March 9, 2016

I-3 Center — Research and Creative Activity

D’Angelo Commentary in Wall Street Journal

PRL Professor of Practice Tony D’Angelo’s latest Wall Street Journal “Crisis of the Week” contribution was published March 7th. Please see link  and text below.
Tony

The Wall Street Journal
Crisis of the Week: BAT Fights Bribery Claims

By Ben DiPietro

This week the crisis involves British American Tobacco and how it is responding to allegations made by a former employee that the company engaged in bribery in Kenya.

The company issued a statement last year saying the allegations were made by a disgruntled employee who had been fired, and said misconduct of any kind is not tolerated. Late last month it included in an earnings press release the news it had hired a law firm to look into the claims, which are being investigated by authorities in Kenya.

Looking only at the company’s statement and its decision to hire a law firm, the crisis experts evaluate how well the company so far is handling the situation, whether it is striking the right tone in communicating its side of the story and how the company should proceed.

Anthony D’Angelo, APR, Fellow PRSA, public relations professor at Syracuse University: “BAT responded swiftly to initial reports of Mr. Hopkins’ bribery allegations by disparaging its former employee and saying it was ‘disappointed’ in the BBC for broadcasting the story. In the court of public opinion, this is akin to being pulled over for speeding and criticizing the police officer standing at your car window with a ticket pad. Maybe you weren’t speeding and your response may have felt justified but you will look bad and likely not get a positive outcome. In fact, you may not get a positive outcome because your response looked bad.

“Not only was the tone of BAT’s response counterproductive, its broad denial opens the company to greater blowback should investigations uncover pervasive wrongdoing. The pace of company communication since December has been glacial, creating a suspicious vacuum. Mr. Hopkins’ blunt admission of his own guilt gives him credibility, and despite his complicity he now appears more trustworthy than his ex-employer.

“BAT’s website touts ‘corporate transparency’ yet its earnings release of nearly three months after the story broke buries a reference to the investigation on page 11. The company’s delay in taking action has also enabled investigations from U.K. and Kenyan authorities to keep it in a defensive posture.

“BAT should seek the truth of the matter and forthrightly communicate about its investigation, come what may. If BAT committed crimes it should fix the problems, apologize and establish safeguards to prevent recurrence.”

Shannon Wilkinson, chief executive, Reputation Communications: “A former employee of British American Tobacco, Paul Hopkins, claimed the company engaged in bribery in Kenya. In response, the company launched the equivalent of an F-22 Raptor attack. That is the wrong approach to managing this crisis.

“After Mr. Hopkins went public on the BBC with [allegations] that the company had bribed senior politicians and civil servants to attain marketing goals, BAT swung hard. The company released this statement: ‘We are disappointed that the BBC has broadcast historic allegations from 2012 made by rogue former employees whose employment was terminated in acrimonious circumstances and who have a clear vendetta against us. We have instructed a specialist media lawyer to deal with this matter.’

“With over 50,000 employees, BAT is one of the U.K.’s largest companies. It has much at stake in this crisis. Going forward, however, BAT would be better served by…acknowledging whatever wrongdoings occurred, if they did. Because the slower this crisis unfolds, the more shareholders have to lose.”

Jonathan Bernstein, president, Bernstein Crisis Management: “The only thing I thought was appropriate in BAT’s release was the the statement that ‘misconduct of any kind is not tolerated.’ And even that is risky unless they are 100% certain there is no widespread corruption practiced by their employees and, in particular, if they are certain that there is no corruption directed by the C–Suite.

“BAT had two choices regarding the whistleblowers and the media: finger-point or thank them for bringing the concern to their attention. Unfortunately, they chose finger-pointing and ended up sounding defensive as a result. A company that’s innocent should embrace any investigation, encourage it, want it over fast. Smart companies even encourage internal whistleblowing.

“An unnamed, company-hired investigator, for alleged international offenses, is too weak. The company needed to hire a very prominent person with impeccable credentials so that his or her report is perceived as credible even if the company did the hiring. Underlying all of this is the reality that the general public doesn’t trust ‘Big Tobacco,’ which as an industry has a horrendous reputation. That means BAT has to overcome both public distrust and whatever the facts are about the alleged offenses.

“The best the company can hope for is that any wrongdoing was, in fact, isolated to a few lower-level personnel, and then share those results widely, using every available medium, not just traditional media, to do that.”

http://blogs.wsj.com/riskandcompliance/2016/03/07/crisis-of-the-week-bat-fights-bribery-claims/

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