Monday, November 1, 2004

Spinning Spitzer

The current round of investigations into corporate wrongdoing being led by New York Attorney General Elliot Spitzer, this time involving the insurance industry, includes an interesting sidelight in how one public relations firm tried rather unsuccessfully to turn the tide against Spitzer. According to a report in Friday’s Wall Street Journal (Oct. 29, 1994), American International Group (AIG) hired a public relations agency, Qorvis Communications, to assist the company in connection with the investigation. Qorvis, in turn, contacted Leading Authorities, a Washington, D.C., speakers bureau, about generating op-eds and TV appearances criticizing the insurance industry investigation. Leading Authorities apparently sent an e-mail on October 25 to various financial industry pundits, including Jeffrey Sonnenfeld at the Yale School of Management, offering a $25,000 retainer and payments of $10,000 for articles and appearances. AIG was unaware of the e-mail, and terminated its contract with Qorvis on October 25, although–remarkably–an AIG spokesman said the termination was unrelated to the e-mail messages.

Among the talking points criticizing Spitzer’s investigation suggested to the e-mail recipients was that revamping industry practices is better left to regulators than criminal prosecutors, and that Spitzer could have addressed problems in the industry in a more “subtle way, perhaps by bringing the industry in to reach an agreement, without the media storm.” No mention of any criticism of Spitzer’s hair.

A critique of Spitzer’s tactics, especially his statement that he would not deal with the current management of Marsh & McLennan to talk about a settlement, may be legitimate, although one is left with the impression that the insurance industry pushed the law to the very limit while ignoring the interests of their clients along the way. Whether there will be any criminal charges remains to be seen, and federal prosecutors have not appeared on the scene, at least at this point. Qorvis and Leading Authorities learned a quick lesson in public relations in this area, however, that offering to buy criticism is not the best approach to an investigation of corporate misconduct. (ph)

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