Grappling With Ethical Problems in Hollywood : Film: An all-day panel discussion wrestles with the bottom line and high ideals.

The superstar jumps ship for a more attractive project, leaving the studio and the creative team in the lurch. . . .

* The harried studio chief then makes an “exclusive” offer to two different stars simultaneously. . . .

* The new star steps in--on the condition that he bring in his own director. . . .

The agent, asked to recommend a second lead, is forced to choose among his five clients.

“That’s a fairly decent description of our working atmosphere,” said producer Sean Daniel, a former head of production at Universal, about the hypothetical ethical dilemmas presented to a panel on Saturday. “Relationships are put at risk. It’s absolute anarchy. Yet the system, in some alchemy, manages to yield a fair amount of incredibly powerful and insightful events. There’s no complacency, no conspiracy to keep things out.”

Maybe not, countered producer Steve Tisch (“Risky Business”), but much of the day-to-day workings are still ethically dubious. “There’s a poorly defined set of rules, an ongoing conflict of interest 10 hours a day. We’re all part of a murky system.”

That system and the mores that govern it were the topic of an all-day discussion of “Ethics in the Film Business,” organized by the Independent Feature Project/West and held at Warner Bros. studios. The morning session analyzed the values presented in motion pictures and their impact on the audience. The afternoon participants wrestled with ethical concerns in the situations described above.

All the panelists--leading writers, lawyers, academicians, producers, directors and agents--concurred that in Hollywood moral absolutes are hard to come by, that everything is shades of gray.

“Fifteen years ago, this was a startlingly honorable business,” claimed writer Benjamin Stein. “Now the ethical bottom has fallen out. Litigation is almost a certainty in any deal. By far, the most important collaborator for a writer is his lawyer.”

The importance of movies, Stein asserted, cannot be overestimated. “Hollywood is a mirror through which Americans look at themselves,” he said. “Yet what we see on the big and small screens ignores much of what is going on in the U.S. There’s so little about the destruction of our environment or the homeless--thousands of people who are as American as (Warner Bros. executives) Terry Semel or Mark Canton. Hollywood is indispensable--the only major voice that can stand up to the chorus of money going into Washington’s vest pocket. Movies are a way of turning things around.”

Playwright/screenwriter Velina Hasu Houston called the film industry “the most integrity-deficient of all the arts.” Movies, she said, are crucial in determining how people perceive reality. Yet they are created by “Caucasian men who sustain and nurture racial and sexual stereotypes.”

It’s a real problem,” agreed Kathrin Seitz, an agent with Camden Artists. “Reconciling bottom-line decisions with Judeo-Christian, Ten Commandments-based morality. As a church-goer, I live with tension constantly.”

Still, argued screenwriter Naomi Foner (“Running on Empty”), it is possible to retain one’s integrity--even in a collaborative system. “The trick is to compromise without compromising what you set out to do. Maybe I’m stuck in the ‘60s, but I still am trying to find some magic, a way of reaching people through films. I call it the ‘trickle up’ theory--making people think about a movie afterwards.”

Publisher and ACLU supporter Stanley Sheinbaum, moderator of the morning session, also voiced a note of optimism. “We all have a sense of right and wrong,” he said. “The problem is more a systemic one with individuals trapped in huge organizations. Creative people need goals. They shouldn’t start from a position of compromise and accommodate resistance beforehand. Though people may not be able to change the system, they certainly can influence it.”

Whether films are an effective tool of social change was a matter of debate. “Ethics are about social change, films about social control,” charged Herb Chao Gunther, director of San Francisco’s Public Media Center, which produces advertisements for nonprofit institutions. “Created by a privileged elite, they alienate people instead of empowering them. Making and watching movies is irrelevant to the world we live in.”

Not true, argued Ella Taylor, chief film critic for the L.A. Weekly. “As the British TV commentator Clive James said, ‘Never underestimate the power of a story.’ There’s a whole symbolic area which is important in getting people to act. That’s why I find the moral ambiguity of many films troubling.

“I loved ‘Reversal of Fortune’ but, at the end, felt I’d been had,” Taylor continued. “Why was I feeling so good about a guy (Claus von Bulow) who--regardless of what he did or didn’t do to his wife--led a life of no redeeming social value? And even Woody Allen’s ‘Crimes and Misdemeanors’ doesn’t bear a lot of moral scrutiny. It posited a crime (the murder of a mistress by a philandering husband), then dropped the ball. Aesthetically, it pleased me, but in ethical terms I felt uncomfortable.”

Hollywood has abrogated its responsibility to the American public, concluded attorney Barry Hirsch, moderator of the afternoon session. “The immigrant studio chiefs instilled values and ethics significant to our growth as human beings,” he said. “But in the past15 to 20 years, a scare has taken over. Instead of teaching, we look to the marketplace to tell us what it likes. In this respect, we’ve failed.”