Wen Ho Lee Wins; News Organizations Lose

This is particularly notable because the news organizations were not actually named in the lawsuit. So why did they pay up? To avoid contempt charges against the journalists who covered Lee. Lee's suit alleged that his privacy had been violated when the government gave reporters information about his finances and polygraph tests, as well as other information. The reporters did not want to give up their sources for this information, and were to be fined and held in contempt for refusing to do so. In a statement, the five news organizations said they made the payment "to protect our confidential sources, to protect our journalists from further sanction and possible imprisonment and to protect our news organizations from potential exposure."
"The implications of this are just staggering," Jane Kirtley, a former executive director of the Reporters Committee for Freedom of the Press, told the New York Sun. She warned, notes the Sun, that "the deal could encourage litigation and demands for payment in connection with mundane reports on hospital statements about those injured in crimes and accidents."
"The journalists found themselves between a rock and a hard place after years of seeking relief from the courts and finding none," ABC senior vice president Henry S. Hoberman told the New York Times. "Given the absence of a federal shield law and the consistently adverse rulings from the federal courts in this case, the only way the journalists could keep their bond with their sources and avoid further sanctions, which might include jail time, was to contribute to a settlement between the government and Wen Ho Lee that would end the case."
For more information on a shield law, check out this USA Today editorial by Senators Christopher J. Dodd and Richard Lugar. "An independent reporter is often the only party a would-be whistle-blower can trust. Imagine a worker who discovers that her company has been polluting the local water supply and has paid law enforcement to look the other way. Can she expect her boss or the police to offer a sympathetic ear?" they write.
"In such cases, it is the very promise of secrecy by a journalist that ultimately protects the public's right to know. Without an assurance of anonymity, many conscientious citizens with evidence of wrongdoing would stay silent. They would rightly fear for their job, their reputation — even, in some cases, for their safety."
One might point out that there are instances in which internal mechanisms are in place for a whistleblower to make his or her concerns heard, making going to the press unnecessary – or worse, if the leaked information has national security implications. (That argument has been made regarding the secret CIA prisons story, for example.) I'm not sure I quite understand Kirtley's concern that the Lee deal "could encourage litigation and demands for payment in connection with mundane reports on hospital statements" – isn't this an issue of protecting a source? But it does nonetheless have troubling implications, particularly since Lee was not disputing the accuracy of the information that was printed about him.