With Citigate just weeks away from achieving its long held ambition
of a public listing, the agency will be severely embarrassed by finding
itself officially reprimanded over its actions on behalf of a client in
a contested bid.
The agency has been criticised by the Takeover Panel, along with its
client Triplex Lloyd, over an incident during the latter’s current
hostile bid for William Cook. The Panel described the intentional
leaking of confidential information to the press as ’reprehensible’.
Such reprimands are unusual - the last one issued to a PR firm by the
Takeover Panel was in 1995 - but it is bound to resurrect calls for
tougher regulation of financial PR.
Critics say there is no need for further regulation of PR firms, since
they must already obey the code of the appropriate City authority. But
the rules on financial communication are famously vague. PR folk must
therefore rely heavily on the tone set by the authorities in dealing
with individual cases to know exactly where they stand. In this case,
Citigate appears to have gone against the spirit rather than the letter
of the code.
No one condones actions which knowingly overstep the mark but frequently
the problem is in knowing exactly where that mark lies. Generally
speaking, PR firms are more at risk of transgressing the rules
inadvertently than they are likely to break them intentionally.
Nor do the sanctions available to the authorities encourage them to err
on the side of caution. Consultancies do not face removal from a
register of those entitled to practise and, while individuals have
sometimes found themselves enjoying an unexpected career break, the
agency suffers no more than a brief bout of corporate blushing.
It is not a comfortable situation. In a contested bid, PR advisers are
playing one of the toughest corporate games imaginable. Those which help
their clients to victory can be rewarded handsomely - seven figure
success fees are not unknown - but advisers are only as good as their
It is therefore to be expected that they will use every legitimate means
to prosecute their client’s case.
Until such time as the rules are clarified and the sanctions
strengthened, PR consultants will continue to push at the boundaries
(and arguably an agency would be failing its client by being too
cautious in borderline areas). Some may occasionally overstep the
The question the City authorities should be asking themselves is which
is likely to have more effect on future participants in these titanic
struggles - the prospect of a sharp word from the Takeover Panel, or the
thought of losing the bid altogether?