When Sony BMG Music Entertainment, the nation's second-largest record company, settled with New York Atty. Gen. Eliot Spitzer in July and agreed to pay $10 million for engaging in "pay-for-play" practices, Spitzer said such corruption reached "the very top of the industry."
Documents released by Spitzer charged that bribing radio programmers with plasma TVs, vacations and laptop computers in exchange for airplay was not only commonplace at Sony BMG, but also had "been tolerated and facilitated by senior executives."
Investigators identified one such executive by title: the executive vice president of promotion at Sony Music's Columbia Records. Spitzer stopped short of naming names.
But an inquiry by The Times has found that Spitzer was told that the trail led to two of the company's highest-ranking executives and some of the most powerful men in music: the Columbia vice president, Charlie Walk, and his boss, Sony Music Label Group U.S. Chief Executive Don Ienner.
Two sources interviewed by The Times said they'd told Spitzer's investigators that Ienner and Walk tolerated and condoned pay-for-play, which is generically referred to as "payola." A third source with firsthand knowledge of the investigation confirmed this.
In response to questions from The Times, Paul Gardephe, a lawyer who negotiated with Spitzer on behalf of Sony BMG, said in a statement: "There is absolutely no evidence that Ienner or Walk knew of any payola activities. If the attorney general's office had such proof, the settlement would have been dramatically different."
A spokesman for Sony BMG said: "After a long, in-depth investigation by the attorney general's office, this whole matter was resolved months ago. It's unfortunate that malicious gossip and false allegations by anonymous sources are now being used to damage the reputations of good and honest people."
Through their lawyers, Ienner and Walk declined to answer questions for this article. Attorneys for both men denied that either one condoned or participated in pay-for-play.
Sony BMG agreed to settle with Spitzer without affirming or denying his allegations, but acknowledged in settlement documents that "some of its employees pursued improper promotion practices."
However, according to three former Sony BMG executives and a fourth source with firsthand knowledge of the investigation, in the months leading up to the settlement, investigators made clear to representatives of Sony BMG that evidence showed that Ienner and Walk knew about pay-for-play.
