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January 30, 2006
Enron’s Ken Lay: A Reputation as a Snake in the Grass
PHOTO: Snake in the grass
“He is a snake in the grass, a selfish, greedy man and holier-than-thou.”
Prospective jurors’ thoughts on former Enron chairman Ken Lay.
He is the devil and a high-class crook.”
Comments from prospective jurors regarding former Enron CEO Jeffrey Skilling.
The corporate trial of the century begins today in Houston. Many reputations within the Enron case are in crisis, especially the reputations of Ken Lay and Jeffrey Skilling. In addition, the reputation of corporate America and the U.S. attorney’s office are also on the line.
Ken Lay, Enron's former chairman, faces seven counts in the trial, including conspiracy and fraud. Former Chief Executive Officer Jeffrey Skilling faces 31 counts, including conspiracy, fraud and insider trading. Both men have pleaded not guilty.
Ken Lay cartoon
Mr. Lay is either the architect of one of the most intricate and devastating fraud schemes in corporate history or an unwitting and hapless entrepreneur who got in over his head while everyone around him was massaging the books.
Some observers have described Enron as the most pivotal moment in the history of corporate America. Hyperbole, maybe, but the collapse of the company is of the order that demands superlatives.
Forget Richard Scrushy; pay no heed to Bernie Ebbers. Dismiss even, if you can, Dennis Kozlowski - his $6,000 shower curtain, $15,000 umbrella stand and $2,900 of coat hangers belong to yesterday. This trial will be the ultimate test of the so-called idiot defense. The idiot defense goes something like this: “I was the CEO, and I may have been asleep at the wheel, but I’m not a crook.”
It didn't work for Big Bad Bernie Ebbers, formerly of WorldCom, who faces 25 years behind bars. It didn't work for Tyco’s Kozlowski, who faces a shorter, yet rather more uncomfortable eight years in a state penitentiary. HealthSouth’s Richard Scrushy was acquitted of fraud, although his freedom came at the price of having everyone consider that yes, he was as stupid as he claimed, prompting a new boom in the industry for accountant jokes.
PHOTO: Ken Lay in handcuffs
If Bernie Ebbers was charged with, quite literally, fiddling while WorldCom burned, Ken Lay stands accused of conducting the entire orchestra as Enron was exploding around him.
Not only that but prosecutors have a host of witnesses that will testify they saw him setting the fuse, including his former finance chief, Richard Causey, who at the end of 2005, having repeatedly sworn to one version of events, suddenly decided he remembered a version of reality that was markedly different.
As a man of faith, Mr. Lay undoubtedly knows that while there is grace sufficient for him and us all, the Lord will ultimately judge his actions and his punishment. But for now, legal justice for Enron's victims is the goal in the trial.
Mr. Lay feels badly for the victims and regrets the financial loss, but then grasps for scapegoats. Like many in our day, he has mastered the art of empty confession. Instead of apologizing for personal wrongdoing, such leaders assume collective accountability. They seek moral credit by taking "responsibility" and then accuse others like a renegade chief financial officer and overzealous prosecutors.
PHOTO: Former Enron CEO Jeff Skilling
Over the past few months, Kenneth Lay has embarked on something of a blitz of public appearances. After several years hidden from view, the former chairman of Enron has been putting his best face on, defending himself to anyone who will listen. Most of his audiences, though, have been carefully picked - TV hosts and business groups unlikely to be overly hostile. His PR campaign seems to be falling on deaf ears for many reasons.
A few reputation management tips from the Reputation Doctor for the Enron boys:
• It is hard to learn from a mistake you don’t acknowledge making. Both Lay and Skilling know the truth, but continue to run from it. Sadly, it will catch up with them soon.
• Their spin is not working. Ken Lay is pushing his website and even buying ads on Goggle to drive traffic to try to influence public opinion. He forgot one important rule: if people don’t believe your story, the PR campaign is a waste of time and will continue to damage your reputation.
• True faith in Jesus Christ should have humbled you to take full responsibility for your actions. Ken Lay is the son of a preacher and a trustee in his Methodist church. Former WorldCom CEO Bernie Ebbers was a deacon in his Baptist Church. Both are held to a higher standard as leaders within their faith for their deceit, lies and unrepentant hearts. They may pay an eternal price for doing so.
• Enron’s former employees, investors and customers will not rest until they hear the truth, the whole truth and nothing but the truth. Once again, we will all hear the horror stories of Enron in the news during the trial. Employees will pull at our heartstrings and tell us how they literally lost everything. Skilling had a tough-guy image while at Enron, but was also led away in handcuffs for the world to see. The perp walk is an embarrassing visual, but their embarrassment still has not resulted in transparency, humility and honesty. However, the trial will bring some accountability for all. Thank God for that.
Remember, do the right thing when your reputation is in crisis. It will be difficult, but the ultimate rewards will be great. Why? Because Your Reputation Is Everything! ™
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.ReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.
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January 23, 2006
Halliburton's Reputation In Crisis, Again!
Halliburton
Halliburton is a name that means connected, powerful, war-time experts and it also means a major company with a reputation in crisis, again.
Troops and civilians at a U.S. military base in Iraq were exposed to contaminated water last year and employees for the responsible contractor, Halliburton, couldn't get their company to inform camp residents, according to A.P. interviews and internal company documents.
Halliburton, the company formerly headed by Vice President Dick Cheney, disputes the allegations about water problems at Camp Junction City, in Ramadi, even though they were made by its own employees and documented in company e-mails.
"We exposed a base camp population (military and civilian) to a water source that was not treated," said a July 15, 2005, memo written by William Granger, the official for Halliburton's KBR subsidiary who was in charge of water quality in Iraq and Kuwait.
"The level of contamination was roughly 2x the normal contamination of untreated water from the Euphrates River," Granger wrote in one of several documents. The Associated Press obtained the documents from Senate Democrats who are holding a public inquiry into the allegations today. Sen. Byron Dorgan, D-N.D., who will chair the session, held a number of similar inquiries last year on contracting abuses in Iraq. He said Democrats were acting on their own because they had not been able to persuade Republican committee chairmen to investigate.
The company's former water treatment expert at Camp Junction City said that he discovered the problem last March, a statement confirmed by his e-mail the day after he tested the water. While bottled water was available for drinking, the contaminated water was used for virtually everything else, including hand-washing, laundry, bathing and making coffee, said water expert Ben Carter of Cedar City, Utah.
Another former Halliburton employee who worked at the base, Ken May of Louisville, said there were numerous instances of diarrhea and stomach cramps problems he also suffered.
A spokeswoman for Halliburton said its own inspection found neither contaminated water nor medical evidence to substantiate reports of illnesses at the base. The company now operates its own water treatment plant there, spokeswoman Melissa Norcross said.
A military medical unit that visited Camp Ramadi in mid-April found nothing out of the ordinary in terms of water quality, said Marine Corps Maj. Tim Keefe, a military spokesman. Water-quality testing records from May 23 show the water within normal parameters, he said. "The allegations appear not to have merit," Keefe said.
Halliburton has contracts to provide a number of services to U.S. forces in Iraq and was responsible for the water quality at the base in Ramadi. Granger's July 15 memo said the exposure had gone on for "possibly a year" and added, "I am not sure if any attempt to notify the exposed population was ever made."
The first memo on the problem written by Carter to Halliburton officials on March 24, 2005 was an "incident report" from tests Carter performed the previous day. "It is my opinion that the water source is without question contaminated with numerous micro-organisms, including Coliform bacteria," Carter wrote. "There is little doubt that raw sewage is routinely dumped upstream of intake much less than the required 2 mile distance. "Therefore, it is my conclusion that chlorination of our water tanks while certainly beneficial is not sufficient protection from parasitic exposure." Carter said he resigned in early April after Halliburton officials did not take any action to inform the camp population.
PHOTO: U.S. Soldier in Iraq
The water expert said he told company officials at the base that they would have to notify the military. "They told me it was none of my concern and to keep my mouth shut," he said. On at least one occasion, Carter said, he spoke to the chief military surgeon at the base, asking him whether he was aware of stomach problems afflicting people. He said the surgeon told him he would look into it. "They brushed it under the carpet," Carter said. "I told everyone, 'Don't take showers, use bottled water."
A July 14, 2005, memo showed that Halliburton's public relations department knew of the problem.
"I don't want to turn it into a big issue right now," staff member Jennifer Dellinger wrote in the memo, "but if we end up getting some media calls I want to make sure we have all the facts so we are ready to respond."
Halliburton's performance in Iraq has been criticized in a number of military audits, and congressional Democrats have contended that the Bush administration has favored the company with noncompetitive contracts.
In my opinion, Halliburton is a name that also means cover-up.
A few reputation management tips for Halliburton, as well as you and I:
• Don’t ever hide the truth because it will come back to bite you. It is human nature to want to cover up the truth when something bad happens, but we must resist this temptation. A person and corporation of true character embraces the truth, leads with it and turns a negative into a positive in how they handle the situation.
• Exposing the truth builds trust. Trust is a huge goal in reputation management. You must give people a reason to trust you. Transparency and accountability help you to get there, but it must be complete and it must come from you directly.
• Email is a powerful tool for exposing lies. Email is catching many people in lies everyday. Erasing an email from your computer doesn’t fully remove its tracks or its recipients. Liars think they are smarter than everyone else, but remember, the truth is smarter than us all.
• A corporate reputation is only as honest and strong as its people. Halliburton can learn valuable lessons from another Texas based corporation called Enron. Enron’s reputation of hubris, powerful friends and being untouchable brought it down. Former Enron CEO Ken Lay's corruption trial starts in about a week. Is Halliburton next?
Halliburton has a lot to learn about reputation management. Spinning never works for the long term and always causes severe damage. Seek the truth in all you do and admit your mistakes completely and directly. Why? Because Your Reputation Is Everything! ™
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.ReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.
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January 16, 2006
MLK: Hero or Cheater?
Rev. Dr. Martin Luther King, Jr.
This week I examine Martin Luther King’s reputation. Rev. Dr. Martin Luther King, Jr. would be 77 years old today. The civil rights leader, Baptist minister and recipient of the 1964 Nobel Peace Prize was born in 1929 and assassinated in 1968. He is still considered one of the world’s greatest heroes for his bravery, leadership and commitment to nonviolence during the pioneering years of the civil rights struggle in America. But unfortunately, his amazing legacy was also tarnished by several major indiscretions in his lifetime which, in my opinion, he didn’t handle properly. Some will not like that I even mention this, but Rev. Dr. Martin Luther King, Jr. was not a perfect man. Like all of us, he had his areas of weakness. He was not a saint. Sadly, because of the way he handled his indiscretions, he was both a hero and a cheater. As a result, his glowing reputation also has areas of tarnish.
A few facts which still affect Dr. King’s reputation and legacy today:
• One of King’s closest friends, Rev. Ralph Abernathy, wrote a book in 1989 called And the Walls Came Tumbling Down. In the book, Abernathy wrote about King’s “weakness for women” and how he indulged in extramarital affairs. In addition, Abernathy wrote, King was “always gracious and courteous to women.” As we know, Dr. King was not the only civil rights leader to have extramarital affairs.
• While working on his dissertation for his doctoral degree at Boston University, King heavily plagiarized from another author who had done research on a subject similar to King’s. In fact, while gathering and collating King’s writings for publication in the late 1980s, the editors of Stanford University’s Martin Luther King, Jr. Papers Project discovered “extensive plagiaries” in his academic papers, including his 1955 doctoral dissertation. All these instances of plagiarism had escaped detection during King’s lifetime, even by his dissertation supervisors at Boston University. Dr. King must have feared being caught before and after receiving his doctorate, but not fearful enough to choose no over yes to cheating in the first place.
• It was also discovered King’s famous ‘I Have a Dream’ speech was not totally his own. In both letter and spirit, the rousing conclusion of King’s most famous speech borrows, without attribution, from one given eleven years earlier by family friend Archibald Carey at the 1952 Republican National Convention. Dr. King must have thought his own writings were not good enough for an important Washington D.C. event. It seems he struggled, at times, with insecurity. I think we all can relate with that feeling. He was a terrific writer and he even wrote one of his most famous speeches in a Birmingham jail.
So let’s remember a few reputation management tips from the mistakes of Rev. Dr. Martin Luther King, Jr.:
• Over time, the truth always bubbles to the top. The dissertation and academic writings of Dr. King are prime examples of plagiarism, which tarnished his reputation. The lesson: keep your reputation truthful and clean to not dilute or distract from your accomplishments. And when you do something inappropriate, don’t hide it. Repair it by coming clean with it yourself truthfully, humbly and transparently. Your apology must also come from your heart and not just in words.
• As a pastor, Christian leader and man of God, he is held to a higher standard for knowing the ultimate truth comes from the Lord. It is mentioned clearly in the Bible. As a result, coming clean with his wrongdoing should have been to God first before all others. But Dr. King’s worldly goals superceded his Godly goals, which was a huge mistake. Focusing on Godly or biblical goals will help keep us all on the path to truth.
• King should have humbly admitted his shortcomings to himself first and then the public before his death with no “ifs” or “buts.” Dr. King knew the reality and the truth about his indiscretions and he hoped no one would ever find out. That is an ostrich head-in-the-sand strategy which never works. If he did the right thing, we (the public) would have not only forgiven him, we would have respected him more for admitting he is not perfect. We would have also learned humility, transparency and accountability always builds character and trust through Dr. King as an example.
• Real men love their wives completely and honor both their wives and themselves with a marriage commitment for life. Cheating on your wife breaks that sacred trust and makes it very difficult to ever get that trust back again. It also severely damages your reputation and character with others. Why? Because Your Reputation Is Everything!™
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.TheReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.
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January 9, 2006
A Week from Hell for Reputations
Below is a list of the top 5 reputations in crisis for the first week of January 2006:
Wilbur Ross
1. WILBUR ROSS AND HIS INTERNATIONAL COAL GROUP's SAGO MINE – the king of turning distressed companies into gold is in hot water. Billionaire Wilbur Ross is the man that owns the mine 12 miners 260 feet below ground were killed in last week in West Virginia. The real tragedy the entire world learned about was the owner of the mine knew for some time the mine was not safe. In the last year alone, the mine’s owner, International Coal Group (ICG), was issued 205 citations, including 46 during the most recent inspection of the Sago Mine from early October to late December 2005. Federal inspectors listed 96 citations as “serious and substantial,” i.e., those MSHA believes could cause an accident serious enough to injure or kill a miner. These included violations of approved roof control and mine ventilation plans intended to prevent the buildup of explosive methane gas. Bottom line: safety is a reputation and life-saving must.
Ken Lay in handcuffs
2. KEN LAY – Rick Causey, the former chief accounting officer at Enron, made a deal with federal prosecutors, in which he'll plead guilty to any number of 34 criminal charges, cooperate with the law, and of course flip on his former boss, Ken Lay, by testifying in a sure-to-be-messy Enron trial. The Ken Lay trial starts January 30th. In late December, Lay was feeling pretty sure of himself and even gave a speech in Houston late December to try to win local support, and influence potential jurors, by explaining his innocence through the media. Well, he is sure not feeling as confident today as Causey was a man Ken Lay worked closely with at Enron and a man who knows both the truth and the lies. Prediction: Ken Lay will be sharing a prison cell for 25 years, equal to the time Bernie Ebbers is now in prison for his misdeeds at WorldCom.
Applebee’s Restaurant
3. APPLEBEE's – An angry mother is suing Applebee’s for carelessly serving her 5-year-old a Long Island iced-tea, a powerful alcoholic drink, in a restaurant kiddie cup at Applebee’s, instead of an order of apple juice. Stupidly, the popular restaurant chain is only saying “no comment” to the media and kicking reporters, interested in giving them a fair chance to tell their side of the story to the public, out of the New York City restaurant. Bottom line: Applebee’s will lose in both the court of law and in the court of public opinion. However, the court of public opinion is more important here because Applebee’s brand, stock price and customer base are all affected by their reputation in crisis.
The Wall St. Journal’s Karen Elliott House
4. THE WALL STREET JOURNAL's KAREN ELLIOTT HOUSE – as mentioned in the New York Times, for the time being, the glass ceiling for some women, including Karen Elliott House, is a skating rink. An arena in which she can show off her substantial skills, but it could contain unseen trapdoors. Karen Elliott House, the publisher of The Wall Street Journal, just ended up falling through one. When the board members of Dow Jones & Company chose a chief executive, they bypassed Ms. House, a Pulitzer Prize-winning journalist who was both professionally and personally wedded to Peter R. Kann, the outgoing chief executive, in favor of Richard F. Zannino, a vice president of the company who came from Liz Claiborne in 2001. Ms. House, who had been at the company 32 years, found herself out of a job. A hard-charging journalist and executive - some would say a bit too driven, a frequent charge against successful women - her career and personal life became defined by her alliance with Mr. Kann. Once she was at the top, the glass ceiling became a mirror, a reflection of choices made. Bottom line: being married to the boss, him naming you his number 2 at work, and sleeping with the man many at the Wall Street Journal have hated for years really didn’t help her reputation, nor allow her own talents to shine bright enough.
Martha Stewart
5. MARTHA STEWART – A U.S. Federal Appeals Court on Friday upheld the conviction of Martha Stewart and her former stockbroker, Peter Bacanovic, for lying about a lucrative stock sale. The Court of Appeals for the Second Circuit in Manhattan rejected arguments put forth by lawyers for both defendants, that their trial was tainted by prosecutorial misconduct, juror misconduct, extraneous influence on the jury and erroneous jury instructions. In one sense, neither Ms. Stewart, the founder of Martha Stewart Living Omnimedia, nor Mr. Bacanovic had much riding on the outcome of the decision; both have already served their prison sentences. But the appeal was a last-ditch effort - and by most accounts, this will be their last - to clear their names. A spokeswoman for Martha Stewart Living Omnimedia, Allyn Magrino, said the company was "disappointed for Martha." Advice for Martha: It bothers you so much because you didn’t get away with it and you think you should have and maybe even know friends who have gotten away with it. Sadly, your heart will continue to harden unless you are honest with yourself first and then give a humble mea culpa with no “ifs” or “buts” for all the world to hear.
So let’s remember a few reputation management tips from our famous friends:
• Unlike Wilbur Ross, always put the safety of your employees above your financial goals because death can happen when we make inappropriate decision.
• The world will soon learn during the Ken Lay trial that both the court of law and the court of public opinion lead with truth, transparency and accountability to result in either an excellent reputation or one in crisis, and can result with the rest of your life in prison or ultimate freedom.
• Learn a lesson which Applebee’s had to learn the hard way: a reduced staff with too many customers, carelessness and frustration in dealing with a child as a customer, no comment through the media, and a mother on a mission to best protect her child all equal a winnable lawsuit and a reputation in crisis.
• Karen Elliott House must learn an excellent reputation as a leader needs many people willing to follow, along with empathy and humility towards your workforce, not just a husband in power and hundreds of journalists who don’t trust you.
• Martha, Martha, Martha, where do I begin? Hubris and a losing appeal will not make a felony conviction escape your rap-sheet and reputation for life. We must all learn humility, honesty, accountability and transparency today before we have a reputation in crisis like Martha.
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.TheReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.
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January 3, 2006
WHAT ABOUT YOUR KIDS?
PHOTO:Michael Jackson and his covered kids.
We see so many leaders, celebrities, business executives and average Americans today with reputations in crisis. When their reputations are in crisis, their lies, deceit and other wrong doings also greatly affect their kids.
Michael Jackson has three small children. Ken Lay has children that are now adults. Martha Stewart has a daughter. Kobe Bryant, Mark McGwire, Barry Bonds and Lance Armstrong all have kids. Various political leaders around the world in crisis also have children. What really happens to the children when one of their parents has a reputation in crisis? In two words: further damage.
I have provided reputation-management counseling to many clients with children over the years. For those truly seeking to repair their reputations, the damage they were afflicting on their children became a turning point. I would counsel them to bravely and courageously seek the truth in their lives for the first time in a long time. For others, the damage done to their children was just another example on a list of things to run from.
What should we personally learn from these examples?
• When our reputations are sullied, they affect all those around us.
• Our children are most damaged if our reputations are in crisis.
• As a result, use their pain as the most important reason to return to truth.
• A good family name begins with honesty, transparency and accountability.
• Are your kids currently being hurt because of your behavior?
• The excuse of ignorance is now gone. Be proactive. Because Your Reputation Is Everything! ™
About Mike Paul
Mike Paul is editor of The Reputation Doctor blog. The Reputation Doctor is a nickname given to him by various clients. Mike's blog is located at www.TheReputationDoctor.com. He appears regularly on Fox News Channel, CNN, MSNBC, Court TV, ABC News, ESPN, CBS News, BBC, and others as a weekly contributor and expert in the global news regarding leaders, celebrities, corporations and other organizations with reputations in crisis. Mr. Paul is also president and senior counselor of MGP & Associates PR (www.mgppr.com), a leading strategic public relations and reputation management firm based in New York. For interview requests, speeches or business opportunities with Mr. Paul, call 212-595-8500.
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