the firm was prosecuted for trying to hide its guilt. The cover-up is always what gets you.
For reporters trying to get to the bottom of a story, attorneys are often our best sources. That's because lawyers, armed with the power of discovery and of the ability to compel testimony from individuals, can uncover information that the rest of us, including journalists, often can't get to.
But there's an irony here. The courts are just as likely to be where secrets get locked away. That's because lawyers aren't paid to expose the truth. They're out to win cases. If that means gaining an edge by leaking information to reporters, fine. If it means agreeing to keep quiet, signing gag orders, conspiring to keep problems in the dark, well, that's fine too.
In my work, I've repeatedly experienced this schizophrenia. Through lawyers and the courts, I've gotten documents and depositions that on my own I'd have little hope of finding. And just as often I've seen lawsuits and the fear of litigation serve as a barrier to getting at the truth.
Among the companies we examined in "Bigger Than Enron" is Sunbeam, another high-flyer that recently came tumbling down amid an accounting scandal. After several phone conversations, Sunbeam's former general counsel agreed to be interviewed for our show. But the next day he sent me an email backing out. The message began promisingly enough, with this inspiring heading: "Never esteem anything of advantage to you that will require that you break your word or lose your self-respect. Marcus Aurelius." But it was all downhill from there. "I consulted with my attorney yesterday afternoon," the email said, "and based upon his advice, it will not be possible for me to provide you with an interview as we discussed." He then listed several reasons for not being able to share his story with the public, all of which had to do with pending litigation.
And then there was our courtship with Philip Harlow, the Arthur Andersen auditor who had blessed Sunbeam's bad books and has been charged by the SEC with fraud. Mr. Harlow actually initiated contact with us, after he learned that we had been looking for photographs of him for our broadcast. It is usually very hard to convince people in Mr. Harlow's position to answer your phone call, let alone to agree to go on camera. Yet here he was tracking us down. Harlow, who insists he is innocent, eagerly consented to go on camera.
Then he called his lawyers.
The next day, I got a brief letter from Harlow's attorneys. Surprise -- Harlow could not appear due to pending litigation. "Lawyers always get in the way," the lawyers wrote.
Harlow allowed us to film him working, even though his attorneys blocked him from answering any of our questions. As our only primary source on Harlow we were left with legal depositions in which the auditor had been compelled to answer questions from government and shareholder lawyers suing him. These had been kept out of the public eye until USA Today fought and won to force them to be unsealed earlier this year. When we wanted similarly to force the release of the videotapes of these same depositions, we were told by first-amendment advocates we had consulted that it would take a lot more time and money than we had to wrest them free.
And so there we were, engaged in a most awkward dance: Harlow, willing but unable to speak out due to litigation, while we were able to get some insight into what happened only because Harlow had been compelled to talk as part of that very same litigation.
All of this would be no big deal, really, if the only thing at stake here was my own professional frustration. But there's something much more serious going on. We all deserve to know the truth about what corporations and individuals do when those actions bear directly on our health and well-being. If a corporation is defrauding investors, it shouldn't be able to cover that up by quietly paying off victims and their lawyers one at a time. The same goes for a hospital that is harming patients or a company that makes dangerously defective products. It should be a crime to hide these problems. Yet this kind of secrecy is part and parcel of the American legal system.
And therein lies the irony in the Andersen case. Had the firm come clean to the SEC, rather than try to sanitize and shred its own documents, maybe they could have cut a deal, complete with a gag order, and nobody would have been the wiser for it.
Marc Shaffer co-wrote, produced, and directed FRONTLINE's "Bigger Than Enron." An independent documentary producer based in Oakland, Calif., Shaffer's previous FRONTLINE documentary was "Rollover: The Hidden History of the SUV," which aired this past February.
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