Smoldering ’60 Minutes’ Controversy Causes Dissent : Television: Staffers are pointing fingers over CBS’ decision not to air the interview critical of the tobacco industry.

The controversy over the “60 Minutes” tobacco-industry interview that did not air is causing dissent and unhappiness among the newsmagazine staff and elsewhere at CBS.

Executive producer Don Hewitt and correspondent Mike Wallace have exchanged angry words about the story, as have Hewitt and correspondent Morley Safer.

Safer, who defended the story on PBS’ “Charlie Rose Show” earlier this week, wrote a letter to Rose, apologizing for making some erroneous statements about the arrangements for the story. He blamed “principals in the story” for “suppressing” the information.

Some on the staff are questioning agreements that were made by CBS attorneys and producer Lowell Bergman with the former tobacco-industry executive and wondering why the arrangements were not disclosed in initial news accounts about the interview being squashed.

And everyone involved is unhappy with the way the story has been played out to the public through the press.

“This is tragic,” said one CBS News employee who requested anonymity. “We did a great story on the tobacco industry, and we end up portrayed as cowards on the First Amendment. There has been a complete absence of leadership at the top of CBS News management on how we would discuss the pending story, if at all. Good people are blaming each other in a complicated situation. And what’s being lost is the substance of the story: the practices of the tobacco industry.”

According to CBS sources, the trouble within “60 Minutes” began when the New York Times broke the news last week that network attorneys had ordered producers of the popular program to pull an interview with a former Brown & Williamson executive. The story--which many at CBS believe was leaked by people at “60 Minutes”--said the attorneys were concerned that the network might be sued for inducing the executive to break a confidentiality agreement he had signed with his former employer.

The initial accounts--and “60 Minutes’ ” own report last Sunday on the difficulties of covering the tobacco industry--left the impression that CBS lawyers were being overly cautious and perhaps were influenced by non-journalistic considerations. But then the Wall Street Journal reported Thursday that the attorneys had more cause for concern than had been disclosed: CBS had agreed to indemnify the executive in any libel lawsuit that might result from its story, had told him it would not air the story without his permission and had paid him $12,000 to be a consultant on a 1994 broadcast.

Legal analysts were divided as to whether CBS still could have proceeded with the interview and defended itself on First Amendment grounds, but they agreed that the decision was a much tougher one than it had appeared at first.

The Journal report “was news to many people at ’60 Minutes,’ ” a source there said. “People who were out defending the story questioned who knew about the details--and why others here hadn’t been told.”

In his letter to Rose, Safer said that he found “troubling” both the consulting fee and the agreement with the subject that the interview would not air without his permission.

Hewitt, who was traveling to London, could not be reached for comment Friday, nor could Wallace.

According to several CBS sources, the details of the arrangements were not as ominous as they sound in the Wall Street Journal. A letter of indemnification is extremely rare, for example, but news organizations have agreed to pay individuals’ legal fees, they maintained.

Bergman, who told the Journal that he had known about the indemnification letter signed by a CBS attorney, told The Times: “The most important point is that the tobacco industry has not leveled with the American people--everything else is smoke-screen.”

Meantime, the New York Daily News published on Friday what it said was an excerpt from the unaired “60 Minutes” interview. The News said that the former Brown & Williamson executive charged that the tobacco company scrapped plans to create a safer cigarette and knowingly used a pipe tobacco additive that causes cancer in lab animals.

CBS declined to comment on the published report. Officials at Brown & Williamson could not be reached for comment.