Christie Learned Wrong Lesson From Corporate Whitewashes
It's part of the standard playbook for a major company embroiled in crisis: Hire a big-name law firm to do a not-so-independent investigation, admit a few blemishes but nothing that would cause lasting harm, and declare yourself exonerated. The genre is so tired and cynical -- not to mention a waste of time and money -- it's become a cliche.
So why would a politician bother trying the same trick, if anyone with a pulse can see through it? New Jersey Governor Chris Christie must figure somebody out there will be gullible enough to believe he is blameless for the scandals plaguing his office just because he paid Gibson Dunn & Crutcher more than a $1 million of taxpayer money to say so.
But it would be foolish of him to think the law firm's 360-page report will change many people's minds. Gibson Dunn's attorneys weren't even able to interview the two people they blamed for the lane closings at the George Washington Bridge that unleashed last year's punitive traffic jams in Fort Lee, New Jersey.
There have been too many comically inept corporate self-investigations over the years to count. But here are a few:
Merck & Co. spent $21 million on a 2006 report by the law firm Debevoise & Plimpton that absolved the drugmaker when it came to its painkiller Vioxx. Five years later, Merck paid the federal government almost $1 billion and pleaded guilty to a criminal charge over its marketing and sales of Vioxx, which was pulled from the market in 2004 after a clinical trial found it could cause heart attacks and strokes.
In 2003, WorldCom Inc.'s audit committee released an investigative report by Wilmer Cutler & Pickering that ripped into the company's former executives, directors and auditors. Oddly, the report said nothing about Citigroup Inc. or its Salomon Smith Barney brokerage unit, which was a major underwriter to WorldCom, because Wilmer represented them in litigation by WorldCom investors who accused them of securities-law violations. Citigroup later paid $2.6 billion to settle the claims, which was more than any other defendant in the WorldCom accounting-fraud debacle.
In 2002, HealthSouth Corp. hired Fulbright & Jaworski to investigate its founder and chairman, Richard Scrushy. It found no evidence of wrongdoing and cleared him of insider-trading allegations. Long story short, they missed some stuff. The next year, the Federal Bureau of Investigation raided the company's headquarters and revealed a sweeping accounting fraud. Five former chief financial officers pleaded guilty to crimes, and Scrushy later went to jail on unrelated charges.
More recently, when JPMorgan Chase & Co. issued its own investigative report last year on the London Whale trading scandal, it didn't even mention the Whale's actual name, Bruno Iksil, or the name of almost anyone else who worked in the bank's London-based chief investment office, which produced the $6 billion trading loss. The report also downplayed missteps by JPMorgan's top management in the scandal -- unlike the Senate Permanent Subcommittee on Investigations, which later released its own report skewering former JPMorgan Chief Financial Officer Douglas Braunstein and other senior executives.
Christie's report may well find its way onto this list someday. It isn't a good one to be on, especially for someone who thinks he can be president.
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