Banana peel

Stein, Nicholas

In Cincinnati, an Investigative Story Opens Up a Mystery

What Did a Reporter Know, and How Did He Know It?

Before he joined the Scandals and Controversies section of the 1998 media yearbook, Mike Gallagher was known within the Gannett news organization as a star investigative reporter — ambitious, solid, unafraid of intimidating targets. That’s why Gannett’s Cincinnati Enquirer recruited him to join its staff in 1995; why his bosses indulged him with hundreds of thousands of dollars for an investigation of the business practices of Chiquita Brands International, Inc., a company controlled since the 1970s by Cincinnati’s most powerful corporate figure, Carl Lindner; why they printed his findings – including charges of bribery, environmental recklessness, schemes to evade land and labor laws – on May 3 in a flashy, eighteen-page special section (at left) with the headline CHIQUITA SECRETS REVEALED across the front; and why Enquirer editor Lawrence Beaupre endorsed the package with a glowing editor’s note that praised its “thorough reporting.” The Enquirer expected the Chiquita stories to catapult it out of journalistic obscurity – to complete the paper’s metamorphosis from middling corporate protector to purveyor of a journalism worthy of the ultimate accolade, the Pulitzer Prize. Less than two months later, the star had become a pariah. On Sunday, June 28, Enquirer readers found the words AN APOLOGY TO CHIQUITA sprawled across all six columns of the front page. As anyone within shouting distance of a media outlet now knows, the apology was part of a settlement between Gannett and Chiquita that included a payment of “more than” $10 million (some Gannett insiders put the figure as high as $50 million). It included language charging Gallagher with the “theft” of information “in violation of law.” The settlement removed the threat of litigation against the newspaper and its corporate parent.

Recordings of some 2,000 internal Chiquita voice-mail messages had been a proudly acknowledged source for the Chiquita series when the newspaper believed that they had been provided by a high-level Chiquita employee (the special section was even illustrated with little images of tapes); they became the package’s Achilles’ heel when Chiquita convinced the newspaper that Gallagher himself had taped at least some of them, apparently illegally. As the apology puts it: “Despite [Gallagher’s] assurances to his editors prior to publication that he obtained his information in an ethical and lawful manner, we can no longer trust his word.” He was fired.

On July 2, Chiquita filed suit against Gallagher in federal district court for “defamation, trespass, conversion, violations of state and federal wiretapping laws and other intentional misconduct.” In addition, Gallagher and several other Enquirer employees have been subpoenaed to appear before a grand jury, as part of a joint criminal investigation by the FBI and the Hamilton County, Ohio, Sheriff’s Office.

Although they eventually must answer the civil suit, by mid-August neither Gallagher nor his attorney, Patrick Hanley, had offered their version of events. Nor had Cameron McWhirter and David Wells, Gallagher’s co-author and immediate editor. Editor Beaupre and publisher Harry Whipple won’t answer any substantive questions about the series or how it was reported; nor will Gannett. Only Chiquita, the target of the series, is happy to talk.

For a man who has spent his life asking questions, Gallagher has provoked a horde of his own: Did he hack into Chiquita’s voice-mail system? If so, how? Or did someone do it for him, as he has maintained. Was it a mix of the two? Did he lie about the source of the voice-mail tapes, as his editors at the Enquirer now suspect? Is he protecting his sources at great personal cost? Or did he simply find a tempting but unethical method to verify the findings of a lengthy and difficult investigation?

In Cincinnati, Enquirer readers can be forgiven for feeling confused. Staring out from the pages of the special section – the colossal forehead, the deep-set eyes, the chiseled jaw losing ground to the jowls – Gallagher resembles a one-time linebacker. “Mike sees the world as black and white,” says a former co-worker. “He’s sort of like the sheriff in the Wild West going after the bad guys. He is passionate about what he does.”

Even before Chiquita, Gallagher’s aggressive pursuit of stories had involved him in journalistic controversies. In 1986, while at the Lansing State Journal, he wrote a series about prison drug smuggling. According to an article in the Jackson, Michigan, Citizen Patriot (which somebody anonymously faxed to CJR and other news outlets), an FBI probe concluded that Gallagher had “fabricated” an anonymous assistant district attorney who supplied him with information about grand jury evidence. Gallagher argued that the probe consisted only of FBI agents asking U.S. attorneys if they had talked to him. “Obviously, none of them said they did,” he told the Citizen Patriot. His editor, Thomas Callinan, supported him, saying, “We know who the source is. He’s there.” And Callinan continues to back Gallagher on the story today.

In a separate incident in 1987, a woman in the Federal Witness Protection program denied that she had spoken to Gallagher after he quoted her in a story about Jimmy Hoffa’s 1975 disappearance. Gallagher said she was protecting herself, that he had indeed spoken to her.

Later that year Gallagher moved on to Gannett Suburban Newspapers, a group of Gannett dailies and weeklies based in Westchester County, New York. There he covered the “Fatal Attraction” case of Carolyn Warmus, a woman who was eventually convicted of murdering her lover’s wife, and wrote a book about it, Lovers of Deceit.

“Mike is a real strong-willed guy,” says a colleague from Gallagher’s Westchester days. “Fearless as a reporter. Never intimidated. He always had an incredible network. Great sources. He knew how the system worked. Broke many stories for the paper.

“It’s good that he has this personality,” the former colleague adds, “because he needs it now.”

Gallagher had worked with Enquirer editor Larry Beaupre long before they embarked together on the Chiquita adventure. Beaupre had been Gallagher’s executive editor in Westchester and “they were really close,” says the former Westchester colleague. “Larry respected Mike more than anyone in the newsroom.”

In 1995, Beaupre recruited his former employee to join him in Cincinnati. The year before, he had brought in Cameron McWhirter, another Westchester alum, who would become Gallagher’s Chiquita co-author.

Beaupre himself had benefited from past connections, from the network of reporters and editors at the Rochester Times-Union, where he began his career in 1968 as a reporter and rose to managing editor before leaving for Westchester in 1984. Beaupre’s mentor, Phil Currie, a former Times-Union editor, became vice president of Gannett’s news division in 1989, and in 1993, soon after Gannett acquired the Enquirer, named Beaupre its editor. (Five years later, Currie would personally review the Chiquita package before publication.)

“Larry was a good editor – hard charging, but careful,” recalls Patrick Sheeran, city editor of The Union Leader in Manchester, New Hampshire, who worked with Beaupre in both Rochester and Westchester. “Ethics and how to get the story were high on his priority list.”

Though they acknowledge his skill in the newsroom, other colleagues paint a disparaging portrait of Beaupre’s style. ‘There are two kinds of editors, delegators and authoritarians,” says a writer who worked under Beaupre in Westchester.

“Larry was an authoritarian. He liked to oversee everything. He was a good newsman, he knew his stuff. But personalitywise, he was lacking a full set of tires. He would like you one moment and hate you the next.” Adds a former Enquirer editor: “People were afraid of him.”

Yet Beaupre got results. “He improved the newspaper,” says Mike Philipps, metro editor of the rival Cincinnati Post. “He made it a better paper by a factor of ten.”

A year after his arrival, in 1994, Gannett singled out the Enquirer as its most improved paper. And in 1996, after naming Beaupre to its top ten editors list, Gannett awarded the Enquirer top public service honors for uncovering widespread safety and financial problems at the uranium processing plant in Fernald, Ohio. The author of the series was Beaupre’s protege and new recruit Mike Gallagher.

If Beaupre’s Enquirer wanted a symbol of its new independence from Cincinnati’s corporate establishment, taking on Chiquita was a good one. It is difficult to overemphasize the influence of Carl Lindner, his son Keith, who serves under his father at Chiquita, and other Lindner relatives on the city’s political and business landscapes.

Over the last thirty years, the Lindners’ American Financial Corporation the holding company for their 37 percent share in Chiquita, among other assets – has donated more than $60 million to the Cincinnati community.

(The University of Cincinnati’s business school bears Carl Lindner’s name.) Lindner has relocated the corporate headquarters of many of his acquisitions to Cincinnati, including Chiquita, which moved from New York after he became its c.e.o. in 1984. Besides being one of America’s wealthiest men (number 282 on the 1997 Forbes 400 with a net worth of $665 million), Lindner is also one of the country’s largest political contributors. Since 1993, he has donated almost $350,000 to both political parties, giving most heavily to Democrats.

Until recently, Lindner was connected to both the Enquirer and Gannett. He owned the Enquirer, in fact, in the ’60s and ’70s. Even after he sold it in 1975, the paper’s editorial stance continued to mirror his business and personal interests. Lindner was also for a time Gannett’s second-largest shareholder, at 5 percent, right behind the Gannett Foundation. In 1985, Gannett voted to enact anti-takeover measures after reports that Lindner was attempting to increase his share of the company. Thus thwarted, he eventually sold his shares in the late ’80s for a reported $150 million.

Shortly after Beaupre arrived at the Enquirer, he left a calling card with Lindner. The paper conducted a three-month investigation of Lindner’s career, culminating in a series of profiles. The stories reported, among other things, that Lindner and other American Financial officials had been investigated by the Securities and Exchange Commission for manipulating company stock. Though the officials acknowledged no wrongdoing, American Financial had paid the SEC an undisclosed settlement. As a result of the profiles, several of Lindner’s companies, as well as businesses owned by his friends and associates, withdrew their advertising from the Enquirer.

So pervasive is Lindner’s influence on public officials that Hamilton County local prosecutor Joseph Deters recused himself from the criminal investigation of Gallagher because he had received political contributions from Lindner. He appointed special prosecutor Perry Ancona in his stead. The judge presiding over the grand jury, however, failed to follow this example. Despite numerous political contributions from the Lindners, Judge Norbert Nadel used his position as presiding justice to remove the scheduled judge on the docket in favor of himself.

“Welcome to the Chiquita Center. Have a great day,” reads an electric sign in one of the building’s high speed elevators as it glides up to the company’s reception area on the twenty-eighth floor. Bananas are everywhere. On the side table. On the receptionist’s console. A perfectly ripened bunch even sits on the edge of president Steve Warshaw’s desk. Warshaw seems to have difficulty suppressing his glee these days, as he stares from his glass-enclosed corner office across the city to the Cincinnati Enquirer Building.

From that building, Gallagher and McWhirter embarked upon their investigation of Chiquita in May 1997. The story took them from Costa Rica, Honduras, Panama, and the Caribbean to Brussels, Antwerp, Vancouver, New York, and Washington, and finally to the Chiquita Center.

According to Warshaw, Chiquita learned of the paper’s inquiry only in October 1997, after Gallagher had arrived unannounced in Honduras at an interview of Chiquita official Fernando Sanchez by a local journalist. After learning that the Enquirer reporter had asked what Warshaw describes as “pointed questions,” Chiquita hired the Washington law firm Kirkland & Ellis which happens to be Kenneth Starr’s firm – as an intermediary between the company and the Enquirer. The two lawyers who took the case, Tom Yannucci and Jim Basile, have a reputation for challenging the press. In 1993 they represented General Motors when it sued Dateline NBC after a segment that used rigged crash tests of GM trucks; in 1995, they advised tobacco giant Brown & Williamson when 60 Minutes planned to run an interview with whistleblower Jeffrey Wigand.

“When people start asking questions with a negative slant, we have to defend ourselves,” Warshaw explains. Chiquita, he says, began amassing evidence and creating documents “to refute some of the claims implied by [the Enquirer’s] questions.” Chiquita maintains that the Enquirer failed to use much of this material, and these alleged omissions are key to the logic of the company’s defamation suit against Gallagher. “There was clear bias in the selective use of what we provided them,” says Yannucci.

By November, according to Warshaw, Basile, and Yannucci, the questions posed by Gallagher and McWhirter seemed to become rapidly more and more focused. “We kept getting detailed questions that dealt with privileged, attorney-client type information,” says Basile. “Either it was being stolen or someone was breaching a very important responsibility.” Alarmed, Chiquita’s lawyers sent a series of threatening letters to the paper and Gannett warning of possible legal consequences.

The series that was finally published made harsh charges about Chiquita’s conduct in Central America — including misuse of farm chemicals and the ensuing human and environmental damage, possible bribes paid by Chiquita employees to local officials for storage space, and the rough treatment of banana plantation residents (one village that the company wanted shut down was bulldozed after the longtime residents were driven out).

Among the series’s strongest claims was a group of stories – subtitled POWER, MONEY & CONTROL – that charge Chiquita with creating complicated, secret trust structures to avoid landownership and labor laws in several countries. The stories say that some Chiquita employees had concerns about the legality of the structures, quoting one of them anonymously. They also cite a number of internal company documents and letters. One document is a letter, dated March 4, 1992 from a London law firm hired to help set up “thirty independent trusts in the Channel Islands” that, as the letter put it, “will ultimately acquire and hold land in Honduras.” The letter goes on to say, “for the record,” that the firm had not been asked for for advice “with regard to the legality” of the structures.

The group of stories also relies on a single intercepted voice mail from one Chiquita lawyer to another about how to answer the Enquirer’s questions about its ownershop of a farm management company called COBIGUA. “Our strategy,” one of the lawyers says, “is to answer that, first of all, the COBIGUA is not our subsidiary; it’s just one of our [independent] associate producers – wink, wink – because we have to take that position publicly. We cannot possibly admit that COBIGUA is our subsidiary.”

Some other claims in the series, such as the bribery allegation, rely more heavily on voice mail. Beaupre, in his introduction to the series, writes that among the documents backing it up were “more than 2,000 copies of taped voice-mail messages. These were provided by a high-level source who was one of several Chiquita executives with authority over the company’s voice-mail system.”

It is that last sentence — concerning the source of the voice-mail tapes that is central to the mystery in Cincinnati. Not a lot is publicly known. On July 17, The Wall Street Journal reported that Gallagher told Beaupre in October 1997 that he himself had tapped into the system – just once, in order to verify what his source was telling him. According to the Journal’s unnamed sources, “Mr. Beaupre reprimanded[Gallagher] , telling him never to use this method of verification again.” Neither Beaupre nor Harry Whipple, the Enquirer’s publisher, will comment on whether such a conversation took place.

Beaupre refuses to discuss anything about the Chiquita series, claiming he is restricted by the terms of the settlement. “Part of the terms of the settlement is that all questions concerning this topic go through our publisher Harry Whipple,” he says.

Whipple was willing to generally discuss the “painful experience” of being “systematically betrayed” by a reporter. But he refused to discuss the Chiquita story itself, also citing the agreement with Chiquita.

Chiquita insists that Gallagher’s explanation for his sourcing – executives “with authority” over the voice-mail system — can’t be true. As the company’s lawsuit puts it, “There is no systemwide access code” or any “company official who has knowledge of employee passwords” to get into company voicemail boxes. (Some telephone security experts consulted by cJR, however, contend that all voice-mail systems have some kind of master password.)

The company also asserts that its voice-mail system keeps an electronic record of all incoming calls. “The system has a footprint,” says Yannucci. It can “trace the location of calls made to the system to a particular phone number.” Chiquita says once the Enquirer’s story came out, it used that footprint to trace calls made to employees whose voice mails were quoted in the story. The company gets a bit vague about just where the footprints led. It won’t say which “particular phone number” connected the calls in question to Gallagher, or how it could know that he placed any calls himself.

Yannucci and Basile presented their evidence — along with a warning of a possible lawsuit – to the Enquirer’s law firm in Cincinnati, Graydon, Head & Ritchie; Graydon then brought Gannett’s Washington counsel, Robert Bernius of Nixon, Hargrave, Devans & Doyle, into the act.

Gannett was apparently impressed enough to want to quickly cut its potential losses. The deal – in which the chain backed away from its reporter and its big story – was worked out fairly quickly. It was only the wording of the apology that took a bit of time.

Nicholas Stein is CJR’s assistant editor. Additional reporting was provided by Patrick Kiger, a Washington free-lance writer.

Clarification

Waiting for the law - News Analysis