Page 111 - Crisis Communication Practical PR Strategies

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9 92 Crisis Communication
a good corporate citizen, the damage from a claim that turned out be
mistaken will be seen in perspective.

Delay and denial compound the problem

Despite high profile scandals such as the Enron debacle, there is little
evidence that out-and-out premeditated fraud is a widespread
problem in western corporate culture today. What helped doom the
high-flying Enron management was the perception of extreme arro-
gance, as exemplified when Enron CEO Jeff Skilling – now serving a
long prison term but then at the height of his power – ridiculed a
reporter on a conference call. He called the reporter an ‘asshole’ when
the reporter had the temerity to ask about misleading statements in
Enron’s financial reporting.
Interestingly, a recent article on Enron notes that many of the ques-
tionable financial schemes used by the company were actually outlined
in its reports and argues that investors who performed due diligence
were not misled by the company’s management. Arrogance, however,
was rampant in Enron’s corporate culture and this tendency can blind
some organizations to what the press and the public will conclude
when unpleasant facts come to light. If Enron had acknowledged
accounting and reporting mistakes early on, if it had taken corrective
action when the first inquiries were being made by Fortune Magazine
and a few other publications, would the company have collapsed so
quickly and irreversibly? Perhaps not.
A powerful corporation may even be successful in keeping news
organizations from reporting allegations or evidence of fraud, but that
strategy is seldom effective in the long run, and it keeps the contro-
versy alive.

Denial and delay

When ABC News reported in 1994 that Brown and Williamson,
a major tobacco company, covered up research data suggesting
that the company ‘spiked’ nicotine levels to keep cigarette users
hooked on the habit, the company sued for libel the researcher
who had provided corporate documents to the network. The
company also sued ABC for a record US $10 billion. Other
news organizations, including the New York Times and CBS Sixty
Minutes were threatened with similar lawsuits and both initially