Hill And Knowlton And Bcci18

HILL AND KNOWLTON AND BCCI'S PR CAMPAIGN

Introduction Two days following its indictment in Tampa in October, 1988 as a result of the Operation C-Chase sting, BCCI did what many businesses in trouble do under such circumstances -- it hired a public relations firm to help it reduce the bad publicity surrounding the indictment. The firm selected by BCCI was, consistent with BCCI's usual strategy, unusually wellconnected politically: Hill and Knowlton, home to Republican Robert Gray and Democrat Frank Mankiewicz, and generally considered the most politically prominent public relations firm in Washington.(1) During the following two years, Hill and Knowlton provided various services to BCCI and to its secretly-held affiliate, First American.(2) On August 1, 1991, former Customs Service Commissioner William von Raab, in testimony before the Subcommittee, criticized the public relations firm, implicating its activities as a factor in BCCI's success in staying open following its indictment, and suggesting that the January, 1990 plea agreement between BCCI and the U.S. Attorney in Tampa was "a tribute to the influence team that was marching up

and down the Eastern seaboard helping BCCI keep its neck off the block."(3) In response to the Von Raab testimony, Hill and Knowlton's Vice Chairman, Frank Mankiewicz, immediately issued the following statement on the PR Newswire, which is set forth in full: Mr. Von Raab's testimony as to Hill and Knowlton is incredibly irresponsible and totally false. Neither I, nor Robert Gray, nor anyone else from Hill and Knowlton ever contacted, on behalf of BCCI, anyone in the Department of Justice or anywhere else in the Executive Branch, or for that matter, on Capitol Hill.(4) The import of Hill and Knowlton's release was that whatever it did for BCCI, its work had not involved lobbying. But Mankiewicz's strong statements concerning what Hill and Knowlton did not do for BCCI failed to explain exactly what Hill and Knowlton did do. In fact, Hill and Knowlton had represented BCCI at a critical time in its history, following the Tampa drugmoney laundering indictment.(5) Moreover, according to statements made by former Hill and Knowlton partners to the press, Hill and Knowlton partners did know BCCI was "sleazy," and at least one partner did leave the firm in part as a result of disagreements over the BCCI account.(6) Moreover, Hill and Knowlton did have contact with Capitol Hill on behalf of First American, Clark Clifford

and Robert Altman, on BCCI related matters, in the period when BCCI still secretly-held First American, and after BCCI's ownership of First American was a matter of public record and established fact.(7) Finally, Hill and Knowlton did have contact with at least one Congressional staffer, Michael Pillsbury, on behalf of BCCI itself, in January, 1990. At that time, Senate staffer Pillsbury wrote Karna Small at Hill and Knowlton, soliciting information from Hill and Knowlton concerning what it was doing for BCCI, and offering to be of assistance to BCCI in its public relations efforts. Small's involvement provides further evidence of the fact that Hill and Knowlton assigned politicallyconnected staff to the BCCI account. Small's previous work had included being assistant press secretary to James Brady under President Reagan, press spokesperson for National Security Advisor Robert McFarlane, and an assistant to the National Security Counsel during the period in which McFarlane and Admiral John Poindexter were in charge of the NSC.(8) The record before the Subcommittee suggests that the contact between Small at Hill and Knowlton and Capitol Hill was initiated by Pillsbury, rather than Small or Hill and Knowlton. Hence, Mankiewicz's statement was technically correct, if incomplete, on this point.(9) Hill and Knowlton's activities on behalf of BCCI, First American, Clifford and Altman resulted in Hill and Knowlton making statements that in the end proved to be materially misleading, and attacking individuals

who were making accurate, but damaging statements about their clients. While there is no evidence that any Hill and Knowlton partner knew that the information it was disseminating was false, BCCI's use of Hill and Knowlton raises questions about the role of public relations firms in our political system. When a public relations firm disseminates information, does it have any independent responsibility to the public to make sure that the information disseminated is accurate? Are there other issues of public policy at stake when a public relations firm that is politically wellconnected, on behalf of a client who has been indicted for illegal acts, disseminates materials attacking and discrediting people who are making accurate statements? Is corrective industry or legislative action warranted? Findings ** Hill and Knowlton partners knew of BCCI's reputation as a "sleazy" bank at the time it accepted the account in October, 1988. Some of this information came from then Commissioner of Customs William von Raab, in response to questions from a friend who was a partner at Hill and Knowlton. ** Hill and Knowlton made contacts with Capitol Hill on behalf of First American, and BCCI's lawyers, Clark Clifford and Robert

Altman, on issues pertaining to BCCI. Materials prepared in part by Hill and Knowlton and provided to Capitol Hill were provided to federal bank regulators in the spring of 1990 in an effort to discourage those regulators from crediting allegations in the media that BCCI secretly owned First American. ** In 1988 and 1989, Hill and Knowlton assisted BCCI with an aggressive public relations campaign designed to demonstrate that BCCI was not a criminal enterprise, and to put the best face possible on the Tampa drug money laundering indictments. In so doing, it disseminated materials discrediting persons and publications whose statements were later proved accurate about BCCI's criminality. ** Important information provided by Hill and Knowlton to Capitol Hill and provided by First American to regulators concerning the relationship between BCCI and First American in April, 1990 proved to be incorrect. The misleading material represented the position of BCCI, First American, Clifford and Altman concerning the relationship, and was contrary to facts known by BCCI, Clifford and Altman. There is no evidence that Hill and Knowlton partners knew the information to be inaccurate, or reason to believe that their clients' account was correct.

Retention and Initial Services to BCCI of Hill and Knowlton On October 10, 1988, BCCI was indicted in Tampa on drug money laundering, sparking an immediate need by BCCI to respond by every means possible. As Abdur Sakhia, one of BCCI's senior officers in the United States, recommended Hill and Knowlton.

I started the Hill and Knowlton connection. The day we were indicted we were inundated by everyone. I said we have to tell our side of the story. I am not capable of telling it. You need to have a PR firm to handle this. To me, BCCI's problems here were like Johnson and Johnson's Tylenol crisis, or the indictment of Drexel for insider trading.(10) Hill and Knowlton had been purchased by a London advertising and public relations conglomerate, the WPP group and now had offices in London. A British BCCI director, John Hilbery, who lived in London, had contacts there, and BCCI's main offices in London hired the firm, at a rate of $50,000 per month. At the outset of the retention of Hill and Knowlton by BCCI, some Hill and Knowlton partners in Washington expressed concern about the account.

As former Commissioner Von Raab testified: I was in my office when a friend of mine from Hill & Knowlton came to me and he said, Willie, he said, BCCI wants to hire Hill & Knowlton and they want me to work on it. And he said, what should I do? And I said, don't work on it, it is a sleazy operation. Well, the result was, Bob Gray and Frank Mankiewicz worked on it. My friend left Hill & Knowlton.(11) Before the month of October was over, Hill and Knowlton had deployed a team of six of its public relations professionals in New York, Tampa, and Washington, D.C., as well as 16 additional Hill and Knowlton staff in ten other countries. The firm's initial work included such standard public relations tasks as handling BCCI's press strategy, developing various BCCI officials as press spokesmen, creating a public relations history of BCCI and a public relations position paper to be used to rebut the Florida indictments, and developing a recommended advertising campaign for BCCI in major newspapers around the world.(12) Hill and Knowlton documents found by the Subcommittee at BCCI's document repository in Florida describe this work in some detail. A document evidently generated by Hill and Knowlton in London in October, 1988, entitled, "BCCI Worldwide Action Program," carried recommendations for generating positive press

for BCCI through interviews between BCCI officials trained by Hill and Knowlton on what to say with influential journalists such as Lou Dobbs at CNN, Louis Rukeyser at PBS, and James Stewart of the Wall Street Journal. A second Hill and Knowlton document dated October 27, 1988, described as "Background on the Tampa Indictments And BCC Position on Compliance," described the approach to be taken by BCCI officers in these interviews: Management of BCCI was surprised and shocked to learn in news reports that the bank and nine of its employees had been indicted in Tampa, Florida on charges of laundering drug money. The bank had no warning that it or any of its people were under investigation, nor is its management aware that any employee anywhere had violated long-standing bank policies to do business in a manner fully consistent with the laws and regulations of every jurisdiction in which it operates. The specific facts of the charges are not known to BCCI at this time; the bank has, however, reaffirmed its commitment to legal integrity and pledged to cooperate with all legal authorities in the resolution of these troubling developments. BCC has taken the further step of launching an extensive internal review under the direction of a special committee of outside directors to review the allegations.(13) Senior BCCI officials to whom the document

was being distributed knew at the time that many of these statements were inaccurate. Even mid-level BCCI officials knew that some of these statements were inaccurate. For example, according to BCCI officers such as Amjad Awan and Akbar Bilgrami, both convicted of money laundering, BCCI had never, even on paper, created a package of "long-standing bank policies" against committing any kind of criminal act, let again directed against laundering money.(14) Creating an anti money-laundering policy after the fact was one of the urgent tasks management was about to engage in as part of BCCI's damage control operation. BCCI official Akbar Bilgrami was in this period told to write a memorandum concerning a meeting which he had not attended in which BCCI had supposedly reiterated its policies against money laundering with BCCI's banking staff in Miami. According to Bilgrami, he declined the request to write the memorandum for two reasons. First, its substance was misleading. Second, he felt ridiculous trying to write an account of an event at which he was not even present.(15) Bilgrami made clear his understanding that the notion that BCCI had an anti-money laundering policy in place prior to his indictment was absurd.(16)

The backgrounder on BCCI prepared by Hill and Knowlton at the time for use with the press

stressed BCCI's total institutional commitment to conservative and ethical practices: BCC draws upon Eastern traditions of trust, confidentiality, hospitality and cordiality in business dealings. The bank has an unusually egalitarian management structure with many functional, as opposed to ceremonial, titles for managers . . .It stresses conservativism, prudence and liquidity in its deposit taking and lending activities. . . Although it has never publicized the fact, BCC is a major participating in recognized charitable and philanthropic programs around the world . . . The BCC Group as a matter of corporate policy adheres strictly to the rules and regulations of all countries in which it does business . . . Financial transactions of the bank are subject to four levels of review by regional auditors, by central auditors, external auditors (Price Waterhouse is the bank's outside audit firm) and by the auditors of various state banking authorities.(17)