| All in the Family | |
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By Larry Shook |
3/29/2001 |
Part 2
How Stacey and Betsy Cowles compromised their newspaper and the city
How Stacey and Betsy Cowles compromised their newspaper and the city
Crossing a Boundary
How do you save downtown, protect your property values and your newspaper's reputation at the same time? Those were the challenges facing Stacey and Betsy Cowles. Stacey was 32, Betsy, 30 when their father, Spokesman-Review publisher William Cowles 3rd, died unexpectedly while jogging in 1992. For the first time in a century, Washington's second largest city found itself without a mature Cowles patriarch at the helm. Just as suddenly, Stacey and Betsy found themselves responsible for running a daily newspaper and managing several valuable blocks in downtown Spokane, the heart of the Inland Northwest. In 1992, it was a downtown going to seed.
Spokane's last major urban revitalization success, Expo 74, was a team effort. The Expo heroes, in the eyes of many, were the most talented leaders in Spokane's history. That team long ago disappeared. With no mentors to guide them, the Cowles siblings grabbed the reins of leadership, and few fault them for it. It's their methods that became controversial.
By consolidating the considerable influence of their media and downtown real estate interests, Stacey and Betsy Cowles blurred a distinction that troubles observers both inside and outside Cowles companies. Repeatedly, brother and sister made decisions that crossed a boundary between the private business of River Park Square and the ethical responsibilities of Spokane's only daily newspaper.
As The Wall Street Journal noted in its January 8, 1999 story, the Spokesman-Review editorialized in favor of the project, while behind the scenes Stacey Cowles capitalized on his publisher's title to lobby city government. On Spokesman-Review stationery, Mr. Cowles wrote the mayor and city council demanding continued support of the Lincoln Street bridge (originally an integral part of the RPS development). The message was clear to elected officials and city staff: the project would be backed by the power of a daily newspaper to influence public opinion. As the Journal reported, the Cowles family "put its own spin" on River Park Square. Mr. Cowles acknowledged his family's "obvious conflicts."
Betsy Cowles wielded the Spokesman-Review's influence even more questionably. On April 18, 2000, she wrote Mayor John Talbott demanding that the city council honor the pledge of parking meter money to cover shortfalls at the River Park Square garage. Ms. Cowles's letter was written, not on Cowles real estate stationary, but on Cowles Publishing Company letterhead. The implication-that the developer of River Park Square was prepared and able to use the clout of the family's newspaper to support family real estate business-was not lost on Talbott.
"My immediate thought was, here's the Spokesman-Review again leaning on the City of Spokane," said Talbott. "Betsy's offices are in the Spokesman-Review. Talk to her privately, it's in the executive conference room of the Spokesman-Review, right next to Stacey's office.... The Spokesman-Review has been a mouthpiece for River Park Square and the Cowles empire."
Ms. Cowles's understanding of her editorial authority was implied in a memo she circulated last June. When the Camas magazine/KXLY TV reporting series on River Park Square began appearing, Ms. Cowles sent an e-mail "To all employees," including Spokesman-Review reporters. If anyone asked them questions about the River Park Square garage, "First," she wrote, "it is always appropriate to forward those names, phone numbers and questions to River Park Square's public relations firm Rockey West... Second, if you personally have questions or concerns... there isn't a question that is off limits or out of line, so do not hesitate to ask."
Spokesman-Review reporters were surprised by the missive. "The newsroom didn't grind to a halt or anything," said one, but some reporters found it offensive, others mildly annoying. Some chuckled; still others felt she was being overly defensive. The memo was circulated to other journalists in Spokane as an example of the muddle being caused by River Park Square inside the newspaper.
"She might have been a bit out of step with the culture of the newsroom," summed up one reporter.
It was another indication of the confusion wrought by River Park Square in Cowles executive suites. Betsy Cowles was supposed to be in the family's real estate business. Spokesman-Review reporters were supposed to be in the family's newspaper business. There wasn't supposed to be any connection between the two.
Nevertheless, political reporter Jim Camden, who was covering River Park Square, took Ms. Cowles up on her invitation. Eight months before the IRS announced its formal investigation into the same question, Camden asked Ms. Cowles for numbers showing how River Park Square's public/private funds were spent.
"She said they were talking about that and they thought they were going to release them [the numbers]," said Camden. "I said, when? She said, 'Well, it might be a week...' Then they changed their mind."
Double-Duty Lawyer
What seems to be most uniformly regretted in the management of River Park Square involves the Spokesman-Review's First Amendment lawyer, Duane Swinton. "By default," as Stacey Cowles put it, the decision was made to let Swinton serve as River Park Square's lawyer at the same time he represented the newspaper. I contacted 20 current and former Spokesman-Review staffers for this story. Most were unstinting in their praise for Swinton as a First Amendment lawyer. All were critical of him for agreeing to accept what they consider to be a direct conflict of interest in serving the development and the newspaper at the same time.
As the newspaper's lawyer, Swinton's job is to help reporters obtain information and get stories in the paper. As River Park Square's lawyer, his job was the opposite. He labored tirelessly to keep documents (like the Nordstrom lease) out of reporters' hands. That kept stories out of the paper.
Free speech champion Duane Swinton became the Cowles point man in suppressing documents.
Wearing his River Park Square hat, Swinton worked to prevent public understanding of the volatile public/private partnership. The erstwhile free speech champion was the point man in Cowles threats to sue public officials, first if they leaked secret documents to the press, second when they refused to turn over the parking meter funds to shore up garage losses. The so-called "Christmas claim," the complaint Swinton filed for the Cowleses last December 22, even went after city council members for defamation for speaking out on talk radio. Moreover, when Spokesman-Review editor Chris Peck sought legal advice about whether to follow the recommendations of his reporters and publish the leaked Sloane/Schwartz legal memo on the Nordstrom lease (see Part 1), it was the double-duty attorney to whom he turned. Swinton counseled Peck not to run the memo.
Was Swinton the only attorney Peck consulted on this matter? No, said Peck. The other Cowles RPS lawyer, Les Weatherhead, agreed with Swinton.
Critics
During the March 7 broadcast of the KPBX "On The Record" radio show, Peck suggested, as he did in my interview with him, that criticism of the Review's handling of River Park Square is largely naive and comes from those who are unfamiliar with the newspaper business. "People are saying that somehow this is all a big, sort of a masterminded plot," he said.
Actually, there is more substantive criticism of the Review's performance than Peck seems to be aware of.
"There is never a time when a newsroom's credibility is more vulnerable than when it's trying to cover a story in which the newspaper company is involved," said Joann Byrd, editor of the Seattle Post-Intelligencer editorial page.
A guest at Peck's January 23 "Credibility Roundtable" discussion, Byrd is a veteran newswoman with impeccable credentials. Among them: ombudsman at The Washington Post and instructor in journalism ethics at the Poynter Institute. She is one of the nation's leading authorities on journalism ethics.
Byrd said she found it "worrisome" that Stacey Cowles previewed River Park Square stories. "That, of all things, can undermine the credibility of the news report. If the publisher who has the most to gain or lose in the story is also reading the story before it appears in the paper, then that really undermines the credibility of the report, even if he doesn't put a pencil mark on the copy."
Byrd said it was just "common sense" that Swinton shouldn't have played his dual role. Newspapers, said Byrd, "need to be more up front and in the open than anybody else. We ask other companies to do it all the time. It's an automatic conflict when a newspaper company is asking to have its work go on behind closed doors, when we're demanding other companies be out front about theirs."
Another veteran journalist, Curt Pierson, was shocked to learn of Swinton's activities. An editor of both the Spokane Daily Chronicle and the Spokesman-Review under Bill Cowles, Pierson stressed that he respects Swinton's legal talents and considers him a friend. Nevertheless, he criticized Swinton's switch-hitting for the newspaper and the developer.
"I just can't believe that's happening," said Pierson. "He's serving two masters... As an objective, former editor, I would say that would be a conflict of interest and would make it terribly uncomfortable in the newsroom... How could I sit there on a Friday afternoon and have what I think is a pretty difficult story about River Park Square's garage? I can't send that to Duane and say, 'Give me your objective opinion of this,' or 'Tell me what I have to do to get this in the paper.' "
Stacey Cowles acknowledged the inappropriateness of Swinton's lawyering for both the newspaper and the downtown mall.
"I don't think anybody felt comfortable with that," said the publisher. The decision was "really made by default. We just haven't run that many public/private partnerships, or been attacked by so many people before, with such vigor. It's one of those unfortunate things that I wish we had seen coming. It was upon us before we really had a chance to separate Duane from the project. In hindsight, the legal representation should have been entirely separate, I think. It would be much cleaner that way."
The P-I's Byrd agreed: "There must be another attorney in town who could help out."
Did Stacey and Betsy Cowles review RPS stories before they ran?
"I think 'review' is kind of a misnomer," said Stacey Cowles. "That would imply my approval, which is erroneous. I think 'notice' would probably be a better word to use....
"Basically, I followed the same process that's been in place here in the publisher's office for at least two generations. If the company gets mentioned in a story, or family members are mentioned in a story, the editor'll ship a copy up. I would look and make sure our names got spelled right, and I would know what was coming out in the next day's paper. And if I had a correction I would call the editor back and say, you know, 'this is spelled wrong; here's a typo,' and so forth."
Mere copy-editing, in other words. RPS stories got no more attention from him than that?
"Exactly," he said.
The only reportorial change he recalled proposing was to Oliver Staley's story about the differences between the Seattle and Spokane Nordstrom stores (see Part 1). Staley's peg, as Mr. Cowles saw it, was "all the things that are missing from the Spokane Nordstrom store that are in Seattle." Cowles said, "I made a comment that I didn't really think that was on point for the grand opening. I don't know whether that had an influence or not."
(It did: the story was rewritten.)
"I would recollect there were probably 25 stories that I saw ahead of time... and I'd like to think that was about three-quarters" of the Spokesman-Review's major reporting on River Park Square over a span of about four years, said Cowles. "In maybe half of those I had some correction of facts or spelling," he said. "It was not an easy story to report because of the complexities of the transaction."
Cowles said it was left to editor Chris Peck's discretion which stories to route to him. "Breaking news" content, Cowles said, is what alerted Peck to show him stories in advance. Mr. Cowles said his sister previewed River Park Square stories only when reporters or editors asked her for fact-checking.
Did he and Betsy discuss River Park Square reporting?
"It's fair to say there's been some discussion about it," he said. "First and foremost, she is absolutely respecting of my insistence that we treat this like any other story and have nothing to do with the content. You know, privately our conversation is, 'Why the heck can't we get any good press in this town?' My view is, the burden rests with the PR function of the project to generate good press. I'm not here to run PR for them or anyone else in town, except the newspaper itself."
Based on what ethicist Joann Byrd heard at Chris Peck's "Credibility Roundtable," she advised Stacey Cowles to provide for an outside audit of the newspaper's River Park Square reporting. She recommended Cowles hire "somebody who's not connected to the company, to come in and audit the coverage as it goes on, as an independent set of eyes."
Warding Off the Media
Following that advice would entail a significant change of direction for the publisher. Last November River Park Square's public relations firm, Rockey West, was asked to do a "media training" for, as Jennifer West put it, "Cowles publishing executives and River Park Square representatives."
Typically, "media training" is not for the media. It is usually aimed at companies that are subjected to media scrutiny. Rockey West was recently acquired by international public relations giant Hill and Knowlton.
In treatises on the darker aspects of modern public relations, Hill and Knowlton receives considerable attention (see sidebar, "Big League Spin"). The company has specialized in the use of bogus science and the planting of erroneous news stories. Among Hill and Knowlton's products is an interactive CD-ROM program that trains businesses in how "to ward off the media."
Jennifer West, a partner in the firm's Spokane office, declined to provide details of her company's Spokesman-Review media training. She said only that it involved the "standard strategy for many clients... It's not information for the public."
Chris Peck said he attended the session at Stacey Cowles's invitation. He couldn't remember who attended besides Stacey and Betsy, but he thought he was the only Spokesman-Review employee there.
I asked Stacey Cowles what the purpose of the media training was.
"It was fairly generic. How to handle an attack interview kind of thing. It was an opportunity to see what you look like on video. It was pretty standard stuff."
Who participated?
"Oh, we had a collection of executives, really, from our subsidiaries. It was a piece of our executive training program."
Did any Spokesman-Review news personnel attend?
"No," said Cowles.
Any Spokesman-Review editors?
"No," said Cowles.
I asked Cowles if the training was done by Spokane-based Rockey West staff only, or if outside Hill and Knowlton personnel were involved.
"They pulled in some resources for that," said Cowles.
Peck recalled the training. "The discussion was, and I think it was a valuable one, just a primer in media relations. I think there's been a feeling, and I share it, that River Park Square as a project has not done a particularly good job of getting its story out. I was kind of glad to see them send some people to school on 'How do you go about getting your story out?' I think they've been out-foxed and cornered. The project did the thing it said it was going to do. It created the jobs. The project's generated-what did they say? $1.4 million to the city-and the city's never paid anything of the parking meter revenue. So it's been a pretty sweet deal for the city so far."
The Spokesman-Review reporter who informed me of the media training was dismayed that Cowles executives sought guidance from a company that is notorious for deceiving the public.
I asked Stacey Cowles if he is considering Joann Byrd's recommendation to provide an independent audit of his paper's handling of River Park Square. So far, he said, he isn't.
Mark Hester, Spokesman-Review business editor during the earliest River Park Square reporting, agrees with Byrd that allowing Stacey or Betsy Cowles to review River Park Square stories prior to publication, "sends a bad message to the reporter... What changes are made are almost irrelevant. It sends a message just by sending it through the process." He said Peck, "on occasion-not every story, but certainly more than once-made suggestions" for changing River Park Square stories.
Did Hester feel those changes were appropriate?
"All of that is so subjective," he said. "It sort of depends on your level of cynicism... There's nothing that five years later sticks out in my mind that I could say was inappropriate." Now business editor of the Portland Oregonion, Hester recalled that, "You could keep a semi-straight face" and rationalize that the changes were within the range of normal editing. "Stacey would at least have plausible deniability on any changes. There weren't any orders [that came directly] from him to me."
In Hester's memory, the only Peck change that provoked newsroom debate was the very first RPS story. It was filed by Stephanie Craft from a Las Vegas retail convention in 1994. Hester said the Spokesman-Review newsroom heard rumors about the project in Spokane, but the Cowleses wouldn't talk about it. He sent Craft to the Las Vegas convention where she uncovered the story. Craft said Betsy Cowles and RPS manager Bob Robideaux were surprised to see her there.
"She did some very good reporting to get that story," said Hester. "We had a good story. Peck asked to see it and suggested pretty widespread changes."
Most people in the newsroom, said Hester, thought Peck buried the lead paragraph, which was about street closure. "The most controversial part of it was in the story but was not the lead."
The Spokane Journal of Business (pre-Cowles ownership) played the story the way Craft first wrote it, "which led some people to say we were scooped," said Hester.
According to Hester, the real issue is not whether Stacey or Betsy Cowles brazenly manipulated coverage of River Park Square. "The real debate is, even if people's hands aren't tied, is there any way that a paper with those ownership conflicts would cover [River Park Square] the way another newspaper would? The answer is obviously no."
"Stacey and Betsy have torn down the firewall."
--Curt Pierson, former S-R/Chronicle editor
Shadow Regime?
If the influence of Cowles business interests on the Spokesman-Review has spawned confusion within the paper, inside Spokane's city hall it has created a crisis. Allegations have surfaced that Betsy Cowles and her River Park Square manager Bob Robideaux exerted inappropriate pressure on city staff to get the deal done. Former city real estate manager Dennis Beringer balked when he was ordered to employ what he considered to be an unethical appraisal method for the garage. Former city manager Pete Fortin noted the developer adamantly lobbied for an appraisal that troubled not only the city's real estate manager but its appraisal consultants as well. The eventual result was a garage appraisal that grossly inflated the facility's worth. That effectively enabled the laundering of tax-exempt financing into the mall.
Former city manager Hank Miggins said several city staffers complained to him that Robideaux gave them orders as though Robideaux considered himself their supervisor. Miggins said some city employees regarded some of Robideaux's directives to be ethically and legally questionable.
According to Miggins, the Cowles influence on city government appears to have been extensive. Said Miggins: "The word in city hall is that [former city manager Bill] Pupo got his orders from Betsy Cowles every day."
One of the few city staffers to go on the record for this report, Miggins retires this month as part of the planned transition to the strong mayor form of government. Miggins says a palpable climate of fear exists among city staff today because of worries about certain aspects of the River Park Square deal.
City councilwoman Cherie Rodgers agrees. She says there is a shared perception among city staff who played key roles in the project that Betsy Cowles inappropriately manipulated the city's participation.
"On several occasions staff did share some of their concerns with me," said Rodgers.
Asked for an example, she said:
"Stan told me that on many, many occasions city staff drew a line in the sand when they were dealing with Betsy and Robideaux... Betsy and Robideaux would go to the city council members, or to Bill Pupo, and voila, instantly all staff concerns were washed away. The developers got their way."
Who among city staff was former assistant city attorney Schwartz referring to?
"I think he probably meant Schwartz [himself], Mandyke, Adolfae, Beringer," she said.
"Dave Mandyke once told me that he couldn't take any more of Robideaux's abuse," said Rodgers. "He told me he complained to Betsy about it, and Betsy said, 'Oh, Dave, everyone needs a pit bull.' She implied that Bob Robideaux was hers."
She said Schwartz was particularly worried about the vulnerability of the HUD loan to the Nordstrom lease. Rodgers said Schwartz once told her:
" 'You know, five years from now I don't want to be standing here and have some 80-year-old man come up to me and say, that's a nice Nordstrom store, but it sure would have been nice if I could have had my roof fixed.' Mike Adolfae was standing right there when he said it."
Schwartz now works for the Cowles law firm Witherspoon, Kelley. Adolfae is Spokane's community development program director. Schwartz did not respond to an interview request. Adolfae says he can't remember this conversation with Rodgers. He stresses, however, that his concerns about the security of the HUD loan are well documented.
Miggins said that although city employees privately confided their fears in him, for the most part they have refused to speak out. "People are more afraid to talk now than they were six months ago," he said. He credits this to the recent threats of Cowles litigation.
Miggins believes that the safest way for certain staffers to divulge what they know is by deposition. That would entitle them to representation by the city's legal department. If they spoke publicly on their own and the Cowleses sued them, said Miggins, they might have to personally foot the bill for their legal expense.
Present and former colleagues of assistant city manager Dave Mandyke told me that Mandyke felt so browbeaten by Robideaux that he sometimes refused to take his calls. Mandyke was the city's RPS project manager.
Miggins said the extent of city staff fears became clear to him last spring when Mandyke confided that he "knows things that could cause problems for a lot of folks. Dave told me that he was not going to be a fall guy."
On advice of legal counsel, Miggins did not question staff about details of River Park Square project transactions nor allow them to share details with him.
"It was a great possibility that we would be deposed by our own attorneys for the purpose of the lawsuit," said Miggins, referring to legal action the city brought against the Cowleses. He said the city's attorneys didn't want "hearsay information to become confused with real information."
Mandyke, Pupo, and Betsy Cowles did not respond to interview requests. Beringer would not comment.
Curt Pierson, the former Chronicle and Review editor, says he is saddened by the mess River Park Square has caused in Spokane. Now retired from The New York Times Co. and living in Georgia, Pierson said the late Bill Cowles, Pierson's former boss, would not have allowed River Park Square to sully the Spokesman-Review's newsroom. The late publisher, said Pierson, "had two great loves in his life, and one was the newspapers that he owned, and the other was the city of Spokane.... He just would not have compromised either one of them. What's happening now, I think, is a compromise of both the city and the newspaper."
"I can tell you that there was a real wall between Bill Cowles and Jim Cowles," said Pierson. Bill ran the newspaper, his brother Jim managed the family's real estate companies. "Bill was the gatekeeper. He was not going to let anything interfere with the objective coverage of the newspaper."
Pierson stressed that he also has great respect for Jim Cowles and considers him a friend. He referred to the separation between the family's newspaper and real estate operations as a "firewall." Jim, he says, would never have tried to breach that barrier.
"It appears to me that Stacey and Betsy have torn down the firewall," said Pierson.
After reading Tim Connor's book on River Park Square, Secret Deal, Pierson said, "I just kept thinking, Bill would never have let this happen.... What's happening now would not have occurred if Bill Cowles were alive."
The End
See sidebar--Big League Spin: The reputation of Hill & Knowlton.
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