Desperately Seeking Disclosure

by Diane Farsetta

In some ways, Armstrong Williams got a bad rap. The conservative 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 betray the public trust, but he was a small fry - a subcontractor receiving a $240,000 piece of a $1 million deal between the Education Department and Ketchum, one of the world's largest public relations firms.

That deal, it turns out, was just the tip of the iceberg.

Ketchum is the number one recipient of recent U.S. government PR spending, with contracts totaling more than $100 million. Since 1997, nine PR firms have received at least $1 million in public funds in a single year.The Bush administration doubled federal PR spending over its first term, relative to the last term of the Clinton administration, to $250 million.

That's according to a January 2005 report by the House Committee on Government Reform, which examined federal procurement records going back eight years, looking for contracts with major PR firms. The Committee launched its investigation following two more "pundit payola" revelations in addition to Williams, and rulings by the Government Accountability Office, Congress' nonpartisan investigative arm, that fake television news segments (called video news releases or VNRs) produced for two government agencies were illegal "covert propaganda."

Yet there is little information about how these millions of dollars were - or are - spent. Despite evidence that public funds have been misused, the details of government contracts with PR firms remain hidden.

The ethics code of the Public Relations Society of America (PRSA), the largest PR trade organization, includes admonitions "to build trust with the public by revealing all information needed for responsible decision making," to "be honest and accurate," to "reveal the sponsors for causes and interests represented," and to "avoid deceptive practices." But, as readers of PR Watch know, ethics codes are often ignored.

When PR Watch asked the nine PR firms in the million-dollar league for information on their government work, responses ranged from cautious answers to deafening silence. None of the firms was willing to share any information not already publicly available - including contract agreements or "deliverables" like studies, brochures and VNRs - to clarify what they did with taxpayers' money.

The million-dollar league PR firms are listed below, from the largest to the smallest recipient of federal funds since 1997, along with what PR Watch was able to uncover about their government work.

Ketchum

Ketchum has received a whopping $100.5 million in federal contracts. These include 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 contract increases for Ketchum since 2003 mirror the Centers for Medicare and Medicaid Services' PR spending boost, suggesting that Ketchum's Medicare work may be more extensive than is currently known.

Apart from the Armstrong Williams scandal, the firm also produced a controversial VNR for the Education Department, promoting tutoring programs under "No Child Left Behind." The fake news segment featured then-Education Secretary Rod Paige and was narrated by PR flack Karen Ryan, who misrepresented herself as a reporter.

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

Fleishman-Hillard

The recipient of $77 million in federal funds, Fleishman-Hillard has worked for the Social Security Administration; Library of Congress; Environmental Protection Agency; and Defense Department, to introduce "managed care" to employees, due to "rising medical costs" and "decreasing resources." While Fleishman-Hillard also did not return phone calls, its application for PRSA's prestigious Silver Anvil Award noted that the main challenge of its Defense 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 firm has also worked for the White House Office of National Drug Control Policy (ONDCP), to "debunk the misconception that marijuana was harmless." For this contract, Fleishman-Hillard produced VNRs later ruled 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 November 2004, Los Angeles' city controller accused Fleishman-Hillard of overbilling 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 the firm's attitude as, "Get as much as you can because these accounts may dry up tomorrow." In April 2005, the firm settled with the city, agreeing to pay $4.5 million and waive $1.3 million in outstanding invoices.

Matthews Media Group

Matthews Media has received $67.9 million, most or all of which is for Health and Human Services Department contracts. The firm has worked for the National Cancer Institute, to analyze newspaper coverage of tobacco issues; and National Institutes of Health, to assist with "patient recruitment strategies."

Porter-Novelli

Porter-Novelli's government contracts total $59.3 million, also for Health and Human Services agencies. The firm has worked for the National Institutes of Health; National Institute of Mental Health; and Centers for Disease Control and Prevention, to carry out an "annual mail survey … that examines health-related attitudes and behaviors."

Equals Three Communications

Equals Three has won $23.8 million in federal contracts, including with 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 PR Watch's first phone call) about "the extensive nature of your questions and the short timeline." She added, "Everything … is in the public domain."

What "public domain" she referred to is unclear, however, since searches of the Nexis news database, PR trade publications, and the Internet revealed little about Equals Three's federal work. Indeed, the firm's penchant for secrecy is so great that materials posted on its website are sized and cropped in such a way that it's difficult to determine who they were produced for.

Hill & Knowlton

Hill & Knowlton has collected $19.2 million in federal funds. Director of Business Development and Marketing Lily Loh refused to answer PR Watch's questions, claiming they entailed "proprietary information that we cannot share due to client confidentiality," although some work is "available in the public record." Searches revealed just one contract with the General Services Administration, for work on the "Dedication of the Ronald Reagan Building and International Trade Center" in Washington, DC.

Hill & Knowlton's other government work could be well worth hiding. The firm is best known for pushing the first Gulf War on behalf of the Kuwaiti government; flacking for Indonesia during its brutal occupation of neighboring East Timor; helping organize the industry-funded Council for Tobacco Research, to downplay the dangers of smoking; and handling damage control for Wal-Mart in California.

Widmeyer Communications

Widmeyer has received $7.4 million in contracts from the Selective Service System; Federal Trade Commission; Health and Human Services Department, for its National Bullying Prevention Campaign; 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, for government clients.

Burson-Marsteller

Burson-Marsteller's federal contracts total $1.9 million, for work with agencies including the Census Bureau, on participation rates; Bureau of Engraving and Printing, on the $20 bill redesign; Treasury Department, on money laundering enforcement; and Postal Service, on "Managing Communication During the Anthrax Crisis."

The firm produces VNRs for government clients, according to global public affairs chief Richard Mintz. Mintz said the firm clearly labels its VNRs, but viewers don't see these labels. He added that Burson-Marsteller 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 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" for Philip Morris, to combat smoking restrictions; and infiltrating activist groups opposing the milk hormone BGH, for the companies developing the drug.

Ogilvy PR Worldwide

Ogilvy PR has received $1.6 million in federal funds, for work with ONDCP, on their National Youth Anti-Drug Media Campaign; and the National Heart, Lung, and Blood Institute (NHLBI), on the "Fashionable Red Alert" campaign, to raise awareness of heart disease among women. In April 2005, NHLBI renewed its contract with Ogilvy for another three years, at a cost of $4.9 million.

In February 2005, 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."

In March 2005, the Homeland Security Department hired Ogilvy, "to provide real journalists for its biennial mock terrorist exercise." The director of the Project for Excellence in Journalism said the exercise "raises potential future conflicts even if the reporter doesn't now cover the governmental entity writing the check."

Oglivy is among the firms that did not respond to PR Watch's repeated calls.

These PR firms' secrecy about publicly-funded campaigns indicates a serious lack of accountability. More alarming is the federal government's reluctance - even refusal, in many cases - to provide information on its contracts with PR firms. For example, documents on Ketchum's work for the Education Department obtained through Freedom of Information Act requests have every dollar amount redacted.

As the House Committee on Government Reform's report 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 U.S. government are "essential," why not release information about them? It's a question Americans must ask of their public officials, and one that PR firms must answer to combat their own image problem.