Seymour Hersh and the dangers of corporate muckraking

By Mark Ames , written on May 28, 2015

From The News Desk

“The Times wasn’t nearly as happy when we went after business wrongdoing as when we were kicking around some slob in government.” — Seymour Hersh
In its original meaning, “muckraking journalism” was all about exposing the awful power that corporations, trusts, and monopolies exercised over people and the broader public interest. So why doesn’t Seymour Hersh, considered the premiere “muckraker” of the past few decades, turn his fearless muckraking guns on private corporate power?

Ida Tarbell dug deep into Rockefeller’s Standard Oil empire and all the ways it exercised a kind of private government tyranny over huge swathes of public life; Tarbell’s work directly influenced the antitrust breakup of Standard Oil in 1911. Upton Sinclair exposed brutality in the meatpacking industry — on its workers, the slaughtered animals, and the diseased, rat-infested meats that eventually wound up in consumers’ homes — leading to the Meat Inspection Act and the Food and Drug Administration. Other muckraking exposés led to state-level child labor and workers’ comp laws, the progressive income tax amendment, and laws placing vast expanses of land and forests under federal protection from rapacious robber barons.

But Hersh and others we today call “muckrakers” focus almost exclusively on taking on government power and the national security state power — not the power of private governments (corporations, oligopolies) that exert so much mundane existential power over our mundane little existences. To the extent that muckrakers today do delve into concentrated private power, it’s usually to expose the influence of corporate money in government, which reinforces the basic operating assumptions today that power is in the hands of public government, and that corporate power is only a problem when it co-opts government power.

The nearly exclusive focus on fighting government power started with the baby boomers in the mid-late 1970s, as they retreated from politics and labor unions, and ditched the sort of university Marxist rhetoric that filled the pages of old Ramparts magazine issues.

There are a lot of reasons for this trend in muckraking journalism over the past few decades, away from fighting private corporate power, in favor of fighting government power — but the most obvious reason of all is the one you won’t hear about much because it’s not very glamorous or heroic: It’s better for your journalism career — and easier — to take on the government leviathan, than it is to take on private corporate power.

The best illustration of this is what happened when Seymour Hersh once tried his hand at corporate muckraking — and failed. The reasons he failed offer important lessons for anyone interested in understanding why investigative journalism chooses to emphasize and amplify some stories over others.

Before getting into the story, it’s important to situate Hersh’s politics back in the 1970s, when he first rose to fame exposing the horrific My Lai massacre and the massive illegal CIA domestic spying programs. Back in the mid-70s, when they were muckraking rivals, Bob Woodward described Hersh as “an old line radical . . . interested more in the abuse of really big power, concentrated power, in the military and international capitalism.” In the New York Times newsroom, editor Abe Rosenthal used to affectionately refer to Hersh as “my little commie.”

In 1975, Hersh was at the very top of his game. As I wrote about earlier this month, Hersh’s bombshell story in the New York Times exposing the massive CIA domestic spying program MH-CHAOS — which the Times dubbed “son of Watergate” — led to an entire year of Congressional committees and White House investigations into US intelligence abuses, followed by a rash of reforms, some serious, some half-baked.

That same year, as Hersh’s colleagues jumped on the muckraking-government bandwagon exposing intel agency abuses (after initially attacking Hersh’s CIA reporting), Hersh himself decided that it was time for a shift — to focus on fighting private corporate power and abuses. As Hersh told NY Times editor Abe Rosenthal:

“The biggest story in the next ten years is going to be corporations.”
After years in Washington, Hersh had moved to New York in 1975 and spent three years there because that's where his wife was going to medical school. Moving from the capital of government power to the capital of capitalism helped focus Hersh on this other source of huge and often unaccountable power: corporations.

In principle, the New York Times agreed with Hersh’s idea — as managing editor Seymour Topping said in 1977,

“There is no reason why we should not scrutinize the private sector as we have government in the Watergate affair.”
But as the Times would find out when they tried this out, it’s a lot more dangerous and tricky to put a bug up private power's ass than government power's.

It started in 1976, when Hersh did a groundbreaking series of articles on perhaps the most powerful (and scary) mob attorney of the 20th century: Sidney Korshak, who served everyone from Al Capone, Sam Giancana and Jimmy Hoffa, to Hollywood-Vegas moguls Lew Wasserman and Kirk Kerkorian. Hersh’s story included allegations that Korshak had planted a camera and a call girl in Senator Estes Kefauver’s hotel room to blackmail him into halting an investigation into the mob, which Kefauver suddenly and unexpectedly did halt; and that many years later, it was thanks to a phone call from Korshak that Al Pacino was released from his MGM contract so that he could play the role of Michael Corleone in Paramount Pictures' The Godfather.

But Korshak was not the type of guy people — journalists — felt comfortable writing about publicly. He once told a former New York Times journalist turned budding film producer,

“Do you know what’s the best insurance policy in the world that absolutely guarantees continued breathing? Silence.”
The ex-journalist, Peter Bart, immediately burned his notes, and went on to a successful career in Hollywood.

So it’s a wonder that Hersh and his collaborator on the Korshak articles, Jeff Gerth (now at ProPublica), didn’t find themselves in the obit pages shortly afterwards, their careers tragically cut short in mysterious car crashes or suicide overdoses. . . .

Instead, Hersh smelled blood: the Korshak articles opened his eyes to a company that was, in the 1970s, the symbol of aggressive, shady corporate power: Gulf & Western. Most people have probably forgotten Gulf & Western, once considered the most aggressively acquisitive conglomerate in the US, so aggressive that even Wall Street nicknamed the company “Engulf & Devour” (immortalized as the evil corporation in Mel Brooks’ “Silent Movie”). G&W's best known subsidiary was Paramount Pictures, which Gulf & Western bought in the mid-1960s during its massive acquisition spree, underwritten by easy money from banking giants Chase Manhattan and Manufacturers Hanover.

Under Gulf & Western, Paramount made some classic films including Chinatown, The Godfather, Airplane!, and Three Days of the Condor. G&W also made the career of future media tycoon Barry Diller, who was named Paramount's CEO and chairman in 1974 and served there for a decade.

Mob attorney Korshak was so integral to Gulf & Western’s Paramount subsidiary, he was known as the film company’s “consigliere,” and rumored to be the model for Robert Duvall's consigliere character in Paramount's "The Godfather." Two years after acquiring Paramount in 1968, G&W pulled off a mind-boggling transaction with notorious Sicilian mafia financier Michele Sindona, who oversaw the mafia’s global heroin money laundering operations, managed the Vatican's global portfolio (earning the nickname "God's banker"), and helped the CIA move money around the globe. Somehow, Gulf & Western managed to exchange reams of worthless commercial paper in a broke subsidiary, Commonwealth United, at a vastly inflated price in exchange for a 10.5% stake in Sindona’s investment empire, Societa General Immobilaire — which was followed by another shady transaction giving half of Paramount Studio’s movie lot to Sindona’s mafia bank. Sindona explained the transaction thus:

“I always sell a company for less than it is worth to someone I want to please.”
In the mid-1970s, Sindona’s investment empire collapsed, triggering what was then the largest US bank failure in history — eventually leading to Sindona's arrest and extradition to Italy, where was poisoned to death with cyanide.

G&W acquired so many companies in its mad buying spree in the late 60s and early 70s that by the time Hersh took the company on, it was the 19th largest employer in the USA. One of its subsidiaries was the Dominican Republic’s sugar monopoly, whose assets included the largest sugar refinery in the world. That made Gulf & Western the largest employer and taxpayer in the Dominican Republic, home to all sorts of American interventions over the years, and led to a scandal in which G&W and the Dominican Republic's central bank secretly helped cook each other's books through illicit transfers.

G&W’s chairman — and Hersh’s nemesis — was Charles Bluhdorn, the “Mad Austrian” and one of the most infamous names in the business world in his day. In the 1990s, years after Bluhdorn's early demise by heart attack, he was described by the New Yorker as “the most ruthless conglomerateur of them all” and “the last of the great business eccentrics.”

But Hersh saw Bluhdorn in less flattering terms, telling his Times editors:

“If your local butcher pulled some of the acts these corporations pulled, he’d be in jail.”
To his editor Abe Rosenthal, Hersh insisted that Gulf & Western would be the Big Business Story of the decade: “I’ve been trying to get into big business stories since coming to NY, and this one is the ultimate,” Hersh wrote in a memo. He believed an exposé on Gulf & Western would “help explain how things work in this nation,” describing G&W as “almost an archetype of what is wrong, or suspected to be wrong, about modern big-time conglomerates,” a company that “grows bigger not by building better products, but by playing the stock market.” Indeed in many ways, the opportunities for fraud and abuse of power that a conglomerate as huge and murky as Gulf & Western were many. And some of its schemes used to hide or transfer losses and inflate earnings by moving assets between subsidiaries, and the ways in which Bluhdorn was able to milk the conglomerate as his own personal ATM machine by commingling personal loans with the conglomerate's banks and its assets foreshadowed some of the fraudulent accounting and bonus schemes used by the big banks in our times, with catastrophic results for the global economy.

This backdrop to Hersh’s one foray into corporate muckraking is explained in Robert Miraldi’s 2012 biography on Hersh.

Hersh’s massive Gulf & Western exposé was published in the Times in 1977 — 13,000 words long, in three parts, revealing a private labyrinth of corporate fraud, abuse, tax avoidance schemes, and mobbed-up malfeasance. And yet — in spite of all the pre-publication hype, the story landed with a whimper. Something Hersh wasn't at all used to. For one thing, the article's language was unusually cautious and dull for a Hersh scoop. As New York magazine quipped,

[T]he general reaction has been a big yawn.

“I expected a lot more explosive stuff,” commented a former G. & W. executive. The reason was pretty straightforward: unlike Hersh’s stories going after the CIA and the military, the Times was far more afraid, and careful, of the consequences of taking on a powerful private company (Gulf & Western) and getting sued out of existence. Unlike Hersh's muckraking stories about illegal CIA spying and military massacres, the Times saddled Hersh with a team of editors and lawyers to vet his reporting, sucking the life out of the piece until it was almost unreadable. Among other things, the Times cut out all the colorful anonymous quotes that made his muckraking bombshells on the CIA (and more recently, on the Osama Bin Laden killing) such memorable reads.

Why? Again, because legally, you can get away with saying much more about government, spy agency, and military abuses without worrying about the legal consequences than you can about private corporations. And the flipside: private corporations have much more legal leeway to go vicious and dirty at a journalist and a publication than the government, which is constrained by the Constitution. It's one of the benefits of contracting government work out to private contractors and agencies — they can legally get away with doing some of the dirty work that the government is barred from doing.

Again, from New York magazine’s postgame commentary:

We hear that the Hersh series may have been toned down considerably by some very tough letters to Times management from Martin Davis, a G. & W. executive vice-president, hinting at legal action.

...The overall impact of the series on the company’s stock was indeed minimal. The G. & W. stock dropped about 1-1/4 points—less than 10 percent in a very sharply declining market. So not only was taking on private sector power more difficult and dangerous — it had far less impact and almost zero payoff for the ego, making it doubly unappealing for a blood-hungry muckraker like Hersh.

Afterwards, Hersh described G&W’s abusive efforts to kill or derail his story as unlike anything he’d ever experienced.

“I’ve never felt such personal animosity in all of my career, and that includes all of the reporting I’ve done [on the CIA and FBI].”
G&W vice president Charles Davis was assigned the role of company front man dealing with Hersh and the Times, and he was savage. He tried to go over Hersh’s head to the Times management and editors, complaining about what he described as Hersh’s “sick, twisted, malicious, hateful tactics.” G&W taped Hersh’s phone calls to them, recording Hersh calling Davis a “son of a bitch” and playing it back to his editors. They also claimed that Hersh had threatened to have them jailed if they didn’t answer his questions. The purpose was to drive a wedge between Hersh and his editors and management. They didn't succeed in getting the story killed; but their relentless attacks did help influence the final flaccid outcome on paper and ensure that down the line, neither Hersh nor the Times had the will to repeat the miserable experience that comes with muckraking a corporate leviathan.

Finally, Hersh and his collaborator Jeff Gerth managed to arrange a sit-down interview with Davis and Gulf & Western lawyers. Afterwards, Hersh told his managing editor that their three hour meeting was “the most distressing interview I’ve had in more than 17 years in the business. These two men repeatedly insulted us and directly threatened us with legal action.” G&W wasn’t afraid of going low and dirty, threatening their families. At a followup meeting a week later between Hersh and G&W’s Davis, Hersh was told that company investigators had dug up “damning evidence” about Gerth’s father. (Shades here of Uber executive Emil Michael’s threats against Pando editor Sarah Lacy’s family.)

They could get away with this, again, because they’re a private company, not the government.

What also made the story so problematic for Hersh was the intense editing and vetting, which he didn’t have to deal with when writing on the CIA or military. From Miraldi’s biography:

[T]he accusations that Hersh made, based on the government probes that were under way, were dense, complicated, tedious, and difficult to follow. Probably the very tight editing by a wary band of editors and lawyers neutered some of the better material. Lee [the Times editor] made the reporters kill anonymous quotes, which Hersh always used to brighten up his stories (and irk Rosenthal).
A Washington Post profile on Hersh in 2001 also describes the problems Hersh faced taking on private power versus government power, saying that the Gulf & Western series,
caused them nothing but grief in the editing process. Part of the problem was that it was about the abuse of private power, a much dicier subject for many editors even than the CIA. “He had a story that were it about a public institution would have been in the paper the first time he wrote it, the first way he wrote it,” Kovach [Hersh’s former New York Times editor] says.
A few weeks after the Gulf & Western series was published, Newsweek published a more serious analysis at the difficulties Hersh and the Times had in doing the story, and how the experience had already turned off both Hersh and the New York Times from repeating anything like it:
The Hersh project provided a case-book study of the problems in investigating corporate affairs. First, the cost is high because of the time and expertise required; Hersh, 40, worked six months on the series with free-lance investigator Jeff Gerth, 32, a former business student. It may also be harder to find leaks in big corporations than in government, and Hersh fell back frequently on government sources.

Actually writing the story can be as much of a hassle as getting it. Many private citizens and businesses are in a stronger position than public officials to sue for damages and apply pressure. A Gulf & Western director repeatedly protested to Times executives about Hersh's investigation while it was going on (his requests for a meeting were turned down), and editing and legal clearance took more than a month. The Times felt obliged to add so much background and legal qualification as to render some readers numb; many newspapers that take the Times news service found the stories too long or dull to run.

Even the appearance of impropriety can prompt a public official to resign, but businessman have rarely been held to that standard of public trust. And stories like Hersh's may not involve such dramatic wrongdoings as payoffs to politicians. And Newsweek interviewed Hersh himself, getting his own despondent thoughts on corporate muckraking in the modern era:

"It's a gray area - what's right, what's wrong, what's established practice," Hersh himself conceded. "I don't know if it was worth the effort, but these are issues people should be thinking about."

...As for the Times, it has started a weekly "enterprise meeting" to coordinate and possibly cut off future investigations, and thus avoid - in Topping's words - "frittering away our resources.” The closest Hersh ever came to anything like corporate muckraking again was his 2001 New Yorker story on Mobil Oil's role in the corrupt world of oil acquisitions in Kazakhstan and the Caspian Sea basin. It was a story about oil geopolitics and third world corruption, not about private corporate power; and yet even even this story, "owing to the complexity of the material, lacked the color and narrative momentum" (quoting the Columbia Journalism Review) of Hersh's blockbuster a year earlier on Gen. Barry McCaffrey's massacre of retreating Iraqi troops in the first Gulf War.

Finally, there's this depressing update from Hersh’s biographer, from an interview he gave last year, on the question of whether reporting on private sector power today is harder or easier than when Hersh tried and failed:

Q: In discussing Hersh’s exposé of Gulf & Western in the 1970s, you talk about the complexity of reporting on business, noting that “disagreement begins…when it comes to [journalism’s] role vis-à-vis the private sector.” In today’s era of government bailouts of private enterprise, Occupy Wall Street, and reduced corporate regulation, do you think that views on business journalism have changed? If Hersh’s Gulf & Western piece were to be published today, do you think modern audiences would be more sympathetic and receptive than his readers were in the 1970s?

A: I suspect the opposite — that the early 1970s was a time when people were more inclined to distrust business. Corporate might is more entrenched today than ever. I don’t know if a publication today would allow a reporter to take apart a modern corporation the way the Times allowed Hersh and Jeff Gerth to go after G&W. It was really quite remarkable. Hersh chose the topic and then went after the company like a prosecutor seeking indictments. He was a brazen foe of GW. No one went to jail after the stories, but the company quickly lost its way and was gobbled up. After that exhausting and brutalizing experience taking on private corporate power, Hersh threw in the towel on the private sector, and spent the next several years working on a scathing book taking down the most powerful "government slob" of the 1970s: Henry Kissinger. And Hersh has been making life hard on "government slobs" ever since — much to the slobs' displeasure, and much to the relief of America's all-powerful corporate tycoons.

[Sources include: Robert Miraldi's biography "Seymour Hersh: Scoop Artist"; Kathryn Olmsted's "Challenging the Secret Government"; "Taking on Big Business," Newsweek, Aug 8, 1977; "The Last Business Eccentric," New Yorker, Dec 16, 1996.]

[Illustration by Brad Jonas for Pando]