George Shultz and Trust

If the admiring American coverage of his death is to be believed, the lodestar of George Shultz’s life was one of trust. Shultz lived to be a hundred and, in an essay to mark the occasion of his centenary, Shultz held that ‘trust is the coin of the realm’. When trust was ‘in the room’ he wrote, ‘good things happened. When trust was not in the room, good things did not happen. Everything else is details’. He died two months later on 6 February 2021.

Shultz fought in the Second World War and worked for Eisenhower in government. He was one of the last survivors of the deceit-flavoured administration of Richard Nixon. Shultz focused on the desegregation of schools, one of the more honourable aspects of federal work in that period. His personal trustworthiness was not tarnished by association with Nixon.

During the Reagan years Shultz served as a long-term secretary of state. He was responsible for negotiations with the Soviet Union which concluded with the signing of a number of arms-reduction treaties. Proceedings were followed to and fro by Reagan’s butchered repeating of a Russian proverb: Doveryay, no proveryay – trust, but verify. Shultz later reflected that the public trusted Reagan because of his unmatched skill in communication; but also that Reagan’s capacity to communicate was built upon the fact that the public trusted the president implicitly.

Nonetheless, on occasion, Shultz had to risk his own credibility for the sake of the executive. When Reagan was first accused of, and finally admitted to, selling arms to Iran and funnelling the proceeds to the Nicaraguan contras, it was Shultz who testified to Congress that the administration had not known of the arms sales, nor where the money they generated went.

Reagan dissembled his admission of the deception with trademark skill. On his earlier, false denials, he said: ‘My heart and my best intentions tell me that’s true, but the facts and evidence tell me it is not.’

Shultz was less flamboyant: he spoke before Congress of ‘the flow of information [that the president deserves] to be given’ and how its lack meant that he and Reagan were effectively kept in the dark. Enough people trusted that explanation for the administration to weather the scandal.

Perhaps the defining story of Shultz’s life was a scandal which overtook his later years: the Theranos fraud. His involvement with the company attested to his willingness to trust even those who were unworthy of being trusted.

Theranos was a company which purported to be on the cusp of revolutionising medicine. Its CEO, Elizabeth Holmes, claimed that its new devices could perform any number of medical tests on barely a thimbleful of blood. The need to give many pints of blood for analysis would disappear.

Drawing blood would be as easy as pricking a finger, she promised, and practically painless. Diagnosis would become simple and medical care could become cheap and largely preventative. Many lives would be extended, or saved wholesale.

The company was soon valued at many billions of dollars. Holmes was briefly celebrated as a hero, and became a very rich woman. But as documented in John Carreyrou’s reporting for the Wall Street Journal and then in his book, Bad Blood, Theranos was in fact an audacious fraud.

Its machines did not work and the tests they performed were faulty. Theranos fabricated its results and lied to its investors. Those tests it performed for members of the public were wildly inaccurate. All the while, Theranos pursued whistleblowers and hounded its staff, one of them to the point of suicide.

Shultz was one of a distinguished group of luminaries and rich men who made up the company’s board, which included James Mattis and Henry Kissinger. The board was an ornament, and a testament to Holmes’ ability to manipulate men who should not, ordinarily, have been fooled. Shultz and his wife hosted Holmes’ thirtieth birthday party.

The trust the board extended to Holmes held for too long; Shultz’s too. All until a most extraordinary coincidence.

Tyler Shultz, George Shultz’s own grandson, worked for Theranos. He joined the company as soon as he left university, enthralled by its vision. He saw the hoax first-hand. The younger Shultz noted Theranos’ myriad deceitful practices and the uphill struggle of the company’s engineers to make the hype surrounding their machines match reality. He took his complaints, brushed aside by Holmes, first to his grandfather – who did not believe him – and then to the press.

Tyler Shultz idolised his grandfather and wanted to protect his reputation. He was one of Carreyrou’s first sources.

While the reporter worked away, Tyler Shultz was urged to keep silent by counsel. George Shultz, meanwhile, was the subject of entreaties from Holmes, whom he still believed. While the story unfolded, Shultz the grandfather and his grandson ‘hadn’t seen each other for the better part of a year and they communicated only through lawyers’. Carreyrou considered this estrangement one of the sadder episodes of the case.

Finally, after much of the reporter’s work was published and went unrefuted, Tyler Shultz succeeded in convincing his grandfather that the company was fabricating its results. Just as Theranos collapsed and criminal investigations began into its active directors, the two were reconciled.

After an episode which proved he was capable of trusting the wrong people, the elder Shultz was determined to put right the results of his mistrust. George Shultz let it be known that ‘he deeply loves and respects his grandson Tyler’ and is ‘very proud of Tyler’ for what he had done.

This piece was originally published at The Critic.

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