Industry reforms in wake of DoE scandal inconclusive

The impact of recent scandals over government PR contracts will likely be felt for a long time. So why has the PR industry's reaction been so spotty?

The impact of recent scandals over government PR contracts will likely be felt for a long time. So why has the PR industry's reaction been so spotty?

Some 10 months ago, industry observers talked about little else than the Armstrong Williams scandal.

When USA Today first broke the news of Ketchum's contract with Williams to promote the No Child Left Behind Act as part of its more than $1 million deal with the Department of Education (DoE), it wasn't the first time that questionable PR activity on the part of the government had made news. Less than a year earlier, Ketchum had been involved in the VNR flap involving work for the Department of Health and Human Services to promote a new Medicare law.

In the wake of the high-profile controversies, many firms pledged to tighten up practices and formalize codes of ethics to ensure that no disclosure issues would ever damage the credibility of their work. Now nearly a year later, it is time to find out what has changed.
The fact is, on the legislative front, changes are pending, and the Ketchum/Williams situation in particular promises to have a long-term impact. Again, while such charges of government propaganda did not start with this case, it has undoubtedly become the proverbial straw that broke the camel's back.

The Government Accountability Office's (GAO) long-awaited ruling that the DoE's work with Ketchum and Williams resulted in covert propaganda has not brought an end to the saga either.

Instead, it has raised additional questions and incited further investigations. Democratic Sens. Edward Kennedy (MA), John Kerry (MA), Frank Lautenberg (NJ), and Byron Dorgan (ND) are asking Attorney General Alberto Gonzales to launch an investigation into whether the DoE paid Williams for services he did not perform. In a USA Today article shortly after the GAO report came out, Williams said he might return a portion of his payment because he had not fulfilled the duties of his contract.

This latest chapter also could provide new incentive for some legislation that did not receive enough support when the story first broke. Rep. Rosa DeLauro (D-CT) first introduced the Federal Propaganda Prohibition Act in January after the Williams contract became front-page news. Kate Cyrul, press secretary for the congresswoman, said the bill has gained 69 co-sponsors so far and it hopes to "capture the momentum" of the current situation as it gathers additional sponsors.

Some congressional Democrats have already been successful in their efforts to tighten antipropaganda laws. In July, Rep. Maurice Hinchey (D-NY) introduced an amendment to a Department of Housing and Urban Development appropriations bill that prohibits the administration from hiring journalists or PR agencies to promote policies.

The agency response

While the impact of the Williams imbroglio on government PR contracts and the general attitudes toward the government's use of PR will likely be lasting, its effect on the industry at the center of it all is still a bit unclear.

In the weeks following the story, PRWeek reported, sometimes in painstaking detail, the industry's response to the situation, including urgent calls for reform among agencies. But
on the whole, individual agencies' responses to the issue of transparency have not been as noticeable. Indeed, some firms have taken steps to address the issue, while others have been more discreet.

In April, Ketchum unveiled its first-ever guidelines for disclosure. At the time, Barri Rafferty, then director of Ketchum South, told PRWeek that the guidelines were developed in response to the DoE controversy, the criticism over the Medicare VNR, and "the changing media landscape." One of the guidelines states, "In all written materials, clearly articulate the client, product, or service being represented."

Just last month, Edelman unveiled its first-ever code of conduct for employees. While the core elements of the code address pretty standard business operations issues, it also includes a day-to-day situation guide on such topics as interaction with the media, challenges facing broadcast PR tools, and work with spokespeople.

Matthew Harrington, president of Edelman's Eastern region, says the Ketchum/Williams incident was not the driver behind development of the code, but he acknowledges that it was created to be a point of reference should similar cases arise in the future.

"What I wanted to do in creating the situation guide is get a bit more granular and provide a bit more guidance to our staff about what Edelman expects from our professionals," he says. Indeed, the situation guide cites the Williams case as one example worth reviewing, and Harrington says that the information on third-party engagement has been among the most valued by employees.

Other agencies have not officially codified policies regarding disclosure, but have continued to take a look at internal procedures throughout this time. Richard Mintz, chairman of the global public affairs practice at Burson-Marsteller, says the agency is comfortable with the compliance and controls system it currently has in place.

"Of course, any incident like this leads you to just take a fresh look at those kinds of things, and we've done that," he says, adding that the agency's government clients reviewed the situation, as well. "I think agencies and government communicators have been increasingly taking note of the potential [to blur the lines between advocacy and propaganda] and are generally more careful," he says.

Porter Novelli also assembled an internal group of senior leaders to review the firm's existing guidelines. The agency continues to guide senior account leaders so they can work with their teams and counsel clients around the issue of transparency.

"Porter Novelli has always believed that our clients and the public are best served when relationships with third-party spokespeople, partners, and allies are transparent," says Helen Ostrowski, CEO of Porter Novelli, in an e-mail.

The industry response

Industry organizations have also made attempts to further educate members about disclosure and transparency over the past nine months. Harris Diamond, CEO of Weber Shandwick and chairman of the Council of PR Firms, says that following the Ketchum/Williams incident, the council distributed information on disclosure guidelines and the industry's best practices.

"At the end of the day, the issues always come down to the same ones - that disclosure and transparency are the keys to success," he says. "That's what the council has basically tried to communicate."

The PRSA also took steps in the month following the incident to give special attention to the issues of disclosure and transparency. In March, it sponsored an Ethics Summit, where members could identify best industry practices in the changing media landscape. In April, the PRSA also issued an advisory to its members about disclosure and commentators.

Elliot Sloane, CEO of Sloane & Co., says his agency has always had clearly stated policies regarding disclosure. But Sloane questions whether the overall industry effort has been enough.

"Nine months later, I'm curious to know what the leaders of our industry have come up with to set the ground rules for the agencies so we can continue to do business, represent government and other business, and behave ethically," he says.

Sloane withdrew his firm from the council in January because he believed comments on the issue made by president Kathy Cripps were inadequate. "There was some expectation that the industry would treat this as if they were treating a client," he says. "We spend all day long helping our clients with crisis issues, but we have not treated this as a crisis."

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