In a scene staged for maximum dramatic effect, complete with the mother and family of jailed dissident Shi Tao seated directly behind them, Yahoo CEO Jerry Yang and chief counsel Michael Callahan were grilled yesterday for over three hours by Rep. Tom Lantos (D - Calif.) and his House Foreign Affairs Committee.

"While technologically and financially you are giants," Chairman Lantos reprimanded them, with his face cast down and his eyes peering out like the famous promotional poster for A Clockwork Orange, "morally, you are pygmies."

Callahan opened by discussing his February 2006 testimony, during which he told a House subcommittee that Yahoo had no knowledge of the intent of a Chinese government order seeking information on Shi Tao, whom the government later sentenced to ten years' imprisonment for improperly revealing information. "I also emphasized my understanding that failure by the Yahoo China operation in Beijing to comply with lawful orders from government authorities," Callahan recited, "may have subjected the Chinese employees of that company to civil and criminal penalties, including imprisonment."

Lantos stopped him there. "Why do you insist on repeating the phrase 'lawful orders?' These were demands by a police state to make an American company a co-conspirator in having a freedom loving Chinese journalist put in prison. By what judgment do you call these orders lawful? These are the orders of a police state demanding cooperation of an American company."

"Yes, Mr. Chairman, and we sincerely regret the consequences, as you point out, of the Yahoo China operation having complied with those orders," Callahan responded.

"So will you continue to use the phrase 'lawful orders,"' Lantos pressed on, "or will you just be satisfied saying, 'orders' or 'requests?"'

Sheepishly, Callahan pretended Lantos' question dealt merely with semantics. "I can refer to it that way, if you like, Mr. Chairman," he said.

Lantos would not let go. "I'm asking you whether you consider it lawful to have the Chinese Communist police demand that Yahoo become a co-conspirator in sending a Chinese journalist to prison."

Callahan apologized for misinterpreting, then said, "It's my understanding that, under Chinese law, these are lawful. I understand that they do not meet the norms, certainly, of what the United States would consider to be lawful, but my understanding is that they were lawful orders in China recognizing the distinction between that and your point, sir."

How It Came to This

The sad tale of Yahoo's incomplete rendering of events to Congress began in January 2006, when representatives of Yahoo, Microsoft, Google, and Cisco were invited to appear before a Congressional Human Rights Caucus. It was not an official legislative function, but the spotlight was turned up, and the subject was how American companies do business in China. The chair of that caucus was Tom Lantos, and none of the four companies showed up.

Instead, they issued written statements which they had hoped would be entered into the Congressional Record. Yahoo saved time by merging its statement with Microsoft's. It included the following: "While we believe that companies have a responsibility to identify appropriate practices in each market in which they do business, we think there is a vital role for government-to-government discussion of the larger issues involved...We urge the United States government to take a leadership role in this regard and have initiated a dialogue with relevant US officials to encourage such government-to-government engagement."

As a Microsoft spokesperson would later say, the reason for not showing up at the Human Rights Caucus was that all four were scheduled to appear the very next day before Congress. That day was February 6, the place was a House Subcommittee on Asian affairs, and seated on the panel again was Tom Lantos. His outrage was evident even from the grainiest Web stream.

While witnesses expected to be asked about matters such as how corporations and governments can work together to ensure the free flow of information between them without upsetting anyone or sending someone to prison, what they got instead was an earful of the most shame-evoking language any congressman is capable of dishing out. At one point, Cisco counsel Mark Chandler was asked point-blank whether he thought Cisco ever did anything in China that it now feels ashamed of.

"Our company provides access to information for people all over the world, including China," Chandler responded then, "on a consistent global platform which maximizes the opportunity for freedom of expression."

You could almost hear the "wrong answer" buzzer sounding long before Lantos interrupted Chandler. Talking over him, he then passed the same question to Google counsel Elliot Schrage. "We've complied with legally binding orders," Schrage responded, "whether it's here in the United States or in China or any of the other 90 countries..."

And there was that phrase, "legally binding orders" - somewhat akin to the "lawful orders" comment Lantos would pounce upon yesterday. He wouldn't hear any more of it: "Well, IBM complied with legal orders when they cooperated with Nazi Germany," he said.

It was amid this torrential atmosphere that Yahoo's Michael Callahan first neglected to say his company knew anything about the political intent behind the Chinese government's request for Shi Tao's information. And it was this environment which Callahan chose not to return to when he neglected to tell Congress the testimony he did give in February 2006 was inaccurate, turning instead to the Hong Kong Privacy Commission.

Next: Yang: "We made no effort to conceal it..."