Following publication of The New York Times’ revelations of secret Microsoft funding, and the questions they raised about “The Independent Institute”’s actual independence, Institute founder and president David J. Theroux published a response at the Institute’s website. It is available (at time of writing) at http://independent.org/tii/news/990919Theroux.html.

The response, dated the day after the Times article, is deeply unconvincing (reasons below). It only reinforces the impression created by the Times article of a corrupt research institution headed by a deceitful leader.

The central point of the Times article is the revelation of substantial, undisclosed payments from Microsoft to the Institute. These were made as the Institute was aggressively and visibly promoting Microsoft’s cause during its antitrust trial. The payments were undisclosed for an obvious reason: they constituted a patent contradiction of the Institute’s claim to independence. (A letter to the Times editor published September 21, 1999 goes further, commenting that “Microsoft’s secret financing of the so-called Independent Institute (front page, Sept. 18) is disturbingly similar to conduct that the United States Supreme Court has found to constitute fraud on the court. [...] In a 1944 case, officers and lawyers of a party improperly engineered a trade journal article signed by an ostensibly disinterested expert in an attempt to influence the outcome of a patent dispute. The involvement in the scheme of lawyers -- officers of the court -- was fraud on the court and warranted severe sanctions. ”)

If an ethical person were thus accused, one would expect a convincing, to-the-point refutation of the unjust charges. Mr. Theroux’s response is not convincing, and it brims with red herrings.

The dubiousness of the response is manifest as early as its title. By pretending that the Times article shows that Institute research has struck “a sensitive nerve,” the title affects a posture suggesting that Institute opponents, not the Institute itself, are on the defensive.

The first of the numbered points which follow attacks the anonymous source who provided the Institute’s “purloined” financial records to the Times, and criticizes the reporter for “choos[ing] also to traffic and benefit from stolen goods.”

Attacking the source of the revelations, of course, is no defense. But what is striking is the extraordinary naiveté on display. The sanctimonious objection to “stolen goods” (referring to information revealing the Institute’s attempt to distort public policy for private gain) suggests an utter lack of comprehension on the part of the Institute president as to the nature and responsibilities of the press.

Theroux does address the Times allegations in point #2 of his response, asserting that he “clearly stated” the extent of Microsoft’s contributions at the time of the Institute’s press conference for its “Open Letter to President Clinton on Antitrust Protectionism.”

If Theroux could establish that he was open about Microsoft funding, it would be a thoroughly effective refutation of the Times’ secrecy charges. Of course, he cannot, because it is not true. If he had indeed “clearly stated” something so relevant, it would have been included in news reports of the press conference and he would be able to prove that he had made the statement. And if he had revealed this to the 240 economists who signed his open letter to President Clinton, there would be a written record he could point to. But there is not. Theroux is lying.

Theroux also seeks to discredit the Times article by comparing the Microsoft contributions it reports with actual figures based on the Institute’s financial records. Here too, as if compelled by instinct, Theroux resorts to deceit. The Times report presents Microsoft contributions as a percentage of external Institute funding. The figures Theroux produces for contrast are percentages of total Institute funding (which includes substantial amounts Theroux has contributed personally).