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The Elliot Spitzer phenomenon is part of being human. For whatever reason, people who obtain power can convince themselves that the very rules they create and enforce don’t apply to them. Elliot Spitzer and his prostitutes. Al Gore flying carbon-spewing private jets. Countless others. Whether the transgressions are large or small, something clicks inside the brain of some people or entities who’ve obtained power and they convince themselves they are above the rules.

I’ve seen this in our world, too. When I questioned a New York Times reporter on why they felt they didn’t need to make disclosures in (very occasional) stories where they were conflicted (here and here, for example), he said the newspaper was above suspicion and, therefore, disclosures weren’t necessary (yes, he actually said this).

Conflicts of interest and ethical reporting are something that we are very careful about at TechCrunch. We write principally about new startups, and these companies are usually very nervous about early reviews of their products. We’ve been offered significant cash payments to write about some companies, which have always been rudely declined. We’ve always been extremely careful to disclose any conflicts of interest in our stories (which is usually that I’ve invested in a competitor). These conflicts are very rare.

Despite that, some people have spread rumors that we’re dishonest in our coverage (from what we can tell, these usually start with an entrepreneur at a startup we’ve refused to cover, or gave a negative review to). All of these claims are false. From a reporter who spent years trying to nail us on a conflict of interest:

Arrington, for a reason no one has ever pinpointed, attracts haters at a level far beyond what you’d expect for what is basically an online trade magazine. I learned this firsthand when I wrote for gossip site Valleywag from 2006 to 2008. Despite Valleywag’s cruel, personal posts, we received almost no hate mail and were never accosted in public. Instead, we got mail, phone calls and in-person pleas from people who begged us to take down Mike Arrington. The most common accusation was that TechCrunch sold endorsements of startups, either in exchange for advertising buys on the site, or for outright cash payments.

This is important: None of these claims ever checked out. Sources would claim to know someone who knew something, but these mystery witnesses never showed up to tell their stories to a reporter. Arrington’s success, both as a blog-era publisher/writer and a startup businessman, inflames less successful entrepreneurs and journalists with off-the-scale envy. How does he do that?

Anyone who knows TechCrunch understands why we flee from conflicts. Even if our moral compass didn’t steer us clear, everyone is trying to nail us. One slip and everyone would know about it.

But most tech bloggers don’t have the constant attention to their ethics that we have here at TechCrunch, and those who lack the genetic makeup to always do the right thing are starting to make too many mistakes. One of our competitors, for example, pays their reporters a low base salary and then gives them a bonus for advertising they sell. The result is that when they interview a startup, the conversation ends with a request to buy advertising.

Another competitor owns millions of dollars of stock in a public Internet company. The conflict is disclosed, but there is no one more conflicted in Silicon Valley than this blogger. And yet another competitor recently took a second job as a venture capitalist. I actually trust the reporting of both of these bloggers, but they are in an awkward position.

Another problem we’re seeing is an astounding level of hypocrisy with certain bloggers. Yesterday super-blogger Dave Winer wrote a long post saying something funny was going on with Twitter, since they’ve made accounts for some bloggers (including us) “suggested accounts.” He says this will lead to a conflict of interest.

Perhaps so, although it is important to note that we didn’t know about becoming a suggested account, didn’t ask for it and frankly don’t get that much value out of it. Still, it’s something we need to be aware of and perhaps disclose. We’re also a default feed in some feed readers, and we may need to disclose that as well. Where do we draw the line? I’m not sure, it may need to be continually pushed back as the landscape changes. Transparency is key.

But it turns out Winer has a shady past when it comes to disclosing his own conflicts of interest. After his post yesterday, an ex-employee of his noted that Winer took at least one cash payment of $10,000 to promote a blog in a news aggregator he created. This wasn’t disclosed until the the person who paid blogged about it some time later.

Credibility = Shot. Permanently.

This is where the Spitzer phenomenon comes in. Winer doesn’t see his taking a payment as an issue, saying on Twitter “No regrets, we did the right thing, both in including him and in accepting his gratuity.” Sorry Dave, but you aren’t above the ethical rules you so keenly shout about.

Back to transparency, one change I’m going to make at TechCrunch is to get rid of all of our investment conflicts. I’ve long been an angel investor and have continued to make a very few investments even after starting TechCrunch. These investments are always disclosed and in my opinion we do more than enough to maintain transparency there. But it’s also a weak point that competitors and disgruntled entrepreneurs use to attack our credibility. So over the next few months I’m going to divest myself of all of those investments in an orderly fashion, and I’ll update readers on the progress. I’ll also discontinue making any further investments.

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