At this week’s SAS Financial Services Summit, Pulitzer Prize-winning author and report for The Wall Street Journal, James B. Stewart, discussed his new book, Tangled Webs: How False Statements are Undermining America. In his book, Stewart reveals the consequences of the perjury epidemic in America, the result of an alarming breakdown of ethics comprising the US judicial system, business and our personal lives. His speech was part of a broader conversation at the summit around building the bridge to trust with consumers again in the wake of the economic crisis.
Stewart stated that the common theme that tied the collapse of major institutions together was false statements, both internally within companies and externally to regulators, law enforcement and shareholders. In his research, he was struck not only by the magnitude and consequences of the false statements, but who was making them: top Chief Financial Officers, Chief Risk Officers and lawyers, as well as prominent politicians, sports figures and other celebrities, to name a few.
In their willingness to commit major falsehoods, Stewart started seeing a pattern not only across businesses, but by all kinds of other people at senior levels: Why would these celebrated people risk all they had achieved by lying? It was this mystery that compelled him to write his book: “Lying and consequences are fascinating to me,” he says.
Unfortunately, he had a myriad of subjects to choose from, culling from thousands of high profile examples of false statements and perjury. For his book, he selected four widely publicized examples to illustrate the broad scope of public perjury: Martha Stewart, I. Lewis (“Scooter”) Libby, Barry Bonds and Bernie Madoff.
Each one was at the very pinnacle of their fields and put it all at risk by lying. Stewart notes that “they all ended up being terrible liars – the only thing they were really good at was the brazenness of the lies.” He chose these stories to illustrate the impact of perjury and false statements and the consequences that emanate from the lies. Most importantly, what does it do to impact the public’s confidence in our leaders and role models?
And what happens to the people that get swept up in all of these lies? Other people often end up supporting and enabling the lies. Stewart asks, “Why do law-abiding people do these things?” He brings up an example from the Scooter Libby case (Libby was indicted in 2005 in connection with the investigation of the leak of the covert identity of a CIA operative, allegedly as retaliation for criticism of the intelligence gathering process used to justify the Iraq War) – “Part of it comes from justified retaliation and revenge. They felt they were being unfairly criticized – if lying is the root of criticism against them, it must be okay for them to lie as well.”
In other examples, people often aid and abet the perpetrator because they think they’re doing it to help their company, or they think it’s what their employer wants them to do. Or, even worse, “I know it’s wrong, but everyone else is doing it, so there shouldn’t be a penalty for it,” and finally, loyalty – it’s a very powerful conflicting value that gets in the way of telling the truth. “But loyalty,” says Stewart, “is the code of the prison yard…loyalty seems to only go in one direction, from the weak to the powerful.”
What can be done about this? There are no easy answers – it starts at the top an organization or business. When you conceal behavior it is the opposite of transparency. If you have a code of transparency, then you have to follow it through. “All of us have an extremely important role to play –we all need to take responsibility in telling the truth in our workplace, our families and our communities,” he states. Ultimately, Stewart’s goal is to try to tell stories in an open way, state the facts about and let people draw their own conclusions. “It’s not always easy to tell the truth,” he concludes. “There’s often no reward other than retaining your personal integrity.”
