Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Tuesday, August 29, 2006

A Sorry Tale, Part II: Peter Sandman’s attempts to persuade the Australian Wheat Board to issue an apology, outlined below, stand in stark contrast to the position taken by Northeast Utilities chief executive Michael Morris back in 1997.

I know it’s not exactly a timely case, but I was reminded of the story while reading a new book, The Triple Bottom Line, by PricewaterhouseCoopers exec Andrew Savitz., which recounts what happened after Morris arrived at the company while it was under federal criminal investigation for violating EPA and Nuclear Regulatory Agency rules.

As Savitz tells it: “Morris’s first internal meeting, four days after he arrived at the company, took place in the main auditorium. A group of four hundred employees came expecting to get a routine update on the legal proceedings. The new CEO was the surprise opening speaker.

“‘I’ve just come from a meeting with the Connecticut attorney general,’ said Morris. ‘He told me some of his lawyers were trying to obtain documents from us related to the environmental investigation. When asked for those documents, one of our in-house lawyers told the deputy attorney general that he had no intention of doing her work for her….’

“There were a few sarcastic chuckles in the room, but Morris didn’t smile. Instead, he paused and looked directly at his audience. They went stone silent. Finally, Morris continued: ‘The next time one of our people is disrespectful or makes it more difficult for an employee of any public agency to his or her job, that person is no longer with our company.’”

A year later, the company pleaded guilty to 25 felonies and paid $10 million in fines. Morris entered the guilty plea personally, appearing in federal court to face the judge along with 20 longtime NU executives.

The guilty plea was embarrassing but the press coverage was surprising supportive of the company, praising it for taking the high road. Soon after, the Millstone power plant that had been at the center of the controversy sold for $1.3 billion—nearly twice what analysts had predicted it would fetch during the crisis.

That’s leadership—still a commodity in short supply.

On another note, Peter Sandman points out an error in the original post, below. Our last paragraph mentions “the mealy-mouthed pseudo apology [AWB] eventually issued.” Says Sandman: “Actually it never issued any apology. It wrote one I thought was pretty mealy-mouthed—though a lot better than nothing—and then decided to go with nothing.”

We also wrote, based on the original source, that the AWB “was recently forced to acknowledge that it paid $290 million in kickbacks to the corrupt Saddam Hussein regime.” Says Sandman: “That’s certainly what most of the media have said, and I think it’s approximately true. I don’t think it’s exactly true. AWB has acknowledged that it negotiated payment to a Jordanian company for ground transportation of the wheat inside Iraq, and that the Alia payments were passed through and paid/reimbursed by the U.N. as part of the Oil For Food program. It has also acknowledged that there is now considerable evidence of a connection between Alia and the Saddam Hussein regime, and considerable evidence that the Iraqi Government, not Alia, was handling at least some of the ground transportation effort.

“It hasn’t acknowledged (in fact, I believe it explicitly denies) that top management knew at the time that Alia was tied to Saddam or that Alia wasn't actually handling the ground transportation itself.”


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