Blogs & Comment

Lies, damned lies, and why we let their tellers off the hook

From Bernie Madoff to Martha Stewart, ‘truthiness’ is an epidemic.

The winter of 2005–06 was a turning point in America’s cultural self-understanding. That fall, the term “truthiness,” coined by Stephen Colbert of The Colbert Report to mock the prevarications of government officials, was instantly incorporated into the popular lexicon, and a panel of distinguished linguists voted it the Word of the Year for 2005. At the same time, a small pamphlet called On Bullshit, by the philosopher Harry Frankfurt, became a surprise international bestseller. Right from its opening sentence (“One of the most salient features of our culture is that there is so much bullshit,”) the book’s message resonated with a public outraged by a rash of corporate scandals and feeling deceived by the failure of American forces to find weapons of mass destruction in Iraq.

Five years on, there can be little doubt that, however you neologize it, “not telling the truth” has become an increasingly common mode of discourse in America. New Yorker business writer James B. Stewart’s latest book is an exploration of a relatively narrow subset of this culture, the lies “told under oath or to investigative and other agencies of the U.S. government” that qualify as perjury.

As Stewart points out, perjury has an awkward status in our legal consciousness. On the one hand, lying under oath has always been seen as a particularly noxious crime, from the biblical prohibition against bearing false witness to the 16th-century common law in England, where perjurers had their tongues cut out. It remains a criminal offense, underwritten by the clichéd courtroom promise to “tell the truth, the whole truth, and nothing but the truth.” Yet, at the same time, perjury is rarely taken seriously, by either law-enforcement officials or the public. It is rarely prosecuted, and when it is, people tend to assume that it’s something of a technicality, a prosecutor’s trick akin to nailing Al Capone on tax evasion.

Yet Stewart—the Pulitzer Prize–winning author of numerous books, including Den of Thieves, about insider trading on Wall Street—believes that perjury is a growing phenomenon, one that “threatens to swamp the legal system and undermine the prosecution of white-collar crime.” He claims that when lying under oath goes unpunished, it does more than simply breed cynicism about a society that purports to be based on the rule of law. As he writes in this book’s portentous final paragraph, “it undermines civilization itself.”

To make his case, Stewart examines four high-profile cases from the past decade—Martha Stewart and the insider trading of ImClone stock; Lewis (Scooter) Libby’s role in outing CIA operative Valerie Plame; Barry Bonds’s association with Balco; and the collapse of Bernard Madoff’s Ponzi scheme. Actually, “examine” is too flimsy a word for what Stewart has accomplished. For this book, he conducted hundreds of interviews and dug his way through thousands of pages of publicly available court transcripts and FBI interviews, and countless other documents obtained through freedom of information requests.

The result is an astoundingly detailed reconstruction of phone calls, meetings, dinner conversations, interviews, depositions and hearings. In the sections on Martha Stewart and Scooter Libby in particular, the author leads the reader through fateful events in something close to real time. Along the way, he manages to break real news—such as the claim that Karl Rove flat-out lied to George W. Bush when the president asked if Rove was the source of the Plame leak. Stewart also has a great sense for the deliciously telling anecdote: after testifying against her boss, Martha Stewart’s assistant Ann Armstrong “was dropped from Stewart’s holiday card and gift list, and subsequently left the company.”

One of the most disturbing aspects of all these stories is the way small initial lies metastasize and spread, consuming more and more lives along the way. Stewart ends each section with a brief “where are they now” recap of what has become of the major players, and it is invariably a roundup of promising careers ruined, fortunes and friendships lost, and reputations shredded. The most tragic, of course, is the suicide of Bernie Madoff’s son Mark, who killed himself on the two-year anniversary of his father’s confession.

In Tangled Webs, James B. Stewart has pulled off a coup of reportage, but it is hard not to feel that he’s become entangled in a web of his own along the way. He has spent so much time with resolute fibbers that it seems to have poisoned his view of human nature. At the least, there is not enough in this book to support the claim that perjury is an epidemic that threatens the foundations of American society. Indeed, what is most striking about these stories is the arbitrariness of the prosecutions, and how disproportionate the consequences are to the crimes. Yes, Martha Stewart’s greasy stockbroker Peter Bacanovic deserved to lose his job, but his young assistant, Doug Faneuil, was as guiltless as it is possible to be, yet he, too, got steamrolled. Meanwhile, Stewart herself served a short sentence and went back to work, while hundreds of millions of dollars in shareholder value was destroyed.

With respect to the Plame affair, Stewart makes it clear that both Karl Rove and Deputy Secretary of State Richard Armitage were at least as culpable as Libby, yet no charges were laid against either man. But while Libby himself never served a day in prison, Judith Miller’s long career at The New York Times came to an inglorious end.

In the book’s finger-wagging conclusion, Stewart says that “the ultimate responsibility for lying rests with the liar.” Fine. But the decision to prosecute people for their lies is a matter of judgment, and it is by no means clear that the relevant officials have always exercised good sense. If anything, Tangled Webs inadvertently confirms the widespread public view of the matter; namely, that a perjury indictment is just the last refuge of a panicky and incompetent prosecution. – A.P.

Executive summaries

JOINT VENTURES: Inside America’s Almost Legal Marijuana Industry (Wiley)
Trish Regan

Anchor of the recent CNBC documentary Marijuana, Inc., Regan claims she’s never once tried the drug, and came to her investigations as a skeptic. For the most part, her exploration of the business behind her country’s booming pot industry is cautiously optimistic about its commercial potential in a decriminalized setting. With the laws banning the drug on shaky legal footing in Ontario and elsewhere, it’s a timely piece of journalism.

Canada gets barely a mention in these pages, however. The focus is predominantly on California and Colorado—Denver, specifically, where in the wake of state legislation accommodating medical marijuana use there’s been a boom in pot dispensaries. Regulatory fees and sales tax on pot purchases are already adding millions to the state’s bottom line, with millions more in expected revenue as the industry grows. Marijuana law-reform advocates suggest that legalized marijuana’s boon to California’s bottom line could be some $14 billion annually, between taxes, fees and savings in enforcement costs. Portugal provides an example of a jurisdiction that’s had success economically and socially by decriminalizing marijuana and other drugs. It’s a useful round-up of the economics of a policy debate that shows no sign of being resolved. – J.T.

CHINNOVATION: How Chinese Innovators Are Changing the World (Wiley)
Yinglan Tan

A prominent Silicon Valley VC once told Tan, a Kauffman Fellow and Nanyang Business School professor, “Chinese people aren’t entrepreneurial! They don’t create things. They’re just good at ripping them off.” The counter-argument to that bit of received wisdom is spread across these 300 pages. Tired of being the world’s factory, innovation is now a buzzword at the highest levels of Chinese business and government.

Tan’s book is both a case study for a western audience of the emerging Chinese approach to innovation and a text on innovation generally—still a concept poorly understood in concrete terms. In the Middle Kingdom, the ongoing struggle is to balance innovation and “low-value reproduction,” both in products and in business practices. In one example, several Chinese entrepreneurs tell Tan that VCs refused to fund them because their business model wasn’t based on a proven American one. The density of China’s human capital, and a cultivated ability to “remix” ideas, combining the best “across sectors and geographies” with intriguing results (such as a supermarket that uses roller-coaster-style cars to take shoppers through the aisles) are creating an environment where those “who do not innovate after copying usually do not survive.”– J.T.

IDEA MAN: A Memoir by the Co-founder of Microsoft (Portfolio Penguin)
Paul Allen

Bill Gates was the most public face of Microsoft, but of course the company started as a partnership with the kid Gates met one day in a group of students crowded around a teletype machine in a Seattle high school. Gates and Allen were kindred spirits from the start, but if both were driven to get under the hood of the earliest computers, Gates was the more strategic thinker, while the title of this memoir best describes Allen’s role in the partnership. And if the two shared an extraordinarily unified vision for their company, they also shared an often fraught relationship.

Allen makes an engaging storyteller, and the book’s best passages capture the thrill of discovery he experienced at the fore of the burgeoning personal computer industry, or the behind-the-scenes tensions inevitable when two teenage friends grow into the twin heads of a multinational corporation. And if the latter half of the book is in some ways the more extraordinary part of the story, dealing with Allen’s life after leaving Microsoft—pro sports franchise owner, private spaceflight pioneer, backer of neuroscientific breakthroughs and multimedia rock ’n’ roll temples—it’s the inside take on Microsoft’s growing pains that will be most tantalizing for business readers. – J.T.