Killing Them Softly

The world has woken up to ethical issues in corporate governance & accounting practices. Corporate heads that were not guillotined were forced hang their heads in retrospective shame. The heads that fell were the victimizers, and the axe that fell, fell too late, and the punishment received, was way too little compared to the suffering, pain and financial losses that the organizations' stakeholders suffered. Trust of millions of investors was lost overnight.

Ethics in governance is one part of the story, the other link in this dubious chain of deceit is usually the professional services like auditing, legal and public relations which work closely with the organization. Such large scale deceit becomes possible only with the active collaboration of these so-called 'professional' services. Hardly professional, really!

The Indian investor has been victim to a lot of companies attempting to make a quick buck in the markets. While caveat emptor ? let the buyer beware, is the legal term that organizations to get out of such wrangles, it is necessary to look into how these various scams are done, and to recognize the role of the professional services, especially public relations in creating and sustaining the scams.

Circa 1994. Every Indian remembers the bloody battlefield of the stock markets. While the aftereffects are well embedded in everyone's memory, few remember how it all began. Upbeat stock stories in the newspapers, stories of millions being made overnight, the oldest stock exchange of the country celebrating the index at an unprecedented high. Stock market pages kept the upward arrow next to almost every stock price quoted indicating the trends. Investors scrambled, dinner conversation revolved around the stock prices, 21 year olds were sitting in front of red-blue flashing computer screens, buying and selling tens of thousands of shares in seconds.

While some companies were actually performing well, many slipped through the back-door and slipped up their shares to unwary investors. Why is the investor so gullible? And is the investor really so gullible?

The method that was used to market the fly-by-night companies to the investors combined the well-used public relations concepts of fear, uncertainty and doubt (FUD). Successful FUD pushes to show how you would be the only person who would be left in the race if you did not buy-in into the campaigner's concept, creates uncertainty about your own analysis & gut-feel and generates doubt about the products or services currently under use. This especially works wonders in a greed-struck stock market, where more often than not, mob-psychology rather than knowledge is the deciding factor.

Usually such scams are orchestrated in connivance with some unscrupulous public relations companies. At other times, the PR companies usually have enough pointers to the possibility of such a scam about to take place. Press conferences are called, headlines blare out the superlative performances of the organization, there is talk of new acquisitions, investor meets happen and stock analysts are shown the factory, the plush office to generate confidence in the investor. The PR agency is rewarded for its great 'efforts' by way of a few millions and the investors collective gets duped for a few billions. Case studies of this century in such dubious PR in India would include the CRB scam, MS Shoes, Harshad Mehta & Home Trade fiasco. While these are the few stories which come to light, there are many scams which get away without even getting noticed.

What is the responsibility of the public relations company in such circumstances? The agency must evaluate the client and understand program and take a view that is beyond just the fees that it will generate and take a responsible decision. The PR agency can & must become the watch-dog for the companies, advising them, guiding them and if nothing prevails, then going to the extent of resigning the account for of a larger good. This kind of discussion, though popular conversation in PR cocktail circuits, is still eschewed by the PR intellectuals in more serious forums!

Unless we work as a committed community on the principles that should guide the PR business; and take stringent action against those who use these tools-of-influence to feed their greed, the respectable business of PR will go to the depths of unrecoverable ignominy very soon.

Chandramouli is the CEO of Blue Lotus Communications Consultancy, a leading knowledge based public relations agency located in Mumbai,India. He is an Engineer-MBA with over 16 years of multi-functional experience and has guided Blue Lotus to a core focus in the booming sectors of Healthcare, Finance, Education and Technology.

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