The Wal-Mart Blog Fiasco: The blogosphere has been buzzing with criticism of Edelman’s involvement with a Wal-Mart blogging exercise that appears to have broken every unwritten rule in the book.

The Walmarting Across America blog was written by a Washington Post staff photographer and his partner, a freelance writer, as they traveled across the U.S. in an RV, parking for free at Wal-Mart stores all across the country and posting conversations with Wal-Mart employees full of praise for the notoriously generous and tolerant retail giant.

A Business Week article exposed the site as a venture of Working Families for Wal-Mart, a front group set up by Wal-Mart and Edelman, which sponsored the entire trip. As Online Media Daily reported, “WFWM paid for the RV and all travel expenses, rerouted the trip’s original plan, and plastered a logo on the RV's side. Though a banner ad announced WFWM sponsored the site, it did not divulge Wal-Mart paid for the couple’s RV, gas, food and other expenses.”

Blogger outrage mounted and for several days none of Edelman’s prominent bloggers said anything, until a post from Richard Edelman apologized for the faux pas: “I want to acknowledge our error in failing to be transparent about the identity of the two bloggers from the outset. This is 100% our responsibility and our error; not the client’s. Let me reiterate our support for the WOMMA guidelines on transparency, which we helped to write. Our commitment is to openness and engagement because trust is not negotiable and we are working to be sure that commitment is delivered in all our programs.”

That apology notwithstanding, Edelman has taken a lot of flack over this controversy. That’s not surprising. For one thing, Richard Edelman has been quick to criticize (and rightly so) the ethical lapses of others. And for another, he has been vocal in positioning his firm as a leader in social media.

I should make it clear at this point that I have had no discussion with anyone at Edelman about this incident, and no inside knowledge about how it came about. But I have had many conversations with Richard and others at the firm about their investment in social media, and I think they’re genuine in their conviction that it’s the way of the future and about their commitment to doing it ethically.

I’ve also been a close observer of Wal-Mart over the years. And there’s no doubt in my mind that Wal-Mart is as sincere about its commitment to use every dirty trick in the book to win its public relations battle as Edelman is about its commitment to set high ethical standards. I’m on record being as a skeptic (in a PR Week column a couple of years ago) about Wal-Mart’s efforts to establish a dialogue with some of its critics, and two years later I have seen no evidence that the dialogue in question involved any listening on the company’s part. (That may change not that Leslie Dach is heading Wal-Mart’s communications; the blogging effort appears to have pre-dated his arrival.)

So what happens when a PR firm with high standards works for a company with a win-at-any price philosophy? The answer is not as obvious as it sounds—there are PR firms who do great work for morally dubious clients—but often the tone is set by the person paying the bills, and we get Hill & Knowlton’s work for the tobacco industry in the 60s and the Kuwaiti government in the 80s, Ketchum’s more recent troubles involving its work for the Bush administration, and countless other examples.

When PR firms go to work for clients who have demonstrated little or no interest in true public relations—in building mutually-beneficial relationships with their publics—then those firms need to be extra careful to make sure that everything they do meets the highest ethical standards.

Because as Edelman just learned, it's not just the client's reputation on the line.