You bet they are. The latest example of the Journal's coziness with Big Brother is a series of well planned, well timed leaks that have obviously come from the office of New York State Attorney General Eliot Spitzer's office and dutifully reported in the Journal. The leaks have been designed to damage the reputation of Citicorp chairman Sandy Weil, and at the same time advance the ugly political career of the power hungry Spitzer.

This is nothing new for the Journal. Prior to the current episode, the Journal played an embarrassing role in the SEC's Leak Fest that attempted to discredit Michael Milken.

Here's how the game is played. It always goes something like this: A Wall Street Journal reporter sits at his desk and takes a giant step in investigative reporting. He answers his phone. On the other end is a government official who wants to advance some cause or his own personal career. Through his broad powers to subpoena all sorts of documents, the government official has finally found a tiny piece of information that he knows he can turn into a major brouhaha. So instead of quietly conducting an investigation on a real crime, the government official sees headlines with his role as superman in those headlines. And the government official starts to leak and leak. The Journal reporter, with hands cupped, will take whatever information the leaking government official has and place the leaky residue on the front page of The Wall Street Journal. 

Now the calculating viciousness of these leaks is not a pretty sight. Once you understand how these leaks work, you will understand just how ugly of a game the Journal is playing in letting the government types get away with this.

It is not like the government official has a story to tell on some major crime, sits down with a reporter, fills in the reporter and the reporter files a complete story. No, the leaker has calculated a series of leaks to be made over a number days for maximum public exposure and headline garnering. It is trial by evil headline, masterminded by the government official with The Wall Street Journal used as the tool.

In the current case, we have as subject of the leaks Citicorp chairman Sandy Weil. Now the leaker is always a wimp. He hides behind a shroud of anonymity. But in this case, you can be sure through a process of elimination that it is Spitzer (or someone very close to Spitzer, on behalf of Spitzer). Hey Eliot, if it is not you or one of your cronies, sue me for libel. I would love to get you on record in a deposition on this.

Now I don't personally know Sandy Weil, nor have I ever worked for any of the corporations he has run, but I have followed his career over the years. He has always been a shrewd and successful businessman. From what I hear, most people like working for him. He is truly a good guy on Wall Street. The Wall Street Journal has to know this also. But when the government comes with a leak, why let a man's lifelong good reputation get in the way of a week or two of government-sponsored and distorted headlines.

So here's what is happening.  A couple of weeks back, the Journal comes out with a report from guess who? An anonymous source. The report says that the government, which is Spitzer in this case, has informed members of Citicorp's board that Sandy Weil should retain separate legal counsel, separate from Citicorp's, since there may be a conflict between chairman Weil and Citicorp.

A few days later, the Journal reports another leak about a former securities analyst for Citicorp, Jack Grubman, and the fact that he sent out an email at one time to a friend and that in the email, he states that he raised his rating on AT&T stock to help Weil in a boardroom power struggle at Citicorp. According to the Grubman email, Weil, who sat on AT&T's board, wanted to influence AT&T chairman Michael Armstrong, who sat on Citicorp's board. The email implied that Weil needed an upgrade in AT&T's stock to influence Armstrong during the power struggle at Citicorp. (To the Journal's credit, and probably at the suggestion of Journal lawyers, they did include one paragraph that said Armstrong and Weil are good friends and that Weil didn't need to go out of his way to influence Armstrong. But this was one tiny paragraph in a major front-page story that implied just the opposite.) 

After this leak in the Journal, Grubman came out and essentially said that he was boasting in the email to look important to his friend, the email recipient, and that Weil did not really try to influence him.

Now three points about the information in the leaks up to here.  Let's assume all the facts of the leak are accurate.

First, in Spitzer's political world of "You watch my back and I'll watch your back," Spitzer is shocked, shocked to find a hint of this at Citicorp. Yeah, right.

Secondly, just what exactly is wrong with Weil attempting to influence his analyst? Weil is chairman of the company, can't he have any say as to what goes out under the Citicorp name? Or in Spitzer's world, is a chairman limited to picking out colors for the company's logo and employees can do whatever the hell they want?

Thirdly, Weil's positive view on AT&T was accurate. With dead bodies all over the telecom industry, Ma Bell continues to chug along.

So now back to the leaks.  Apparently, Grubman may have tried to pull a bit of a power play with Weil. Grubman wanted to get his twins into a very exclusive New York city nursery school, the 92nd St. Y nursery school, (I kid you not, this was the topic of leaks for days, on the front page of The Wall Street Journal!.) And in the same email that Grubman updated Weil on his analysis of AT&T stock, Grubman asked Weil how it was going as far as help on getting the twins into the 92nd St. Y (hint hint).

To make a long leak short, Weil through Citicorp donated a million dollars to the 92nd St. Y and the Grubman twins are at the 92nd St. Y, apparently happy with the quality of the crayons.  Weil, Grubman and 92nd St. Y officials all say there was no connection between the million bucks and the twins’ acceptance.

So let's take a look at the leaks here. Grubman wants to get his twins into a good nursery school. This is not a bad thing. The school Grubman has his eyes on is super exclusive, an exclusivity that most of middle America can't have a clue about. But let me put it to you this way: The very, very rich live very different than the rest of us. I just read, for example, that London's Prince Charles has a servant who squeezes the toothpaste from the tube and puts it on Prince Charles' toothbrush every morning. So it is a world none of us can really comprehend.  

Anyway, this exclusive nursery school is just that EXCLUSIVE, but a million bucks in the nursery's till apparently makes you exclusive enough.

So here we have Weil sitting on the board of AT&T, and I guarantee you Weil and the other board members aren't trying to make decisions that will drive AT&T stock into the ground. So Weil goes to these board meetings while his pesky analyst refuses to upgrade his view on AT&T. In other words, Grubman is really saying Weil doesn't know what he is doing over at AT&T. It has to be annoying and embarrassing.

So Grubman brings up the topic of the twins (Grubman thought Weil had pull with the school). Is Weil supposed to ignore him and get the analyst pissed off at him? That's really going to get the AT&T stock upgraded. So Weil has Citicorp donate the million dollars to the nursery. It's no big deal. Grubman was already making tens of millions. It was a business decision made for business purposes to keep a very important employee happy. End of story, except for the fact that Spitzer has been snooping through Wall Street's emails trying to find out why brokerage research analysts aren't independent (see my column The Evil and Wacky World of Eliot Spitzer). Spitzer, in his snooping, found Grubman's emails and is trying to blame the entire damn internet stock market crash on the fact that Weil got Grubman's twins into a nursery school! This is one top cop, I tell you, and the Journal is lapping up this leak as though it is a real story. It's disgusting.  

Second, be very careful of what you write in emails. Government hasn't figured out how to read our minds yet, but Spitzer has clearly shown that the government will use and distort, for the personal advancement of the snooping government official, any email it can.

And as government powers continue to grow, more and more of this evil snooping will go on. It will turn us from a freedom loving people into a people who will always be wondering who is snooping on us today.         

As for Spitzer, he is out there looking for more headlines. The last report is that he is interviewing officials at the nursery school. Let me close this way. Any government official that is interviewing nursery school officials to find out how you got your children into nursery school is very, very dangerous and a real punk.