Editorial: Overstepping the boundaries

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.

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

last bid.



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

mark.



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?



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