He was the sheriff of Wall Street, a rising star whom some believed might eventually occupy 1600 Pennsylvania Avenue. Beyond Wall Street, he wanted to change the ethics of New York State and perhaps the nation as a whole. But his own ethical decisions paved the way for his political demise and his disgraced exit from the Statehouse in Albany, N.Y., long before the White House became a reality.

On March 17, Eliot Spitzer, former New York state attorney general who prosecuted corporate scoundrels, resigned after it came to light that he had employed the services of prostitutes. Spitzer had been a high-profile and controversial figure for some time, so it is no surprise that the discovery of his indiscretions and his eventual downfall made national news.

The story felt oddly familiar. Again and again, we have seen politicians, celebrities, corporate leaders, even religious figures shamed by the public revelation of an indiscretion on their part. Some of the scandals have involved sex; others involved money or power. But there are two common threads: a poor choice made and a series of deceptions to cover it up.

And that makes the two weeks after Spitzer resigned and Gov. David Paterson was sworn in to replace him all the more extraordinary.

Why? Because Paterson knew he had made choices that could put his career and reputation on the line too. So he did something quite unusual: He started talking. Talking about affairs he’d had over the course of a few years. Talking again about his drug use in the 1970s. Talking even more about how he was a man who made decisions at various points in his life that he wouldn’t make again.

People were intrigued, even perplexed, that someone would come out wearing his past mistakes on his sleeve. Bloggers found it amusing. Late-night talk-show hosts included it in their routines. Reporters began investigating the possibility of illegal activity related to the incidents that Paterson confessed.

But so far, nobody has called for Paterson’s impeachment. Within a few days, the conversations in Albany about Paterson revolved around his budget requests rather than his personal failings. In other words, people are now talking about the job he’s doing rather than whether he’s the man to do it.

Spitzer’s problems and resignation became the lead story in national news. Why did Paterson get a pass?

Well, the truth is that he didn’t get a pass. When it comes to ethics, people rarely get away with misconduct, even though it might seem like they do. Paterson took the heat, the barbs, the questions about his decisions, and the jokes about his sanity. The new governor admitted to being an imperfect human being, but demonstrated courage and foresight by bringing issues into the light of day, rather than sweeping them under the rug.

Although many still try to dodge bullets and wiggle through tight ethical spots, more and more leaders and organizations choose to do exactly what Paterson did. They come forward and say: “We made a mistake,” or “We discovered this problem.” Transparency is at the forefront of best practices in finance, audit, public relations, and leadership. Self-disclosure prevails.

There is an increasing understanding in business circles, and in the public sphere generally, that trustworthiness is not about having a lily-white past, but about having the candor to admit past mistakes or wrongdoings, face the consequences openly, and commit to walking the higher road—or at least trying to—in the future. It’s also about not fooling oneself that having power means never getting caught.

What is there to be learned from all this truth telling? Is there a better (or worse) way to do it?

Whether you’re the leader of a state, a company, a school, or even just a short-term project, there are lessons to be learned from Spitzer and Paterson, as well as the countless other examples of those who chose not to be transparent and those who did. Like it or not, when you accept the mantel of leadership, you take on the burden of being in the limelight. People look up to those in positions of power and authority, and they also feel entitled to scrutinize leaders’ attitudes, decisions, and actions.

And you may be a leader without even realizing it. Last year, the Ethics Resource Center asked more than 1,000 people nationwide whom they considered to be “top management.” Fifty-five percent believed that top management was the head of their business unit, region, or location, rather than the CEO, president, or board of the whole company. In other words, tone at the top resides in several different locations in the organization, and that means the responsibilities and challenges spread far below the C-suite.

Some corporate leaders might feel that the downfall of Spitzer is cause for relief: The sheriff has left the building, so everyone can relax and go back to their previously scheduled tomfoolery. It’s business as usual; feel free to walk as close as possible to that bright line.

Yet anyone who takes that stance is sorely mistaken. The 2008 drama in the New York Statehouse reveals that the past rarely stays buried. Perhaps what makes the biggest difference is not legality, but who chooses to dig it up.

One governor frequented prostitutes; the other used drugs in his younger days and carried on multiple affairs over a number of years. You can argue about whose transgressions are worse, but you cannot debate that one’s political career has gone down in flames while the other feels comfortable calling New York state’s elected officials to task for not finishing the budget.

One governor admitted his mistakes and was willing to take the heat, so the people of New York are letting him stay in the proverbial kitchen. The other was caught and left in shame. The Spitzer-Paterson saga has taught us one final, critical lesson: Candor counts.

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