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Flashes

A Possible Appearance of Impropriety

The journalist sits at a booth in a Phoenix McDonald's and seethes. He is a reputable and highly decorated reporter for the Millennial Arizona Republic, and he believes his good name has been sullied.

Not that I will tell you his good name. He has agreed to speak about his alleged ethical breach on the condition of anonymity. Based on what he is about to tell me, his bosses at the Republic will surely know who he is. He doesn't care about them. He worries most about how his contacts in the community would react if his name were disclosed.

His job is now on the line, but he is too angry to hold his tongue. So he sneers when he says his superiors have "hung us out to dry."

He is one of 10 newsroom employees who purchased stock in Central Newspapers Incorporated, the Republic'sparent company, after hearing that the company might be for sale. CNI stock has nearly doubled in value since the Republic wrote a Page 1 story on June 8 announcing that the company was indeed on the block. All 10 workers had made the stock buys through their company 401(k) accounts -- wholly transparent acts committed by people who either did so with clear consciences, or with foolhardy naiveté. It was akin to speeding past the police station.

On June 16, Republic executive editor Pam Johnson penned one of those pious Page 2 lectures that disclosed the supposedly nefarious deeds. None of the ethically challenged was named. In her "Letter to Readers," Johnson wrote that the stock acquirers had violated the Republic'sethics policy that forbids workers from profiting from information to which the general public does not have access. She wrote that the six nonmanagement stock traders had had disciplinary letters placed in their personnel files. The four supervisory employees had been suspended without pay, reportedly for as long as 10 weeks.

At least two of the stock traders -- one editor and one top political reporter -- have resigned. Others have retained attorneys.

Even though his name was not published, this reporter feels he has been the victim of "character assassination." People in the newsroom know who the culprits are, he explains, and he has always been held in high esteem there.

The Flash has heard lots of names, too, but aside from those offenders interviewed on condition of anonymity, has not been able to confirm any.

The indignant reporter says he didn't do anything unethical. He did not know that some of his colleagues were reporting on a possible CNI sale, and, in any case, he got no information from those reporters that hadn't been circulating outside the newsroom for some time.

He shows me not one but two letters of "concern," addressed to him and signed by managing editor Julia Wallace. The first is dated June 14, and it indicts him thusly: "After a team of journalists began reporting on rumors that the Arizona Republic might be for sale, you engaged in a transaction involving company stock. That action is a violation of ethics policy and gives the appearance of the conflict of interest.

"We accept your explanation that you did not intend to breach ethics policy. However the fact that the act occurred cannot be undone, and that is the reason this letter of concern is being placed in your employment file."

The second letter is dated June 21, after the reporter had met with Wallace and Johnson to contest facts averred in the first. The second letter presents a divergent set of facts, a clear backpedaling on Wallace's part: "You told us that when you bought the stock, you did not know that this reporting was being done.

"We accept your explanation and have no facts to indicate otherwise. However, the timing of your stock purchase creates a possible appearance of impropriety, and that is the reason this letter is being placed in your permanent file."

No facts to indicate otherwise?

A possible appearance of impropriety?

String him up.

The journalist has a point about the ubiquity of the sale rumor. The Flash keeps hearing that the rumor of a possible CNI sale was planted in the newsroom not from corporate insiders but from New Times. Acting on a tip, a New Times reporter had called a Republic journalist to ask whether it were true that CNI was for sale. Once word of our query made its way to Republic editors, several reporters were assigned on May 26 to work on a story about a possible sale. Although the executives who knew all the facts work in the same building, it took the Republic news staff 13 days -- until June 8 -- to get a piece confirming the rumor into the paper.

So, apparently, Wallace and Johnson believe New Times writers are insiders.

The Flash has spoken with numerous Republic sources who say the sale rumor was openly and widely discussed in the halls, and that many employees also talked loudly about buying stock. Nobody in management spoke up to head them off. However, the reporter tells me that management did draft a memo advising against stock purchases, then declined to distribute it for fear that it would confirm the sales mode and possibly jeopardize a sale. The reporter also claims that one of his colleagues who bought stock did so at the suggestion of a member of the newsroom ethics committee, who even provided a phone number to abet the transaction.

One veteran journalist who did not purchase stock tells me: "The rumor was long-standing enough and rife enough and had been circulated widely . . . . It seems to me that if it's on the street that much . . . then I don't see any ethical problem with doing a trade. It's supposedly your 401(k) money to do with what you please."

Calling from a pay phone, he adds that the rank-and-file news staff "don't consider either the deed (stock purchases) or the handling of it in the same way the company does."

The reporter who bought stock, as well as an editor who bought stock, tell me they were summoned to a meeting with top editors to discuss their purchases -- and disclose whom they had talked with about making those purchases. The reporter described the grilling as "humiliating." The editor, who had been tipped to the nature of the meeting by a colleague who had just sat through one, walked out of the building and tendered his resignation the next day.

"I'll be fucked if I'm going to tell them what I said to anybody else," explains the editor, who characterized the interrogation panel of top editors and a human resources officer variously as "a witch hunt, the third degree, an evidentiary hearing, a star chamber, the House Un-American Activities Committee."

"They were trying to investigate whether we had done anything unethical, and here they were asking us to do something much more unethical, and that's to rat each other out.

". . . The whole thing they tried to hang it on is the ethics code. Well, I worked there for 13 years (mostly as a middle manager), and I've never seen the ethics code."

Every newsroom source the Flash has spoken with believes management is hypocritical in busting journalists on dubious ethics charges while top executives have already made millions on the stock surge and stand to make still more if a sale culminates.

"A pretty strong sentiment in the newsroom is that the gap between the executives -- who would make a great deal of money on this deal -- and the newsroom people is substantial," says a journalist who did not buy stock.

The editor who resigned concedes that hindsight has made his own folly apparent -- yet he blames his superiors for creating an environment that spawned such a scandal. He cites an erosion of morale, shrinking of the news hole and corporate homogenization of what once was a family business. He notes that the leading candidate to acquire CNI appears to be Gannett, publisher of USA Today, which he terms "a wretched news corp."

"I really believe that I had become so cynical about the behavior of upper management . . . that it never occurred to me that there should be a different standard for us," he says. "It never occurred to us that we had become desensitized.

"But now I'm gone, and I'm glad to have that stink blown off."


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