Integrity vs. Temptation
by Mark Lacter
Question: What do you make of the scandal that's unfolding at the Entertainment Industry Development Corp., the little-known agency charged with fast-tracking location permits for movies and TV shows?
a) Much ado about very little.
b) A classic case of what happens when a good idea is poorly executed.
c) Another example of political backscratching.
d) Hollywood finding a way to corrupt anything it touches.
e) Who cares? And by the way, when's the next episode of "American Idol"?
I'm never very good at multiple-choice tests because I usually find plausibility in more than one selection as with the above, where most all the answers might fit (well, "e" is just to make sure you're paying attention).
By Enron standards, what happened at the EIDC is relatively tame stuff. It revolves around one person, agency President Cody Cluff, who according to court papers spent EIDC money as if he were a studio mogul fancy restaurants, Lakers tickets, 100 percent tips and charging his membership to a Beverly Hills cigar club.
The newspapers, of course, are having a field day because it looks so bad. And also because, absent these expenses, the money collected by the EIDC for film permit fees presumably would have been passed onto public coffers.
But there are some slippery double standards to consider starting with the fact that most of the above-mentioned spending is second nature in Hollywood. It's also second nature in the corporate world, most recently revealed in former GE chief Jack Welch's ugly divorce papers. It turns out that the company still provides the now-retired Welch with private jets, box seats for the Yankees and the Metropolitan Opera, condominium fees for an apartment on Central Park West as well as free laundry, dry cleaning and newspaper subscriptions. You would think that a guy who made almost $17 million in 2000, his last full year at General Electric, could afford the $481 it costs each year to get The New York Times delivered.
Let's not just pick on Jack Welch (although it's mighty tempting given his overblown deification) or the by-now familiar bad boys of corporate excess: Tyco's Dennis Kozlowski, Adelphia's John Rigas and WorldCom's Bernie Ebbers. This is an indictment of any executive who somehow believes he or she is entitled to perks and privileges unavailable to common folk.
Still, it should come as no surprise when such attitudes rub off on the littler fish, especially in the case of the EIDC, which is exposed to Hollywood's big-spenders. It also should come as no surprise when the agency's chief hobnobber, Cluff, takes out his EIDC checkbook and contributes $200,000 to the campaigns of the elected officials on the agency's 45-person board (any organization with more than a dozen directors is asking for trouble).
Predictably, there are expressions of outrage and calls for investigation, ironically from those same board members who until last week barely knew what the EIDC did. Cluff will no doubt be the fall guy and maybe deservedly so and the agency itself will be torn down and rebuilt. But you don't fix the problem until you seek its root cause, and in the case of EIDC, as well as Tyco, Enron, Adelphia and the others, it comes down to little, if any, oversight.
Alas, people are inclined to do foolish things when they figure they can get away with it. Insert the specter of checks and balances and suddenly you're looking at a lot of noble souls.
Mark Lacter is editor of the Business Journal.
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