The problem is that the project status "green shifted" as it rose through the various levels of management. The people on the ground were very clearly reporting a red project status, our project manager wanted to play it safe so reported yellow status, and his manager was more political yet and reported green status.
Green-shift is a form of information "erosion". When rocks erode under the influence of wind, rain, sand and dust, the sharp edges of the rocks disappear first. Next the shape of the rocks will change and finally the rock will crumble into pieces losing its original form entirely.
Erosion of information is a natural phenomena in communication. Every time a story is told, it is changed a bit. This way insignificant events may become spectacular (red-shift) and alarming reports may become uplifting (green-shift).
I like the solution that Scott proposes that by holding scrums the green-shift can be reduced. Three elements may play an important role in this. First, direct communication instead of passing the information over several layers. Less layers means less erosion or green-shift. Second, frequent communication reducing the delays. Less delays means less (time for) erosion. And thirdly, a scrum adds non-verbal communication that (written) reports are lacking. This improves the interpretation of the information, and interpretation is one of the sources of information erosion.