Media

Spinning Out of Sight

In their refusal to reveal the details of federal contracts, seven major public relations companies reveal a startling lack of accountability.
In some ways, Armstrong Williams got a bad rap. The conservative black commentator, who was paid by the U.S. Department of Education to advertise and advocate for the controversial “No Child Left Behind” law, lost his syndicated newspaper column and was pilloried for not disclosing the payment.

Williams did indeed betray the public trust, but he was a small fry – a subcontractor who received a mere $240,000 of a one-million-dollar deal between the Education Department and Ketchum, one of the world’s largest public-relations agencies.

And that deal is just the tip of the iceberg.

A recent House Committee on Government Reform investigation – launched after similar revelations about two other commentators besides Williams – identified Ketchum as the largest recipient of recent PR spending, with contracts totaling more than $100 million. Looking into federal procurement records for contracts with major PR firms since 1997, the committee's minority office also found that the Bush administration doubled the government's PR spending to $250 million, over its first term.

Yet there is little information about what that money was spent on. The lack of transparency is especially alarming given the recent spate of PR-related scandals, which include not just paid commentators but also the use of video news releases (VNRs) aired on TV stations as news reports. The Government Accountability Office issued two rulings declaring the VNRs produced for two federal agencies in violation of the ban on covert government propaganda.

Despite this worrying evidence of misuse of public funds, the top PR companies refuse to disclose the details of their contracts. Requests for information from the PR firms that received at least a million dollars from the federal government since 1997 were met with partial and unsatisfactory answers, at best. None of the firms were willing to share any information not already publicly available — including contract agreements or “deliverables” like studies, brochures and VNRs – to clarify what they really did with all that taxpayer money.

Ketchum

Ketchum has received a whopping $100.5 million in federal contracts since 1997. These deals included work for the Education Department; Internal Revenue Service; U.S. Army, to “reconnect the Army with the American people” and boost recruiting around its 225th birthday; and the Health and Human Services Department, to “change the face of Medicare,” promote long-term health care planning, encourage preventative care, and present home care information.

Large increases in Ketchum’s federal work since 2003 mirror the Centers for Medicare and Medicaid Services’ PR spending boost, suggesting that their Medicare work may be more extensive than is currently known.

Apart from the scandal surrounding Armstrong Williams, the firm also produced a controversial VNR for the Education Department that promoted tutoring programs under “No Child Left Behind,” and included then-Education Secretary Rod Paige and PR flack Karen Ryan, who misrepresented herself as a reporter.

Ketchum representatives did not return repeated phone calls – making them among the least responsive of the firms contacted by PR Watch.

Fleishman-Hillard

The recipient of $77 million in federal contracts, Fleishman-Hillard has worked for the Social Security Administration; Library of Congress; Environmental Protection Agency; and the Defense Department, to introduce “managed care” to employees, due to “rising medical costs” and “decreasing resources.”

While Fleishman-Hillard also did not return any phone calls, the firm notes in its application for the prestigious Silver Anvil Award from the Public Relations Society of America that the main challenge of the DoD contract was “the anger and frustration of the retired military community who were now required to pay an annual fee for guaranteed access to health care they said was promised them by their recruiter as a free lifetime benefit.”

The company also worked for the Office of National Drug Control Policy, to “debunk the misconception that marijuana was harmless.” Part of that contract involved producing VNRs, which were later found to be covert propaganda, because ONDCP “did not identify itself to the viewing audience as the producer and distributor of these prepackaged news stories.”

In addition, Los Angeles’ city controller has accused Fleishman-Hillard of over-billing the city’s Water and Power Department by $4.2 million. Several former employees said they were told to inflate the hours billed to the city. One described Fleishman-Hillard’s attitude as, “Get as much as you can because these accounts may dry up tomorrow.”


Equals Three Communications

Equals Three received $23.8 million in federal contracts, including work for the National Institutes of Health, on Colorectal Cancer Awareness Month; National Institute for Mental Health; and National Highway Traffic Safety Administration.

Vice president of PR Kimberly Marr complained (a week after the first request for information) about “the extensive nature of your questions and the short timeline.” Her final word: “Everything … is in the public domain.”

What "public domain" she is referring to is unclear, however, since a series of searches on the Nexis news database, PR trade publications, and the internet reveal little information about the firm's federal work.

The company's desire for secrecy is so great that even materials posted on Equal Three’s web site are sized and cropped in such a way that it’s difficult to determine who they were produced for.

Hill & Knowlton

Hill & Knowlton has received a total of $19.2 million from the federal government since 1997.

Director of business development and marketing Lily Loh refused to answer questions, claiming that they entailed “proprietary information that we cannot share due to client confidentiality,” although some work is “available in the public record.” A search only revealed one campaign with the General Services Administration for work on the “Dedication of the Ronald Reagan Building and International Trade Center” in Washington D.C.

One can only guess at what Hill & Knowlton’s other work for the federal government. This is a firm best known for pushing the first Gulf War on behalf of their client, the government of Kuwait; flacking for Indonesia during the brutal occupation of East Timor; helping organize the industry-funded Council for Tobacco Research, created to downplay the dangers of smoking; and handling damage control for Wal-Mart in California.

Widmeyer Communications

The company has received a total of $7.4 million in contracts from the following federal agencies: the Selective Service System; Federal Trade Commission; Health and Human Services Department; Education Department; National Institute for Literacy; Farm Service Agency; and Defense Department, for their Deployment Health Clinical Center.

Assistant vice president Scott Ward said that Widmeyer “never uses paid third-party spokespeople,” and that the firm produces video footage, but not ready-to-air VNRs.

Burson-Marsteller

Burson-Marsteller received a total of $1.9 million, including from the Census Bureau; Bureau of Engraving and Printing for work on the $20 bill redesign; Treasury Department; and Postal Service for “Managing Communication During the Anthrax Crisis.”

Global public affairs chief Richard Mintz confirms that Burson-Marsteller does produce VNRs, but the firm clearly identifies their source. He says the firm has not used paid spokespeople, “per se,” but has signed contracts with third parties, such as senior and minority groups, to reach target populations.

Burson-Marsteller, however, has a less than stellar track record in its corporate work, which includes directing “crisis communications” on mad cow disease for McDonald’s and the National Cattlemen’s Beef Association; running the front group “European Women for HPV Testing” for the U.S. biotechnology company Digene; creating the “National Smokers Alliance” to combat smoking restrictions for Philip Morris; infiltrating activist groups opposing the milk hormone BGH, for Monsanto subsidiary Nutra-Sweet and Eli Lilly; and boosting Indonesia’s “human rights and environmental image” after a 1991 massacre in East Timor.

Ogilvy PR Worldwide

Ogilvy PR received $1.6 million for contracts that include work for the National Heart, Lung, and Blood Institute; and Office of National Drug Control Policy, on their National Youth Anti-Drug Media Campaign.

Ogilvy is now working for the Homeland Security Department, “to provide real journalists for its biennial mock terrorist exercise.” The director of the Project for Excellence in Journalism said that contract “raises potential future conflicts even if the reporter doesn’t now cover the governmental entity writing the check.”

Last month, two former executives of the related marketing firm Ogilvy & Mather were found guilty of conspiracy and false claims, for inflating labor costs on the ONDCP account. According to the indictment, the executives “directed certain Ogilvy employees to revise time sheets and caused falsified time sheets to be submitted to the government.”

Oglivy is among the firms that did not respond to repeated requests for information.

In their refusal to reveal the details of publicly-funded contracts, these major PR companies reveal a startling lack of accountability. More alarming is the fact that it is very difficult to get this information through Freedom of Information Act requests. For example, the Ketchum/Education Department documents obtained by People for the American Way have every dollar amount redacted.

As the House Government Reform Committee noted, “Not all government PR contracts are problematic,” but they must be “authorized by Congress and conducted in a fashion that does not mislead the public.” If, as Burson-Marsteller’s Richard Mintz claims, the “public education campaigns” PR firms undertake for the government are “essential,” why must they be shrouded in such secrecy? It's a question the American people must ask of their public officials, and one that PR firms must consider to combat their own image problems.
Diane Farsetta is the Center for Media and Democracy's senior researcher. More information on the PR firms mentioned above can be found on SourceWatch, the Center's online encyclopedia of issues, people and groups shaping the public agenda.