Credit Suisse Tax Evasion Fine is Just That: Fine

 Credit Suisse Tax Evasion Fine is Just That: Fine

THE PR VERDICT: “D” (PR Problematic) for the US government, which gave its PR team little to work with.

Credit Suisse pled guilty this week to helping more than 22,000 Americans evade taxes by stashing their cash in Swiss bank accounts — a notable event on several levels, PR included.

The deal represents the first criminal conviction of a major global bank in more than a decade. Criminal charges, it has been widely thought, are a death knell for institutions that cop to them. Credit Suisse agreed to pay $2.6 billion — the largest penalty ever in a US criminal tax case. Prosecutors huffed and puffed about how significant this plea is: US Attorney General Eric Holder warned, “No bank is too big to jail.”

But…nobody’s going to jail, at least nobody at the top. While the conviction generated a lot of media, the general impression is: It’s not so bad. Credit Suisse wasn’t forced to reveal any client names, and it can keep operating in the US. The bank’s CEO told analysts he expects little business impact from the agreement. Indeed, Credit Suisse stock actually rose after the deal was announced.

No doubt the US faced a conundrum: Regulators wanted to inflict serious pain, but too harsh a penalty might be so destabilizing as to spark unintended (and unwelcome) consequences. After all, the threat of banking failures precipitated the last global recession. So they walked a line — and that’s exactly how the media read it.

THE PR VERDICT: “D” (PR Problematic) for the US government, which gave its PR team little to work with.

THE PR TAKEAWAY: Actions speak louder than words. Are we really shocked, shocked, to discover that Swiss banks help people hide money? Yes, the fine is big, but even the general public has become inured to banks paying massive sums. If the US really wanted to send a message to tax evaders and the banks who love them, regulators needed to be more visible: name-and-shame clients, or put some white collars in orange jumpsuits. There’s nothing like a CEO in handcuffs to really command attention.

US vs. HSBC: Two PR Punches for the Price of One

 US vs. HSBC: Two PR Punches for the Price of One

The PR Verdict: “A” (PR Perfect) for the US government.

Everybody likes two bites at the PR cherry, and US prosecutors may have had their way when it comes to the latest fines levied against British banking giant HSBC. The headlines that HSBC was set to pay a record $1.9 billion penalty for ignoring possible money laundering came out on Tuesday. The announcement wasn’t official, but mysteriously there it was, hours before the official drop date.

News this big can’t be kept under wraps for long. HSBC was expected to agree to pay $1.9 billion to settle a probe in connection with money laundering from narcotics traffickers in Mexico. Also alleged was that HSBC intentionally allowed prohibited transactions with Iran, Libya, Sudan, and Burma while facilitating transactions with Cuba. Headline-making stuff.

Tuesday’s papers carried front-page stories with astonishing levels of detail, helpfully provided by the very trusty “people briefed on the matter.” Once the news was out, Wednesday ‘s media coverage gave even more detail. “HSBC is being held accountable for stunning failures of oversight — and worse — that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars,” read the official government statement on day two. Not unlike statements from the previous day, only this time it wasn’t attributed to someone “briefed on the matter.”

The PR Verdict: “A” (PR Perfect) to the US government for what seems like a well-orchestrated PR campaign to maximize publicity.

The PR Takeaway: For really big news, use the “Curtain Raiser.” The old PR trick of releasing information the day before the official launch can not only give useful indications of market reactions but, as in this case, allows the headlines to announce the big numbers on day one and stretch the news to a second day by providing more detail. Maximum publicity for the prosecution; as anyone knows, more is better than less.

Guest Column: Foul Ball for Toronto Blue Jays

YUNEL ESCOBAR2 150x150 Guest Column: Foul Ball for Toronto Blue Jays

The PR Verdict: “F” (Full Fiasco) for Yunel Escobar.

Could Yunel Escobar be any dumber?  The 29-year-old starting shortstop for the Toronto Blue Jays drew what is generally interpreted as an anti-gay slur into the eye black he wore during a major league baseball game last week. Predictably, his face was subsequently splashed across the media and Escobar and his team’s owners, Rogers Communications, one of Canada’s largest telecommunications providers, seemed to be taken aback by the resulting criticism.

The phrase in question, “Tu ere maricon” is Spanish slang for “You are a f—-t,” but in some contexts, Escobar explained,  it is interpreted as an emasculating insult only. “Amongst Latinos it’s not something that’s meant to be offensive,” Escobar said during a fumbling news conference in which he apologized while insisting he was misinterpreted. “For us it doesn’t have the significance to the way it’s being interpreted right now.”

The Blue Jays PR machine did what PR machines do: Investigations were held, news conferences were called. Escobar offered apologies, all of which appeared disingenuous. Platitudes were shared about cultural differences, sensitivity training, more education for Blue Jays personnel. Escobar was suspended for three games and his salary (approx $90,000 USD) donated to charities. Ouch! Unfortunately, there was never an explanation to the fundamental question: What could he, or his team managers, have been thinking?

The PR Verdict: “F” (Full Fiasco) for Escobar and the Toronto Blue Jays for this tepid response. In what world is an anti-gay – or even emasculating – slur acceptable?

The PR Takeaway: Crisis Communications templates are nice, but sometimes actions speak louder than words. The Blue Jays (and Major League baseball, for that matter) need to say they are concerned, and ACT like they are concerned. Stiffer penalties and proactive policies that leave little wiggle room for interpretation about what players can wear on the field might be a step in the right direction… First Amendment rights notwithstanding.

How Sorry Are You, Barclays?

 How Sorry Are You, Barclays?

The PR Verdict: “D” (It’s a Dud) for Barclays. (Pictured: Barclays CEO Bob Diamond)

Isn’t it nice to know that Barclays PLC and its subsidiaries have agreed to pay more than $450 million to settle charges that it attempted to manipulate key global interest rates? The announcement of the largest-ever fine was accompanied by much huffing and puffing about market integrity. Everyone agrees; terrible business. Why, even Bob Diamond, Barclays CEO, and his three chief lieutenants waived their bonuses in recognition of the seriousness of the issue.

Barclays said all the right things on the day. It humbly acknowledged the actions “fell well short of the standards to which Barclays aspires.” This was a mea culpa, albeit somewhat measured, given that the Department of Justice is continuing with its criminal probe. This could get uglier, no doubt.

But was that it? Was there a lost paragraph to the announcement? Yes, investigations are continuing, yes other firms are involved, and yes, Barclays has been assisting every regulator it possibly can. Fair enough, but the key question remained unanswered in Barclays’ formal statement. Has ANYONE lost their job or been suspended? Has there been a clearing of the decks?

The PR Verdict: “D” (It’s a Dud) for Barclays for avoiding disclosure of the most important piece of news: Is anyone’s head going to roll?

PR Takeaway: One way to draw a line over bad behavior is to draw a line over bad employees. If the bank is committed to turning a new page in ethics, why not update stakeholders about who was, or will be, fired? Even if previously disclosed, say it again. Waiving a bonus counts for something, but making it clear to inside and outside stakeholders that certain behaviors will not be tolerated goes further. This was an odd omission in a statement that went to lengths to make it clear that these issues won’t happen again.

Did Barclays go far enough by apologising and waiving bonuses, or should heads have rolled? Give us your PR Verdict, below.