Corporate Watch : Hill & Knowlton : Corporate Crimes
A Corporate Profile
By Corporate Watch UK
Completed June 2002
4. Corporate Crimes
Managing the outrage is more important than managing the hazard Thomas Buckmaster, 1997
A Corporate Profile
The Torturers Lobby
In 1992 The Center for Public Integrity published its report on lobbying and PR efforts by repressive regimes, The Torturers Lobby. Hill and Knowlton topped the list of earnings, making $14m in one year from a list of human rights abusing states including Indonesia (responsible for genocide in East Timor and West Papua), China, Kuwait, Israel, Egypt, and Peru. They earned $1.2m from Turkey alone from 1991-92. The contract with China was accepted shortly after the Tianenman Square massacre when China needed to clean up its tarnished image.
The Massachusetts-Burma law is a controversial piece of legislation excluding any corporation that trades in Burma from contracts for Massachusetts state government. Similar selective-purchasing laws have sprung up in at least 18 cities across the USA banning companies that trade with a number of repressive regimes from government contracts.
Naturally such legislation has come under attack from corporate interests, particularly from the National Foreign Trade Council (NFTC), a coalition of US-based companies, which has taken the state of Massachusetts to court over the law.
Seeking to distance itself from charges that it places economic interests above human rights in Burma, the NFTC hired the Wexler Group, an independent unit of Hill and Knowlton, to set up a front group, USA Engage, to do the dirty work for it. USA Engage, which was launched in April 1997, portrays itself as a "broad-based coalition representing Americans from all regions, sectors, and segments of our society". It promotes an agenda of sustained involvement and engagement, particularly economic, with tyrannical governments, in order to promote democracy around the world. And naturally it underscores it s message with appeals to the need for a strong American economy.
Though it claims over 600 members, USA Engage is really dominated by 50-100 active members. The oil industry is heavily represented. Unocal, notorious for their Burmese gas pipeline, built with forced labour, is represented by their lobbyist, Jack Rafase. Texaco and Mobil, which have long lobbied against sanctions on Nigeria are members. As is Boeing who sell aeroplanes to China and has long lobbied for Chinas Most Favoured Nation trading status, and Caterpillar who do significant business in Burma as well as other regimes such as Sudan, Indonesia and Colombia which have also been threatened with sanctions.
On of USA Engages first priorities was to defeat the proposed Wolf-Specter Freedom from Religious Persecution Bill of 1997, which aimed to introduce sanctions against countries that restrict religious freedoms. Their campaign, which involved strategic lobbying and enlisting religious leaders such as Billy graham, was successful. And the group has been actively promoting anti-sanctions legislation such as the Enhancement of Trade, Security, and Human Rights through Sanctions Reform Act since then, as well as lobbying against selective purchasing laws and other restrictions on international trade and investment based on social and environmental objectives.
El Paso Natural gas
In the early 1960s El Paso Natural Gas was barred, by the US Supreme Court from buying the Pacific Northwest Pipeline Company. Such an acquisition, the court concluded would have an anti-competitive effect and ultimately harm the consumer. El Paso turned to H&K for help in overturning the decision. New competition legislation was being considered that might be influenced in such a way as to supercede the Supreme Court ruling.
H&K brought pressure to bear on the chairman of the Senate Committee considering the new legislation. They did this by writing to all the chambers of commerce in the Senators home state and asking their members to press for new legislation. H&K also provided materials for newspapers and coached witnesses, friendly to El Pasos cause, for the Senate hearings and helped them to prepare their testimony. In this way El Paso got the legislation they wanted and were able eventually to buy up the pipeline company.
In October 1988, three days after the Bank of Credit and Commerce International (BCCI) was indicted by a federal grand jury for conspiring with the Medellin Cartel to launder $32,000,000 in illicit drug trafficking profits, the bank hired H&K to manage the scandal. Robert Gray also served on the board of directors of First American Bank, the Washington D.C. bank run by Clark Clifford (now facing federal charges) and owned by BCCI. Furthermore BCCI was implicated in fraudulent accounting, tax evasion and arms smuggling. BCCI is also alleged to have handled many CIA accounts since the early 80s.
A Report by Senator John Kerry and Senator Hank Brown to the US Senates Committee on Foreign Relations, concluded that: Hill and Knowlton partners knew of BCCI's reputation as a "sleazy" bank when it accepted the account in October, 1988; Hill and Knowlton made contacts with Capitol Hill on behalf of First American, and BCCI's lawyers, Clark Clifford and Robert Altman, on issues pertaining to BCCI, despite publicly claiming that they undertook no lobbying operations on behalf of BCCI; and in the process of assisting BCCI with an aggressive public relations campaign designed to demonstrate that BCCI was not a criminal enterprise, and to put the best face possible on the Tampa drug money laundering indictments, Hill and Knowlton ended up providing information to the Congress and to the press and public that was not merely misleading or distorted, but actually false. Hill and Knowlton assisted in discrediting people who were providing accurate information about the underlying situation, including a former BCCI officer, an investigative journalist and his publisher. Given Hill and Knowlton's close ties to both political parties, and its influence in Washington, this was especially unfortunate.
Whilst Hill and Knowlton claims that it no longer works for Enron, a former Hill and Knowlton staffer has been working for the family of Enron CEO Kenneth Lay in the wake of the 2002 accounting scandal. When the scandal erupted, Sharon Lay, Kens sister, contacted M.A. Shute, who once ran H&K's Houston office and handled Enron, to spearhead the family PR offensive.
Chute organised Linda Lays tearful appearance on NBC's "Today" program, in which she falsely claimed that the family was financially ruined by Enrons collapse and that her husband was the victim of devious Enron executives whose financial shenanigans led to Enron's ruin.
H&K staffer Brian Gill was arrested on March 20, 2002 after allegedly fraudulently collecting money which he claimed was to go toward a fund for New York City fire fighters in the aftermath of the World Trade Centre disaster.
The National Conference of Catholic Bishops
In 1990, Hill & Knowlton took on an anti-abortion campaign sponsored by the National Conference of Catholic Bishops. [www.demossgroup.com/article.htm] The account was estimated to be worth around $5m and employed all of the modern PR tricks. It did however expose H&K to considerable criticism internally and externally and resulted in a number of resignations.
The NCCB had wanted help in altering the debate and creating a more conducive political climate for their anti-abortion position in response to the increasingly successful pro-choice campaign. The account had been taken on by H&Ks Washington office without consideration for how other H&K employees would feel about such a controversial issue. Employees in other H&K offices found out about it from the newspapers and reacted unfavourably to the news. There was considerable outrage inside H&K, particularly in the New York office and eventually the account was dropped.
The Church of Scientology
Another of the scandalous accounts taken by H&K after its acquisition by WPP Group included its work for the Church of Scientology. After the death of its founder L. Ron Hubbard, the Church turned to Hill and Knowlton for help in cleaning up its tattered image. The Church had been embroiled in controversy over its strong-arm tactics in dealing with its critics. Eleven of its members had been jailed in the early 1980s for burglarising and wire-tapping several government agencies that had been investigating it, including the US Internal Revenue Service. In 1991 Time had described Scientology as a highly profitable global racket that survives by intimidating members and critics in a Mafia-like manner.
The broad aim of H&Ks campaign was to present Scientology as grossly misunderstood, but H&Ks activities went beyond the normal PR remit. In addition to dealing with media appearances and lobbying on Capitol Hill, they handled Freedom of Information requests to get government documents relating to the IRS investigation and H&K executives were even sent to bail out two scientologists who had been arrested.
As part of their work for Scientology H&K engaged in lobbying against the licensing of certain prescription drugs. These activities involved calling for a congressional investigation of the drug Prozac. At the same time the advertising agency, J Walter Thompson, another WPP Group company, had an account with Eli Lilly, the makers of Prozac. Who raised complaints with WPP. Eventually the Scientology contract was dropped due to complaints from them and other pharmaceutical companies.
The Wise Men
IN 1937 Jack Hill, created an elite, invitation-only club of PR practitioners. The group called itself the Wisemen. The Wisemen made recommendations for the PR effort for the Manhattan Project and the early civil nuclear programme in the 1940s and 50s, but otherwise little is known about the activities of this very private club.
Managing the Tobacco Crisis
Hill and Knowlton has been involved with the tobacco industry since the 1950s, and its activities constitute one of the first and most successful examples of crisis management.
In the early 1950s a number of scientific papers were published strongly suggesting a link between tobacco smoking and cancer. In response to what the industry referred to as the 1954 emergency Hill and Knowlton was hired to devise a PR strategy for the industry. According to PR Watch this is the same basic strategy in use today, described by the American Cancer Society as a delaying action to mislead the public into believing that no change in smoking habits is indicated from existing statistical and pathological evidence.
An H&K employee described the situation thus, There is only one problem confidence, and how to establish it; public assurance, and how to create it in a long term interim when scientific doubts must remain.
In 1954 H&K established the Tobacco Industry Research Committee (later renamed the Council for Tobacco Research) which quickly launched a newspaper promotion campaign with full page adverts appearing in more than 400 American newspapers. The ad, entitled A Frank Statement to Cigarette Smokers expounded themes that echo in most of the PR crisis campaigns ever since. It assured the public that the industry took its responsibilities to the pubic very seriously promised more research, openness and cooperation with the authorities on the health implications of tobacco. To improve its credibility, the TIRC soon hired Dr Clarence Little, previously MD of the American Society for the Control of Cancer, as its director.
In 1958 H&K helped to set up another tobacco front group, the Tobacco Institute. Described by The Public Relations Journal in 1990 as one of the most formidable PR/lobbying machines in history, the Institute was by then spending $20m annually.
So deeply was Hill and Knowlton involved in the tobacco cover-up that it was prosecuted throughout the nineties in the many of the same cases as the big tobacco companies.
Three Mile Island
When control systems failed at the nuclear power plant at Three Mile Island, Robert Dilenschneider of H&K was brought in to handle public relations for Metropolitan Edison, the operators of the plant. Either his advice was very poor or it was unheeded, for what transpired was a classic example of how not to handle public relations in a crisis.
Metropolitan Edison immediately tried to downplay any hazards and gave out contradictory and inaccurate information. While the local populace were evacuating themselves Metropolitan Edisons CEO was attempting to allay their fears with tortured euphemisms, when asked what might happen if the hydrogen bubble that had built up inside the reactor ignited he admitted that it might lead to a spontaneous energetic disassembly of the reactor.
Partners for Sun Protection Awareness
In 1994 H&K formed Partners for Sun Protection Awareness a front group for Schering Plough, the worlds largest manufacturers of sun-tan lotion. In response to fears about the thinning of the ozone layer and increasing risk of skin cancer the Partners campaign urges people to use sun block to protect themselves. H&K gained a little green credibility for the campaign when it successfully persuaded the Sierra Club and the Natural Resources Defence Council to lend their names, without them even knowing of the connection to Schering Plough. Naturally the campaign had nothing to say about dealing with the causes of ozone depletion.
Coode Island, Australia
In 1991 a section of the Coode Island chemical terminal in Melbourne, Australia, operated by Terminals Pty Ltd exploded causing huge clouds of toxic gases to drift toward the city. Six weeks later the local police held a press conference, pre-empting a major national TV investigation of safety within the chemical industry. At the conference they announced that they had evidence that stainless steel pipes had been cut with oxy-acetylene cutting equipment. Whilst it emerged that they had questioned no environmentalists, they speculated that this had been the work of environmental protesters. The fact that oxy-acetylene torches cannot cut stainless steel was ignored.
Years later Brian West, of H&K Australia revealed at a PR conference that H&K had been advising Terminals Pty on how to handle the crisis. He used the case as an illustration of how in the field of crisis management PR practitioners must strive to portray their clients as victims rather than perpetrators in order to win public sympathy.
Bovine Somatatrophin or recombinant bovine growth hormone is a genetically engineered hormone, developed by Monsanto, to increase the milk yield from cows.Like Burson-Marsteller, H&K also worked on getting FDA approval for bovine growth hormone. They were employed by Monsanto to act in the USA where they managed to defeat several attempts by legislators in different states to enforce labelling of rBGH treated milk.
In Canada, where they worked alongside lobbyists from S.A.Murray Consulting, H&K gained access to senior Health Canada officials in order to push for rBGH approval, evidently to great effect. Health Canada scientists testifying before a Canadian Senate agricultural committee revealed how they were put under pressure by their managers not express their concerns about the safety of rBGH. A leaked government document showed plans for controlling the testimony given by the scientists at the hearings. It also revealed that Health Department officials were very concerned about what Monsanto lawyers and its Government Relations representatives in Ottawa would think if confidential information were to be revealed. Ultimately however, rBGH was banned in Canada.
Animas-La Plata Project
The US Bureau of Reclamation hired Hill and Knowlton to conduct PR for the controversial Animas-La Plata irrigation project in SW Colorado. The scheme which would have diverted a significant proportion of the water from the Animas River for crop irrigation had come under attack from numerous environmental and local citizens groups, due to its impact on the river ecosystem. A document leaked from H&K revealed their plans to "demonstrate to Congress and the Administration the overwhelming public support" for the project and silence our opponents by identifying and publicizing the splits in the environmental and deficit reduction coalitions and seek to build alliances in both of those quarters."
In spite of H&Ks efforts the Animas La Plata project has not yet been built and proposals have been drastically downscaled.
IN 1983 H&K worked for building materials manufacturers, US Gypsum. Gypsum which had been using asbestos in many products, was becoming entangled in a public controversy. Documents released as part of a court case brought by the State of Baltimore against US Gypsum showed how the issue was handled.
H&K advised Gypsum that the "the spread of media coverage must be stopped at the local level and as soon as possible" and that Gypsum should create an industry group to "take the heat from the press and industry critics." H&K also suggested that Gypsum enlist scientists and doctors as "independent experts" to downplay issues about the health risks associated with asbestos. "The media and other audiences important to U.S. Gypsum should ideally say, 'Why is all this furore being raised about this product?' We have a non-story here," concluded H&Ks advice.
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Citizens for a Free Kuwait
H&Ks biggest ever contract was to conduct PR on behalf of the government of Kuwait (the Kuwaiti Royal family) after the invasion of Kuwait in August 1990.
The ambitious aim of the campaign was to persuade the American people to support all out war on Iraq. This was to be no easy task, Iraq maintained very large armed forces, the American public had since Vietnam been very reluctant to risk the lives of large numbers of its servicemen, and the Kuwaiti regime was not a sympathetic one, being itself a brutally repressive regime that had mercilessly crushed the countrys democracy movement. However they did have the tacit support of the first Bush administration.
The Kuwaiti govt rapidly hired twenty or so public relations, law and lobbying companies in a campaign to be masterminded by H&K. Under the terms of the US Foreign Agents Registration Act foreign sponsored propaganda campaigns should be exposed to the American public, but in this case the Department of Justice chose not to enforce the Act.
Initially H&K set up a front group under the name Citizens for a Free Kuwait, to spearhead the campaign and to channel funds from the government of Kuwait. Over the following 6 months the Kuwaiti government funded CFK to the tune of $11.9m, $10.8m of which went on fees to H&K.
The campaign was headed by Craig L. Fuller, head of H&Ks Washington office and previously chief of staff to George Bush snr., when he had been vice president. Under him were 119 H&K execs in 12 offices through out the USA. According to journalist John MacArthur, "The H&K team, headed by former U.S. Information Agency officer Lauri J. Fitz-Pegado, organized a Kuwait Information Day on 20 college campuses on September 12. On Sunday, September 23, churches nationwide observed a national day of prayer for Kuwait. The next day, 13 state governors declared a national Free Kuwait Day. H&K distributed tens of thousands of Free Kuwait bumper stickers and T-shirts, as well as thousands of media kits extolling the alleged virtues of Kuwaiti society and history. Fitz-Pegado's crack press agents put together media events featuring Kuwaiti "resistance fighters" and businessmen and arranged meetings with newspaper editorial boards. H&K's Lew Allison, a former CBS and NBC News producer, created 24 video news releases from the Middle East, some of which purported to depict life in Kuwait under the Iraqi boot." CFKs 154 page book Rape of Kuwait was mailed to hundreds of media outlets.
H&K commissioned daily opinion polls from the Wirthlin Group, in order to gauge the public mood and identify the themes and slogans to concentrate on. It was soon learnt that the message most likely to motivate public support for war on Iraq was the perception of Saddam Hussein as an evil madman who even committed atrocities against his own people and had to be stopped.
The story that may have started the Gulf war came out at a hearing by the Congressional Human Rights Caucus. The Caucus outwardly resembled a congressional committee, in reality however it was just an association of politicians. Its chairmen, Californian democrat, Tom Lantos, and Illinois republican, John Porter also co chairs of another group known as the Congressional Human Rights Foundation which happened to occupy free office e space in H&Ks Washington DC offices.
The story was given as testimony to the Caucus by a Kuwaiti girl known only as Nayirah (her family name was kept secret supposedly in order to protect her relatives from reprisals by the Iraqis). She told how, as a volunteer at the Al-Addam hospital in Kuait, she had seen Iraqi soldiers taking babies from incubators and leaving them to die on the floor.
The story captured the medias interest and was repeated countless times over the next three months having a huge impact on public opinion, even Amnesty International took up the case. Only much later, in investigations by journalist John MacArthur, did it emerge that Nayirah was in fact the daughter of the Kuwaiti ambassador to the USA, that she had been coached in giving the testimony by Lauri Fitz-Pegado, H&Ks vice-president, and that the story was entirely untrue. Given the narrowness of the Senates five vote majority to declare war, this, the most resonant of all the stories of the Iraqi occupation of Kuwait may well have tipped the balance ion favour of the Gulf War.
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American Association of Advertising Agencies
In 1960 H&K was hired by the American Association of Advertising Agencies to improve their image. The Association believed there to be a deep-seated emotional distrust of the ethics, believability and taste of advertising which needed to be addressed.
H&K made a series of recommendations. Firstly they recommended that the AAAA did not use advertising to address the issue. H&Ks researches had shown that the distrust was held by a minority of the population and they felt that an advertising campaign might arouse suspicions amongst the wider public.
Instead they advised establishing a thought-provoking magazine to send to prominent opinion formers, and working closely with editors and writers in a wide range of fields including those working on school and college text books. In addition they suggested sponsoring a seminar on advertising at a major university. This would provide an opportunity to study the thoughts of educators and students. An in-depth study of thought-leaders in 16 major cities was also advised.
International Olympic Committee
In the wake of the 1998 International Olympic Committee (IOC) scandal, in which the IOC was accused of taking bribes from cities bidding to host the games, the IOC hired H&K in January 1999, to handle the crisis. By the end of 1999 the IOC had paid H&K over US$ 2m for their services.
Rather than genuine reform, documents leaked to investigative journalist, Andrew Jennings, show that H&K were assisting the Committee in simply cleaning up their image. The number one priority of H&Ks work was to protect and enhance the image and integrity of the International Olympic Committee, its leadership
and they listed amongst challenges to be overcome journalists, including Jennings, who wrote three books about the scandal.
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 Thomas Buckmaster, H&K exec, at the "National Grassroots Conference for Corporate and Association Professionals", Florida, Feb 1997, www.prwatch.org/prwissues/1997Q1/risky.html
 Stauber J and Rampton S, 1995, Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry, p.150; Johan Carlisle, 1993, Covert Action Quarterly 44
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p.?
 Ken Silverstein, Mother Jones Magazine 28-4-98, So You Want To Trade With a Dictator, www.motherjones.com/mother_jones/MJ98/silverstein.html, date viewed 3-5-2002
 Ken Silverstein, Mother Jones Magazine, 28-4-98, So You Want To Trade With a Dictator, www.motherjones.com/mother_jones/MJ98/silverstein.html, date viewed 3-5-2002
 Mass-Burma: Human Rights Objectives Overruled, Corporate Europe Observer 4, July 1999, www.xs4all.nl/~ceo/observer4/index.html#6
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p.75
 Johan Carlisle, 1993, Covert Action Quarterly 44
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p.369
 The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate by Senator John Kerry and Senator Hank Brown, December 1992
 ODwyers PR Daily, 29-1-2002
 ODwyers PR Daily, 27-3-2002, www.odwyerpr.com/archived_stories_2002/march/0327hk_staffer.htm, date viewed 3-5-2002
 The Feminist Chronicles, www.feminist.org/research/chronicles/fc1990.html, date viewed 3-5-2002
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p359
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p359-361
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p.357
 Miller K, 1998, The Voice of Business: H&K and Post War Public Relations p.132
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, p 358
 Stauber J and Rampton S, 1995, Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry, p.34; ODwyers 6 Aug 2001
 Miller K, 1998 The Voice of Business: Hill and Knowlton and Postwar Public Relations, p129
 Stauber J and Rampton S, 1995, Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry
 Stauber J and Rampton S, 1995, Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry, pp.38-40
 Stauber J and Rampton S, 1995, Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry, p.71
 Coode Island Community Consultative Committee, www.ciccc.org/coodeisland.htm#History, date viewed 3-5-2002
 Rowell A, 1996, Green Backlash: Global Subversion of the Environment Movement, p252-3
 Rowell A, 1996, Green Backlash: Global Subversion of the Environment Movement, pp113-14
 An information resource by the native American people of the Southern Ute and Ute Mountain Indian Tribes of Colorado, www.animaslp.com, date viewed 3-5-2002; www.macinstruct.com/alpcentral/letterscolumn.html , date viewed 3-5-2002
 Is the Press Any Match for Powerhouse PR? Alicia Mundy, Columbia Journalism Review, Sept/Oct 1992 www.cjr.org/year/01/6/oldpieces/1992excerpt.asp, date viewed 3-5-2002
 Johan Carlisle, 1993, Covert Action Quarterly 44
 Stauber J and Rampton S, 1995, Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry, p.169-74
 Trento S, 1992, The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, pp 62-3
 www.ajennings.8m.com/olympic_doctors.htm, date viewed 8-5-2002