The Whistleblower
The Whistleblower
Ruth and Elliot have drafted half a dozen different press releases with Ethan and David before coming up with the correct wording that reports a decidedly more realistic and gloomier forecast than the claims they made two and half weeks before.
The release goes out and the first domino falls. The price of Mattel’s stock takes a nosedive. Some shareholders feel they’ve been misled. Ruth loses track of how many people either are threatening or have already filed lawsuits against the company. The board of directors opens an internal investigation, trying to get to the bottom of what really happened and figure out who is responsible. Mattel’s in-house counsel is overwhelmed. David sends for reinforcements by way of an outside law firm, but Simon is still working round the clock. He’s hardly spent any real time with Stevie over the past few weeks.
One evening while Simon’s working late, Patsy knocks on his door. “Do you have a minute?” she asks.
“Sure.” He carefully closes his folder and does a quick scan of his desk to make sure nothing is visible that shouldn’t be. He sits in a wingback chair at a stately desk surrounded by shelves upon shelves of leather-bound legal books. It’s a sharp contrast to the jovial, playful decor of the other offices.
Patsy explains she needs to talk to him because David’s already gone for the day. “And if I don’t say something now, I might lose my nerve.” She smokes a cigarette and proceeds to share a treasure trove of information with Simon. “As far as I can tell,” she says, “the problems started a few years ago. Back in January of ’71. I remember Rosenberg was worried about the merger with Ringling Brothers. I know for a fact that they inflated the financial records. And that if the circus found out, the whole deal would have blown up. They knew they’d get sued.”
“Who’s they ?”
“Rosenberg for sure. Possibly Loomis. But Rosenberg for sure. He had us doctor invoices. We had tons of invoices that went into these Do Not Mail folders.”
Simon, who’s been taking notes, looks up, eyebrows spiking.
“Yep,” she says. “Oh, and the books are an absolute joke. There’s two sets of them, you know. One has all the real accounting, and the other is complete and utter fiction.”
“Hmmm. That’s, ah…” Simon shakes his head. His poker face is vanishing. He’s writing as fast as she speaks, filling up pages of his legal pad.
“And I know of one case for sure where they forged a customer’s signature on a bill and hold order.”
Simon sits back and rubs his eyes. “Were Elliot and Ruth aware of all this?”
“I’m sure Elliot had no idea.” Patsy looks down at her hands before gazing back up. “I don’t know about Ruth. I’m not the best person to ask about her.” Patsy is forever protective of Jack and will never forgive Ruth for the way she’s treated him. She’s even been encouraging him to go ahead and sue for lost royalties, arguing that Mattel’s a mess right now anyway, so who cares if they fire him. “But c’mon,” says Patsy, “Ruth has her hands in everything. How could she have not known?”
“But she never— Ruth never asked you to falsify any documents?”
Patsy shakes her head. “No. That came from Rosenberg.” She pauses for a minute and then says, “Did I do something wrong? Am—am I in trouble?”
He sets down his pen. He doesn’t want to scare her, because technically, yes, she’s exposed. Technically there could be consequences, but he also knows that corporate crimes typically stop with the company officers. What he tells her is, “You did the right thing by speaking up.”
When Patsy leaves his office, Simon consults his watch. It’s late. Almost eleven o’clock. But this can’t wait till morning. He calls David at home. “You’re not gonna believe this.”
—
The following week the board of directors is holding a special meeting, and beforehand, Ethan, David and Simon sit down with Ruth and Elliot.
“We don’t want you going in there and getting blindsided.”
“Blindsided by what?” asks Elliot.
“Some new and frankly disturbing information has come to our attention,” says David.
Ruth wants to know what kind of disturbing information.
David and Simon turn to Ethan, who says, “Turns out Mattel has more to answer for than merely the cancelations and returns on the bill and hold orders. There’s errors in the routing and delivery paperwork. Discrepancies in the invoicing, too.”
“It’s obvious,” says David, “that someone’s been fudging the numbers.”
“Maybe it was Rosenberg,” adds Simon with a shrug.
“Maybe it was Rosenberg and other people, but whatever the case,” says David, “you should know that the board’s been looking into this themselves, and I know this isn’t what you want to hear, but we met with them and—”
“You met with the board?” Ruth asks. “Without us?”
David’s hands fly up as if she’s holding a shotgun on him. “We felt it was in everyone’s best interest.”
“I can’t believe you went behind our backs.”
“Ruth, this isn’t about you personally,” says Ethan. “These are some serious allegations. We’re trying to protect the company. Which is why the board felt it was necessary to conduct their own internal audit.”
“We never heard about this,” says Elliot. “Arthur Andersen never said a word.”
“The board had another firm conduct the audit,” says Simon. “They went to Price Waterhouse.”
“Why? Why not go to our accountants?”
“Well,” says David, “frankly, they don’t trust Arthur Andersen. Think about it”—he shrugs—“how could all these errors have possibly slipped by them? Price Waterhouse took a good hard look at Mattel’s books and the accounting going back to 1971, when you first showed a loss.”
“So now what?” Ruth asks. “What happens next?”
The men exchange looks that say: Who’s going to tell them?
Finally, David speaks up. “We had to alert the Securities and Exchange Commission.”
“The SEC?” asks Elliot in disbelief.
Ruth goes limp in her chair. A fog rolls in all around her. She barely hears David saying, “I’m afraid things are going to get worse before they get better.”
—
The emergency board meeting that follows is a nightmare. Ruth and Elliot don’t even recognize some of the men sitting in their conference room. Awkward introductions are made, and for the first time, she and Elliot learn about meetings that have been taking place with their bankers, with some of Mattel’s top executives, even with the SEC.
“The SEC insisted we put new blood on our board of directors,” says Irwin Brash, someone they’ve only just met ten minutes ago. He’s tall, lanky and has an icy manner about him. “We’ve been hand selected, preapproved, if you will, by the SEC to serve as board members of Mattel. And now”—he shrugs—“now we need to make some changes. Ruth, we need you to step down.”
“I beg your pardon?” She glares at him.
“We need to replace you as president. We’ve discussed it and we all think Art Spear is a better choice, given the circumstances.”
“No way.” Ruth shakes her head. “Absolutely not.”
Art speaks up. “With all due respect, Ruth—”
“Art”—she cuts him off—“you’re a vice president of operations. You’re very good at what you do, but you don’t know the first thing about running this company. You have no grasp on marketing. You’ve never worked with our ad agency, you’ve never even been on the floor at Toy Fair.”
“It’s the only way,” says Irwin. “The banks have already said that without a change in leadership, they won’t issue the company another line of credit. They’ll call in all the loans. It’ll be a disaster. So as you can see”—he has the nerve to smile—“we have no choice.”
And though she continues to argue for the next half hour, fighting for her professional life, it’s obvious that she doesn’t have a choice, either.
By the time they leave the meeting, a vote has been taken. The new board members have spoken, crowning Art Spear as Mattel’s new president and CEO. Ruth emerges from the meeting having been demoted to cochair, a title she’ll share with Elliot.
She feels like a robot when she walks down the hallway of Mahogany Row. Elliot hasn’t said a word. Neither has she. They sit in his office and stare at each other. Elliot has always been her rock, there for her when Sarah died, when she had her surgery, when things went badly at work. But strong as he is, there’s nothing he can do or say to make this less of a disaster, less scary. She’s clammy and dizzy. It feels like someone is striking matchsticks against her stomach lining.
Eventually she goes back to her office, opens her top drawer and fishes two quarters out of a compartment where she tosses loose change. She gets up from her desk, and without a word to anyone, without being able to focus on anything other than staying upright, she takes a long walk down to the cafeteria. She drops her quarters into the cigarette machine, selects a package of Winstons and pulls the knob.