BROOKE GLADSTONE: This month Anchor Books released an anthology that may well be the first of its kind called Best Business Crime Writing of the Year, and oh, what a year it was! Enron, ImClone, Worldcom, Adelphi [sp?], Tyco, Qwest and of course Arthur Andersen - the villains of these tales - were as colorful as their misdeeds. There was Worldcom's churchgoing CEO Bernie Evers and Salomon Smith Barney's Jack Grubman [sp?], the wheeler dealer telecom analyst who was caught touting stocks on television that he knew to be losers. On this program we discussed how and why much of the business press failed to report on the disasters in progress, but there has been a great deal of gripping and clarifying coverage after the fact according to James Surowiecki, business columnist for the New Yorker and editor of Best Business Crime Writing of the Year. He joins me now. James, welcome back to the show.

JAMES SUROWIECKI: Thanks for having me on.

BROOKE GLADSTONE: Well it seemed that the stories, at least in the early part of the '90s, were about profit and innovation, and they were replaced very suddenly by stories of fraud and loss.

JAMES SUROWIECKI: It certainly is the case that in the last year the shift has been pretty immense, both in terms of, obviously, as you said the, the literal kind of stories that are written, but also the tone. I think it's fair to say that in the late '90s there was a, somewhat of a cheerleading tone. The great example of that would be the deification of CEOs as these sort of superhuman beings. And I think in the last year you saw more of a return to a more skeptical and in some ways cynical understanding of what was actually going on.

BROOKE GLADSTONE: Listen, I'm going to ask you to do something really hard here; I'm going to toss your your book--

JAMES SUROWIECKI: Okay-- [BOOK LANDS]

BROOKE GLADSTONE: -- pick out your favorite paragraph.

JAMES SUROWIECKI: [LAUGHS] Of anybody's.

BROOKE GLADSTONE: Yeah!

JAMES SUROWIECKI: All right. Let me see if I can -- okay. This, I don't know if this is my favorite, but this is a good paragraph.

BROOKE GLADSTONE: And who wrote this one?

JAMES SUROWIECKI: Steven Rosenbush [sp?] was the byline and then there were five other Business Week reporters who worked, who worked with.

BROOKE GLADSTONE: And when was it?

JAMES SUROWIECKI:August of 2002. This was a piece called Inside the Telecom Game, and it was a piece that basically drew a picture of Jack Grubman's relationship with all of these different CEOs who were running these tel--different telecom companies.

BROOKE GLADSTONE: Grubman is the Citicorp analyst who--

JAMES SUROWIECKI: Yeah.

BROOKE GLADSTONE: -- got his kids into preschool through some shady dealing.

JAMES SUROWIECKI: Exactly. Can I go ahead?

BROOKE GLADSTONE: Yeah!

JAMES SUROWIECKI:[READING] Grubman's formula for his success was to grow increasingly close to the managers at the telecom companies he was covering. He recruited execs, helped plot strategy and advised on mergers. For example, he helped Bernie Evers launch Worldcom's hostile bid for MCI in 1998 which resulted in a 43 billion dollar acquisition. Rival analysts chafed at Grubman's chumminess with the execs he was covering. He'd get on a company's conference call and just start talking about what he [LAUGHS] thought about the company, says one analyst. We all had questions for the company, and he was asking them "So how about that dinner last night, huh?"

BROOKE GLADSTONE:[LAUGHS] It does tell you a lot. I noticed that you pulled articles from all kinds of sources -- newspapers, weeklies and monthly magazines, even on line publications. Was there anything in particular you found interesting?

JAMES SUROWIECKI: Well, I was hoping that local newspapers would be great sources that would be included in here because you know they would be close to the company, dah dah dah dah dah. And there are a couple of examples of that. There's a great Rocky Mountain News piece about Qwest and then there's this great profile [LAUGHS] of Bernie Evers that ran in the Edmonton Sun because he's from Edmonton which I had not known until, until I read this thing. But it is interesting because in other cases it is very clear that the local paper had in some way cast its lot with the company, so for example a Jackson Ledger or Clarion Ledger, whatever it's called, in Mississippi - there was nothing really substantive about what Worldcom was doing, because it was just they sort of bought the Bernie Evers line in a way.

BROOKE GLADSTONE:And after the truth about Enron came to light, many people as we said criticized the business media for not catching the misdeeds sooner, and you were saying actually in your intro--you were talking about "independent knowers" -"these are institutions whose business it is," and I'm quoting from you, "to distinguish between the trustworthy and the trustworthless" and you talk about accountants and the Better Business Bureau. Can the business media actually function as independent knowers?

JAMES SUROWIECKI: You know someone like Gretchen Morganson [sp?] at the New York Times I think and, and actually Floyd Norris there, there are writers who have clearly sort of staked out an independent position, but it's difficult, I mean because in a strange way the more access you get, the harder it is to write these kinds of pieces almost I think. [BOTH SPEAK AT ONCE]

BROOKE GLADSTONE: Why?

JAMES SUROWIECKI:Well because I think then it becomes a question of loyalty and-- in a sense getting access becomes really essential to the story. Take the old example of, you know, the Wall Street Journal which became so powerful that essentially companies would leak news of mergers to them in advance, but in exchange the Journal would agree not to print the news until -- I mean there you have this very complicated [LAUGHS] relationship--

BROOKE GLADSTONE: Well I don't think it's complicated. It's just plain unethical. [BOTH SPEAK AT ONCE]

JAMES SUROWIECKI: It's just bad. It is. No, you're right -- it is unethical. You're right. It is.

BROOKE GLADSTONE: [LAUGHS] Well--

JAMES SUROWIECKI:But it's sort of a function in a weird way of the Journal's importance. Probably if you look at it, the role of the business media in relation to what it's covering is not historically as adversarial as, as other areas, and maybe not expected to be by the people who are reading their, their-- In some ways, probably business is probably closer -has been closer historically to like sports journalism than, than political journalism.

BROOKE GLADSTONE: Hm! And you think it still will be after all this?

JAMES SUROWIECKI:I think it's going to be better. I think there's no question that it's going to be better. It's easier to sell stories on accounting than it was, and that I think will help. Some people have made reputations and made names for themselves by digging under this stuff. That will help. I mean someone like Chris Byron [sp?], for example, at the New York Post, you know, that's basically his job is to search this stuff out. But I mean the other thing one would hope is that there are going to be fewer of these stories to be done. I mean you know, ideally you're not going to have this book next year. This is -- this should be a one of, basically, but you know, who knows?

BROOKE GLADSTONE: James Surowiecki is a financial columnist for the New Yorker and editor of Best Business Crime Writing of the Year. [MUSIC]