A Cover-Up Lasts Forever ... or Until You Get Caught

As I conducted interviews for this book, I also spoke to a couple of white-collar criminals, on condition of anonymity. They are at the other extreme from the invincible executive. Both men had very successful careers—one in government, the other in the insurance and investment business. Both of them went to prison for covering up the frauds of their organizations.

One of them made a statement that sets the tone for our discussion to follow: "A mistake takes only a moment. An admission of that mistake has repercussions that may last for a few weeks. A cover-up lasts for a lifetime, and a conviction brands you and your family forever."

I asked about twenty invincible executives this question: "What are the qualities that cause talented people to fail?" Most of them put this answer at the top of their list: failure to take responsibility for their own actions or actions of their organization. "The mistake they make is not admitting their mistakes," says Lieutenant General John Sams, former commander of the Fifteenth Air Force. "It is not the fact that you made a mistake that is important. It is how you react after you've made the mistake," General Sams adds. Most important, the general concludes, "Don't let someone else be the one who reports your mistakes." If you let others bring your errors to the attention of decision makers, they will perceive you as cowardly and devious. Executives with staying power know that they can survive a mistake if they come clean with it quickly. They also know that they will not survive if they try to cover up a mistake and get caught.

Let's look at history for the proof. President Nixon resigned because he covered up the Watergate scandal. Had he gone public with the information he knew about the 1972 break-in at the head-quarters of the Democratic National Committee, Nixon would have been criticized for a few weeks for not controlling his people better. It would have blown over. He would have probably gone down as one of the best presidents of the twentieth century. President Clinton was impeached because he covered up the affair with an intern. Had the president just admitted the problem, he would have taken some heat, but his legacy would have survived in much better shape.

In 2002, Arthur Andersen imploded not because of the advice it gave Enron, but because it destroyed documents related to that advice—another cover-up. Countless other companies—Columbia Health Care, Global Crossing, etc.—have gone under or taken huge financial hits in the past two years because of accounting or billing scandals. The vast majority of the executives whose careers were ruined by these scandals had no direct role in the shady practices. Rather, they participated in cover-ups once they learned of the practices, and they got caught.

The Waco scandal that consumed conspiracy theorists in the late 1990s arose because FBI agents covered up their use of pyrotechnic tear gas on the Branch Davidians in 1993. The FBI did not cause the fire that killed the Davidians. Rather, the FBI was embarrassed that its agents had used a small amount of pyrotechnic tear gas that supporters of the Davidians might incorrectly claim caused the fire that killed eighty-four people. So certain agents and other officials lied about it for years—to Congress, to lawyers for the Davidians, and to the media—and they lost all credibility when the truth came out. They also seriously damaged the public perception of law enforcement through their pointless and unsuccessful cover-up. Waco Special Counsel John Danforth, an Episcopal priest, put it best in his report to the Justice Department when he said, "The failure to disclose information, more than anything else, is responsible for the loss of public faith. ... The only antidote to public distrust is ... openness and candor. ... Playing it close to the line is not acceptable behavior."

The image of the Catholic Church has been tarnished badly in recent years by a terrible sex scandal. But the news focuses on high-level church officials—some of them cardinals—who knew about the problem and covered it up. The cover-up has ruined the reputations of senior church officials who honored their personal vows but covered up the misdeeds of others. In the minds of many, the cover-up is the most nefarious part of this tragedy.

For these reasons, the invincible executive always comes clean and bounces back. It is simple advice that has saved many careers. And, even more important, as recent corporate scandals attest, the failure to heed this advice has cost hundreds of executives their livelihoods, and many their freedom.