Edelman fights its very own PR battle in China

US PR agency in crisis management mode after a former associate is arrested on unconfirmed charges

In a twist of irony the world’s biggest PR firm finds itself in the centre of a media storm after Chinese authorities took into custody Rui Chenggang, a prominent television anchorman who once held equity in a Edelman-owned local subsidiary. Rui, 36, was arrested on Friday in a surreal drama that saw him missing from a live show that he regularly hosts on CCTV. Viewers saw an empty chair next to his co-host on the hour long programme. While no official explanation has been given for his detention speculation is rife. Some media reports speculate it may have something to do with conflict of interest. Others say it could be part of a continued state crackdown on corruption.

The story goes like this: In 2007, Edelman acquired a majority stake in Pegasus, a local PR firm that Chenggang founded with a couple of other partners. Following that acquisition Rui’s share in the firm whittled down to 7.92 percent making him a minority, "non-active" investor.

"It was our expectation that Mr. Rui was to be divested of his minority shares immediately after the acquisition," Edelman said in a statement to PRWeek. According to the firm another co-founder Steven Cao purchased Rui’s shares in 2010 ending the latter’s stakes in Pegasus. "The transaction, which took longer than expected, was completed in 2010," claimed the PR firm. It has now come to light that Pegasus provided services to Rui's employer CCTV at the time when he stil owned shares in the Beijing-based public relations firm. Edelman says Pegasus was hired to "underwrite" (PR-speak for securing coverage) CCTV’s presence at Davos in 2009 and 2010.

Rui, 36, is a charismatic TV presenter who is widely admired for his nationalistic tilt as well as reviled for his apparent "arrogance" and flashy lifestyle. He has interviewed several heads of states and even moderated sessions at the World Economic Forum in Davos. The presenter famously helped mobilise public opinion against a Starbucks branch in Beijing’s Forbidden City in 2007. His arrest comes less than two months after his boss was detained on suspicion of taking bribes.

Edelman has launched its own internal investigation. "We are taking this matter very seriously and will continue to provide updates as warranted," it said in a statement. It is likely that the incident may have a negative short-term impact on its business in China.

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