How Blind Is Hollywood to Ethics? : The enormous temptations of power, fame and greed are hard to resist and lead to some creative interpretations of ethical behavior in the movie business

* A film producer sends 10 copies of a script to 10 different directors, attaching notes to each one saying, “You’re my first choice.” An ethical lapse? Ten little white lies? Or business as usual?

* A major studio agrees to a star’s salary demand, but insists on paying some of it “on the side” so the true amount won’t be used by agents of other actors as leverage in future negotiations. Deceit? Or just a savvy competitive dodge?

* A script calls for a scene on a tennis court, so the producer volunteers his back yard, has a court built there, and charges construction costs to the film’s budget. An outrageous scam? Or a routine perk?

The ethics of Hollywood.

The phrase itself invites snickers and raised eyebrows, inside and outside the business. It’s an oxymoron, a contradiction in terms, boastful irony. “It’s going to be a very short story,” said more than one industry insider when asked to participate in this story.

“Ethics is not a good word for our business,” said a leading industry executive. “There are no ethics. It’s a total jungle, a barroom brawl. A gentlemanly code used to exist, but that’s gone. There’s a whole new set of rules (that says) there are no rules. You do whatever you have to do.”

Hollywood’s image has always been that of decadence personified, the New Babylon, located at the confluence of Power, Fame, Greed and Excess--a den of hustlers, if not iniquity. There have been sex and drug scandals since the first stars were born, and in recent years, stories about check forging (the Begelman affair), child endangerment (the “Twilight Zone” tragedy) and breach of contract (Buchwald versus Paramount) have broken in on the evening news. If anything has changed, it’s that where scandals once sent the wrong-doers into humble obscurity, modern Hollywood is wont to cast proven money-makers out.

On the contrary, where the events lend themselves, the industry seems happy to exploit them. When the videotapes of actor Rob Lowe’s hotel-room sexual escapades became public last summer, the previously accessible Lowe was unavailable for interviews. But last month, when Lowe’s next film--the ironically-titled “Bad Influence”--came out, he became the focus of a Rob-bares-all publicity campaign that was almost unprecedented in its exploitation of a personal scandal.

Ethical behavior has come under growing scrutiny in America as the self-realization and Me decades disappear on a horizon clouded with transgressions. In religion, there was the PTL pick-pocketing and the teary confessions of exercised lust from the TV pulpits. In politics, a presidential contender was found to have plagiarized papers back in college. Wall Street brokers were caught with their hands in the junk bond jar. A smug hotel baroness told the masses to eat cake, then withheld tax contributions that might have helped us pay for the batter. The Reagan Administration was lousy with miscreants.

Time magazine, ABC-TV’s “Nightline” and other media have put the ethics of contemporary American life under the microscope in recent months and found the moral fibers weakened. Nobody would be surprised to learn that however lax they were elsewhere, ethics operate at an even lower level in the film industry. But in a business whose stock-in-trade is illusion, the question is whether Hollywood’s moral rash is a symptom of real disease, or just a benign blemish?

To get a sense of current ethics in Hollywood, The Times talked to dozens of studio executives, producers, agents, actors and others whose lives are affected by the ethical whims of a business that--on the level of fair play--is often on its own. While most people interviewed said they believe the film industry is as ethical as any other, none was hard-pressed to come up with routine examples of unethical behavior, and even the most sanguine acknowledged that the business works in ways that bring out the worst in people.

WHY PEOPLE DO WHAT THEY DO--INSIDERS EXPLAIN THE WAYS OF THEIR WORLD

Because of the money at stake, and the fame and power that go with it, Hollywood has always been both an attraction for hustlers and a target of suspicion. “It’s an open playing field, anybody can come,” producer Don Simpson told Tom Brokaw on a recent NBC-TV news special titled “The New Hollywood.” “It’s free, it’s a democracy . . . you can think anything you want, as long as it works on paper.”

“It’s a business in which there isn’t much stability or consistency,” said one studio executive. “There’s a large fear factor as well as a greed factor which sometimes leads to abuses. As a human being, it’s hard to keep your personal integrity when everything around you is in turmoil.”

Hollywood’s blessing is also its curse; it’s a field of dreams in which anyone can and--so it sometimes seems--tries to play. The phrase that “everyone in town has a script” is only a minor exaggeration, and there isn’t a recognizable star or executive in the business who hasn’t had an unsolicited script slapped in his hand by a complete stranger. Where else do taxi drivers and waiters lay in wait for customers in the hope of happening onto a quick career? It only happens in the movies, or in the town where they are made.

Most professions that produce the levels of income enjoyed by film people require some formal preparation. In Hollywood, the only time you need credentials is when you’re going to the Oscars.

“There’s no training for the business, no credentials necessary to enter . . . It’s all about entrepreneurs, innate street intelligence and instincts,” says former Columbia Pictures President Dawn Steel. “It’s a business which encourages people with dreams. That’s the essence of Hollywood.”

Says Universal Pictures chief Tom Pollock: “There’s always been more suspicion and doubt cast on this business because it is one of the few in which people can get rich very fast, legitimately. In Hollywood, you have an idea and a year later you’re worth millions. It tends to attract hustlers, more hustlers than any place I can think of.”

Another studio executive stated matter-of-factly that people have to engage in unethical behavior in order to succeed. “It’s the same tune that is played on Wall Street, in real estate, in politics,” he says. “You only get caught if it’s illegal . . . People just convince themselves that the end justifies the means.”

Peter Dekom, a lawyer and one of the town’s most important deal-makers, admits being frustrated by the lack of morality in business dealings. “There are people who try very hard to maintain their ethics,” he says. “Unfortunately, they are in the minority.”

Michael Josephson, president of the nonprofit Joseph and Edna Josephson Institute of Ethics in Marina del Rey, says Hollywood is definitely among the lower practitioners of ethics. Also a lawyer, Josephson calls the industry’s moral code “the ethics of product” and says it is totally amoral: anything goes as long as it sells.

“By all accounts, Hollywood has the sleaziest level of business I know of,” Josephson says. “People don’t feel committed to a deal. They have no difficulty renegotiating if it is more profitable, or if they have more leverage . . . People just don’t trust each other in the industry and trust is the most fundamental of ethical issues.”

If there is “accountability” in Hollywood, insiders say it stems from the fact that it is a small community in which successful people continually cross each others’ paths. It’s a business whose credo could be “let the buyer and the liar” beware. “Dishonesty, lack of integrity catches up with you,” says Steel. “The first time you screw someone you don’t get to do it again.”

Still, everywhere there are shades of gray. “Most of the major players are ethical people of strong moral fiber,” says one agent. “But they’re not beyond stretching the rules if they’re in a tight spot so they can compete.” Adds another studio higher-up: “Questions of right or wrong are dealt with on a case-by-case basis: Thou shalt not covet thy neighbor’s wife, unless you’re going through a really messy divorce.”

“It doesn’t have anything to do with what we collectively call ethics,” the same executive continues. “Is it unethical for an agent to tell me I’m going to get the next movie by a certain director then make a deal with a third party? It may mean that I never speak to that agent again, but we’re dealing with fine lines here.”

Josephson says the simplest rationalization for unethical behavior is to claim you’re simply grazing with the herd, that you’re only doing what everyone else is doing. “There’s a flexible ethical code in Hollywood (that says) ‘I’m willing to be as ethical as you are, and also as unethical.’ That’s the antithesis of integrity because it’s based not on principle but on the lowest common denominator.”

Hype, often a synonym for lying, is a fact of life in Hollywood, according to most insiders. A producer may say a star has committed to a script when he has only agreed to read it, or an agent may exaggerate the salary his client received on his last film. And people take comfort in believing that everyone does it. “I’m in the business of selling and in the interest of interesting someone else, I have to make it as enticing as possible,” said Jeffrey Katzenberg, chairman of the Walt Disney Studios, while testifying during the Buchwald vs. Paramount trial. Katzenberg added that executives often “embellish” in such situations.

Routine deceptions are “the language of filmmaking,” says producer Tom Musca (“Stand and Deliver”), adding that ethical lapses may be overlooked more readily because the stakes are not life and death. “You should have total honesty when it comes to bridge-building over great gorges where lives are at stake,” he says. “But to get a film made, it can’t be hard-edged . . . The business isn’t nuts and bolts and shouldn’t be.”

To purists like Josephson, who conducts ethics workshops primarily for businesses, ethics is nuts and bolts--or rights and wrongs--and ethics don’t stretch to accommodate deception in businesses where lives are not necessarily at stake.

“The four ethical values are honesty, integrity, fairness and the caring and respect for others,” Josephson says. “Any conduct inconsistent with them is unethical. The high stakes in the (film) industry is just an excuse to violate them. If people would stop squinting and open up their eyes, they’d see that what appears to be shades of gray is clearly black.”

Most adults know the difference between right and wrong when they’re instructing their children, and Josephson doubts that many film people could answer “yes” to the question: “Would you act that way if your kid was looking over your shoulder?”

MOGULS VS. LAWYERS AND MBA’s: HOW THE OLD HOLLYWOOD BECAME THE NEW

Film historian Neal Gabler, who profiled Old Hollywood in his book “An Empire of Their Own,” says the early studio moguls were as ruthless in their dealings as today’s MBAs and lawyers, but there were rules that everyone understood. “Today things are much more legalistic,” Gabler says. “One could say that makes it more ethical. But one could also argue that in the old days, there was a certain honor among thieves that may have been more ethical.”

“When we started, a handshake was the deal,” says screenwriter George Axelrod, who had his first film script (“Phffft”) produced in 1954. “The business used to be run by movie makers, now it’s run by lawyers . . . When I started, I worked with (Hollywood’s) prime monster, (Columbia Pictures chief) Harry Cohn. But when you shook hands with Harry Cohn, you had a deal.”

Lawyers and agents are the most frequently mentioned causes of the town’s declining ethics, but they are really part of a larger phenomenon. Calmer voices say the public ownership of the studios--the conglomeratization--has put studio administrations on short leashes, emphasizing quick returns over steady long-term performance and forcing production people to lie down with dogs known to have fleas.

“There are people in this town--everybody knows their names--who are wildly unethical in the way they do business, but you can’t ignore them because they have proven they can make successful movies,” says a producer who has worked both independently and as a studio executive. “There’s the attitude at the studios that if it’s legal, it’s ethical. Well, people are screwed legally in this town every day.”

The inevitable problem in discussing ethics in Hollywood is agreeing on a definition. Dictionaries define ethics in general terms as moral codes and standards followed by individuals, societies or companies. Michael Josephson says “ethics are the moral standards that distinguish right from wrong, how a good person should behave. The operative word is should . It’s based on moral not legal obligations. Something isn’t ethical because it’s legal.”

“Ethics come from what you were taught growing up, not from what you learn in this business,” says Ben Moses, producer of “Good Morning, Vietnam.”

When director Terry Gilliam was feuding with MCA-Universal President Sidney Sheinberg over the studio’s editing of “Brazil,” Gilliam complained that today’s Hollywood is run by people “who in any other business would be middle level executives.” His point, that there are no industry leaders establishing policies, was echoed by many interviewed for this story.

But if there are no stated guidelines for doing business, there are certain standards, some industry people maintain. Entertainment lawyer Eric Weissmann says that because of its unique product and structure, Hollywood does function in ways different from other businesses:

* It’s a mixture of art and business.

* The stakes are outrageously high. “If Michelangelo screws up a canvas, it’s not such a big deal. He can always redo it. But a motion picture is out there.”

* Your moment in the sun is not very long, so tensions are high. “There’s something to the notion that you’re only as good as your last picture.”

* You’re dealing with intangibles. “There’s no other business I can think of in which the same kind of money is spent purely on a guess.”

* It has visibility beyond its importance. “If a gas station attendant cheats on his wife, no one cares. But if Rock Hudson gets AIDS, everyone is interested.”

Weissmann disagrees with those who say people are less inclined to honor verbal contracts today. He says the handshake deal is as solid as ever, but he acknowledges that structural changes in the business have made negotiations more complicated. “The power used to be with the studios, now it’s equally distributed so there are more clashes, more movement, more players, less stability.”

“The studio heads used to be really tight,” says a veteran producer. “They would meet three or four times a year to create policy as a group. Now the guys who run the studios all hate each other . . . the business is like Hong Kong--it’s the ultimate free market. There are guidelines set by the guilds, the WGA, DGA, and SAG etc., but within these rules you can play the game in a free-wheeling way.”

Jere Henshaw, a producer with 30 years of experience in Hollywood, says the influx of outside money and the growing power of lawyers and accountants has made dealings cool and often ruthless and has brought in young people who have turned the personal trust that used to govern deal-making into a joke.

“The older hands get depressed,” Henshaw says. “There’s a lack of morality among the younger set. Lying has become a way of life. What’s frustrating is that I don’t see any measurable reward for honesty or forthrightness.”

THE ENDURING CASTING COUCH: THE POWERFUL EXPLOITING THE DESPERATE

Most agree that the people who do succeed in Hollywood, even on the lowest levels, have an inordinate amount of personal power. That leads to a range of abuses to which those furthest from the sources of power are especially vulnerable. Dolores Chevron, a former casting agent now with Feature Players Agency, has seen so many desperate young actors ripped off by unscrupulous “service” agencies that she has begun lecturing acting groups on such scams as excessive fees, photo studio kickbacks, false promises, and outright fraud. And yes, says Chevron, the fabled casting couch is still in service.

“Actors are so desperate, they want to work so badly, that they’ll do anything,” Chevron says. “They will give you their money, their time, their body for the opportunity. Sex, like power, is part of the business. Anybody with power--a producer, a director, a casting agent--is in a position to take advantage of that. And they do.”

Hollywood and sex have always been linked in the public mind, and the ample documentation of the exploits of its stars have strengthened the connection. Gloria Swanson spoke of the hedonism of the screen’s early years as if the public had given their idols a mandate to live with abandon, to take advantage of opportunities the average person could only imagine, and it’s an attitude that, for many, survives even in these liberated times.

Sources talk about the overt sexual liaisons that often occur between stars following the cliched belief that off-screen ardor will help them give more convincing performances before the camera. One person said it is not unheard of for a film company to hire extras to serve as “location wives” for lonely crew members toiling out of town. And there have been “cattle calls” where actresses were required to disrobe for a part that was somehow never written into the script.

IF YOU HAVE THE KNACK FOR MAKING MONEY, YOU CAN DO NO WRONG

Everyone can agree that it is unethical--not to mention illegal--to forge checks, or to ignore labor laws and put children at risk in the middle of the night, or to co-opt somebody else’s work and call it your own. But in Hollywood, where the ability to make money is valued over the ability to make ethical choices, the people who have done those things have not greatly suffered.

David Begelman, who forged checks while head of Columbia Pictures in the late ‘70s, has worked steadily in Hollywood since. John Landis, whose end-run on the labor laws resulted in the deaths of two children during the making of “The Twilight Zone,” is still directing major studio movies. Paramount Pictures, the loser in a breach-of-contract suit brought by Art Buchwald over the film “Coming to America,” may not have to pay a dime in profits to him.

These incidents have revived the argument that Hollywood is the New Babylon. Not the deeds themselves, but the nonchalance with which the industry accepted them. Bring Begelman’s name up to industry leaders today and most will say his was an unfortunate personal tragedy, “a tempest in a teapot” heated up by a punitive press.

“What Begelman did didn’t hurt anyone,” says Weissmann. “It would have been different if he was a businessman who stole from his clients.”

But what about Cliff Robertson, the actor whose name Begelman forged on checks and whose reward for blowing the whistle on the felony was a six-year layoff in a town that has a long history of blackballing trouble-makers?

“The word around town at the time was that it wouldn’t do (Robertson) much good to be heroic or courageous,” says actor-comedian Steve Allen, who addressed Hollywood ethics in his 1979 book, “Ripoff: A Look at Corruption in America.” “Now what the hell kind of business is that?”

There was great general outrage at revelations during the “Twilight Zone” case and though Landis and his co-defendants were acquitted of charges of criminal negligence, even he acknowledged violating laws governing the use of underage children in movies.

“The ‘Twilight Zone’ case involved questions of ethics in Hollywood as much or more than any other case I know,” says Ron LaBrecque, author of “Special Effects, Disaster at ‘Twilight Zone.”’ “John Landis . . . made clear-cut ethical decisions, questions of right and wrong.”

LaBrecque blames arrogance of power for the “Twilight Zone” tragedy, saying Landis behaved as if he were above the law. “We give people in Hollywood luster, power; our society sets them apart and they feel free to cut corners,” he says. “The basic ethic of Hollywood is what will make me the most money?”

Josephson calls unethical Hollywood behavior “an extension of our tolerance for artists. We don’t hold artistic types to the same standards (as everyone else). We tolerate their nonconformity, which in many cases is simply selfishness.”

Art Buchwald scored big points with the media and the public in bringing mighty Paramount to its knees in the first round of his “Coming to America” suit. Buchwald maintained that he had provided the core and inspiration for the movie in an early treatment titled “King For a Day.” He received no writing credit and was therefore not in line for his contractual share of the film’s profits.

There was much guffawing and slapping of thighs over Paramount’s declaration that its $440 million hit was still millions of dollars in the red and the public’s first real glimpse at Hollywood’s legendary “creative accounting” practice was instructive. But executives at other studios defend Paramount’s accounting on “Coming to America” as business-as-usual. “Net” profits, or “monkey points” as Eddie Murphy calls them, are paid out only occasionally in a business where the smart and powerful players leverage their money up front. “As a writer, you’re probably thrilled to see a big-name star or director attached to your project,” says Steel, “but it means that you probably won’t see anything on the back end. Gross points mean something. Net doesn’t. As David Mamet said in ‘Speed-the-Plow,’ ‘there is no net.’ ”

SO SUE ME: WHY IDEAS TURN UP IN THE DARNDEST PLACES

“Negotiation by litigation” is a phrase commonly heard in today’s Hollywood . . . though those on the outside such as Buchwald are far more likely to take that route than those who must work within the system. The powerful producers, the hot directors and the popular stars usually have their contracts honored, but others are often faced with long delays and hefty legal expenses in getting paid.

“I know a number of producers whose attitude is ‘Sue me and I’ll settle for less money later,’ ” says one studio executive. “If the contract says you’re owed $100,000 and it costs $50,000 for you to sue, you might choose to take a $60,000 setttlement and be $10,000 ahead. The producer saves $40,000. That’s one of the problems posed by a system in which each side is forced to pay its own legal fees, no matter which side wins.”

James Tierney, an entertainment lawyer who has successfully represented clients in copyright infringement cases, says “errors and omissions’ insurance policies, protecting producers from infringement liabilities, have contributed to the “so, sue me” attitude. “They have absolutely no exposure,” Tierney says. “Since few writers have the finances to foot legal bills that run into the hundreds of thousands of dollars, most of these cases are handled on a contingency basis--and there are few law firms willing to take them.” The upshot, says Tierney, is that, like rape, most of the offenses go unreported.

Some have been reported. Screenwriter Michael Montgomery won a multimillion-dollar judgment against director Hal Needham and some associates after a jury agreed with the writer that a script he had shown Needham years earlier had evolved into the hit Burt Reynolds picture “Smokey and the Bandit.” Screenwriter Sydney A. Glass was given a story credit and was paid a third of writer-director Paul Schrader’s fee for “Blue Collar” after complaining to the Writers Guild of America that Schrader had gotten the idea from him. Schrader acknowledged that Glass had given him the idea, but he told journalist Stephen Farber that he only agreed to the credit and payment because he “didn’t want Richard Pryor reading that I had ripped off a black man.” In many other instances, producers and studios have settled with writers out of court.

But for every instance where a writer was remunerated for an idea or story that had been ripped off, there are scores of others who had no case. You cannot copyright an idea, and naive newcomers are anxious to share their ideas--especially with people established in Hollywood.

James G. Robinson, the one-time Subaru Midwest auto distributor who now runs the independent film company Morgan Creek, says he has run into a lot of deceit in Hollywood, but says people can only blame themselves for becoming victims. “Once you know the rules, who to play ball with and who to avoid, you can operate successfully,” Robinson says. “Hollywood is no place for the trusting or the naive.”

Veteran producer Bernie Brillstein agrees with Robinson about choosing your partners, but he says that’s the case in every business. “What about the contractor who says your house will be ready by April?”

WILL IT GET BETTER OR IS THIS AS GOOD AS HOLLYWOOD GETS?

The majority of people working in the film industry consider themselves ethical people, and believe that they behave ethically. “Most people in this industry are decent ethical people,” says Peter Bart, who recently put 22 years of studio experience behind him to become the editor of the weekly trade paper, Variety. “There is definitely less corruption in Hollywood than in, say, the construction industry.”

Bart says that much of the business behavior in Hollywood “represents the way business is done in our society today, the ‘80s mentality of sticking it to you is pervasive (everywhere). But everything in show business is more extreme, so the decline (in Hollywood ethics) has been more dramatic.”

The question then is if the examination of ethics in American life prompted other businesses to improve their performance would Hollywood follow?

“I see no reason to believe that the decline in ethics will reverse itself,” Bart says. “For one thing, attorneys have a lock on the business and they gain their power through discord not harmony. . . . For another, those people who control the stars--managers, agents, and so on--have their power heightened if they can insulate them from the storm raging outside. The trend toward bigger entities and the investment of off-shore money has made things even more impersonal which will probably only increase the number of clashes. There’s no indication that Hollywood will clean up its act.”

So, whether the ethics of the business are being tugged down by the few or by the majority, accepting Hollywood as a principled enterprise requires a suspension of disbelief most people are only able to muster for a good movie.

“It takes $18 million plus an additional $18-20 million to put a film into the marketplace,” says one of the industry’s central players, explaining why he thinks so many Hollywood deals have the civility of the Buster Douglas/Mike Tyson fight. “With that kind of pressure, the rules set up in the film business are more breakable and bendable than in other businesses.”

Money, power, fame. They’re all related, but many people will settle for any one of them--at least in the beginning--and if one dubious act will put them over the top, well, they can pay the devil later. In the meantime, the high stakes game goes on, and it isn’t always pretty.

Says one veteran agent: “People will do anything they have to do, leverage anyone they have to leverage, screw any of their friends to get what they want for themselves and that’s at every level of the business. . . . It’s like an ice hockey game. You skate down the ice and if the ref isn’t looking, you stick your stick in your opponent’s rib cage, or even trip up your own player if you don’t want him to score. All companies in this business are set up for the employees to screw each other, convinced that it’s good for the bottom line. Add that to the lust for success and money . . . and ethics? Forget it.”