Many companies (Texaco [TX] and Sunbeam [SOC], to name a few) have discovered that when a crisis breaks, business achievements and philosophies (i.e., marketplace longevity; well-intentioned business moves) overshadow the challenge at hand: dealing with the controversy. For instance, how do you put on a positive spin when your business is the victim of a white-collar crime that puts your company in the limelight?
That's exactly what unfolded after former tobacco company executive Edward J. Reiners, his "associate" Judy Rose Bachiman, and an un-named and unindicted accomplice bilked banks such as Signet [SBK] and NationsBank [NB] out of close to $350 million in fraudulent loans from 1993 until their arrests in 1996. The capital was to be used for a bogus research project.
It was Signet, however, which showed surprising agility in snapping back into place after the initial shock wore off that it had given $81 million to several high-brow grifters.
When The Wall Street Journal Comes A Callin'
During the initial crisis days, as the story unfolded on the pages of The Wall Street Journal and Signet's hometown newspaper, the Richmond Times-Dispatch, the $11-billion financial institution made the decision to put PR Director Teri Schrettenbrunner on point answering all media inquiries, possibly to shield its top management from the wafting cloud of scandal.
Response Stages
Source: PR NEWS |
"We were very forthcoming right up front about what was going on," said Schrettenbrunner. And, a quick search on Lexis Nexis proves it worked for them.
According to Teri Schrettenbrunner, former VP and PR director at Signet: "At Signet's headquarters in Richmond, our crisis team - consisting of about 15 people, including the chairman and president - were assembled and awaiting the final outcome of the FBI sting against the bank fraud suspects.
"We had Plan A and Plan B ready to implement. Plan A was 'everything is OK and this is just an unusual misunderstanding,' in which case we had to work on the mistrust built up with the client, Philip Morris [MO].
"Plan B was, 'this really was a highly sophisticated, costly fraud,' in which case we had a slew of audiences to address. When we got the call from the FBI, Plan B went immediately into effect. Within five hours of the call, we issued a major news release identifying what we knew, the skeletal basics of what had occurred."
Schrettenbrunner would not disclose the budget for this campaign.
A PR Loan on Its Reputation; And on Being Upfront
By all accounts, Schrettenbrunner delivered the facts as she knew them, and with immediacy. The same day the story broke, the Associated Press reported that Signet made this statement:
"RICHMOND, Va. - Signet Banking Corporation announced today that it is the apparent victim of fraudulent commercial loan transactions amounting to $81 million. The transactions are structured as loans to finance computer equipment leases in which the purported lessee is a Fortune 100 corporation, well known to Signet."
The "well-known corporation" was Philip Morris. But, Signet also made it plain that it wasn't the only bank duped, and that it would indeed recover quickly.
At first, there was a great deal of skepticism about how Signet could have been "duped" so easily. "As the facts rolled out, it became more clear that we had done our jobs correctly, and that this was an extremely complicated fraud that required an enormous amount of deceit," said Schrettenbrunner.
In fact, the news media bought it and it went away within a few weeks of the story breaking. This doesn't surprise Portsmouth, N.H., crisis management expert Katharine Paine, of The Delahaye Group, who instructs her clients to follow Schrettenbrunner's model. "If you own up to a problem, the press coverage goes away. If you blame or deny, the coverage increases," said Paine. (Signet, 804/771-7210)