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HILL AND KNOWLTON AND BCCI'S PR CAMPAIGN

Introduction

Two days following its indictment in Tampa in


October, 1988 as a result of the Operation C-Chase
sting, BCCI did what many businesses in trouble do
under such circumstances -- it hired a public relations
firm to help it reduce the bad publicity surrounding
the indictment. The firm selected by BCCI was,
consistent with BCCI's usual strategy, unusually well-
connected politically: Hill and Knowlton, home to
Republican Robert Gray and Democrat Frank
Mankiewicz, and generally considered the most
politically prominent public relations firm in
Washington.(1) During the following two years, Hill and
Knowlton provided various services to BCCI and to its
secretly-held affiliate, First American.(2)

On August 1, 1991, former Customs Service


Commissioner William von Raab, in testimony before
the Subcommittee, criticized the public relations firm,
implicating its activities as a factor in BCCI's success
in staying open following its indictment, and
suggesting that the January, 1990 plea agreement
between BCCI and the U.S. Attorney in Tampa was "a
tribute to the influence team that was marching up
and down the Eastern seaboard helping BCCI keep its
neck off the block."(3)

In response to the Von Raab testimony, Hill and


Knowlton's Vice Chairman, Frank Mankiewicz,
immediately issued the following statement on the
PR Newswire, which is set forth in full:

Mr. Von Raab's testimony as to Hill and Knowlton is


incredibly irresponsible and totally false. Neither I,
nor Robert Gray, nor anyone else from Hill and
Knowlton ever contacted, on behalf of BCCI, anyone
in the Department of Justice or anywhere else in the
Executive Branch, or for that matter, on Capitol Hill.(4)

The import of Hill and Knowlton's release was that


whatever it did for BCCI, its work had not involved
lobbying.

But Mankiewicz's strong statements concerning what


Hill and Knowlton did not do for BCCI failed to explain
exactly what Hill and Knowlton did do.

In fact, Hill and Knowlton had represented BCCI at a


critical time in its history, following the Tampa drug-
money laundering indictment.(5) Moreover, according
to statements made by former Hill and Knowlton
partners to the press, Hill and Knowlton partners did
know BCCI was "sleazy," and at least one partner did
leave the firm in part as a result of disagreements
over the BCCI account.(6)

Moreover, Hill and Knowlton did have contact with


Capitol Hill on behalf of First American, Clark Clifford
and Robert Altman, on BCCI related matters, in the
period when BCCI still secretly-held First American,
and after BCCI's ownership of First American was a
matter of public record and established fact.(7)

Finally, Hill and Knowlton did have contact with at


least one Congressional staffer, Michael Pillsbury, on
behalf of BCCI itself, in January, 1990. At that time,
Senate staffer Pillsbury wrote Karna Small at Hill and
Knowlton, soliciting information from Hill and
Knowlton concerning what it was doing for BCCI, and
offering to be of assistance to BCCI in its public
relations efforts.

Small's involvement provides further evidence of the


fact that Hill and Knowlton assigned politically-
connected staff to the BCCI account. Small's previous
work had included being assistant press secretary to
James Brady under President Reagan, press
spokesperson for National Security Advisor Robert
McFarlane, and an assistant to the National Security
Counsel during the period in which McFarlane and
Admiral John Poindexter were in charge of the NSC.(8)

The record before the Subcommittee suggests that


the contact between Small at Hill and Knowlton and
Capitol Hill was initiated by Pillsbury, rather than
Small or Hill and Knowlton. Hence, Mankiewicz's
statement was technically correct, if incomplete, on
this point.(9)

Hill and Knowlton's activities on behalf of BCCI, First


American, Clifford and Altman resulted in Hill and
Knowlton making statements that in the end proved
to be materially misleading, and attacking individuals
who were making accurate, but damaging
statements about their clients. While there is no
evidence that any Hill and Knowlton partner knew
that the information it was disseminating was false,
BCCI's use of Hill and Knowlton raises questions
about the role of public relations firms in our political
system.

When a public relations firm disseminates


information, does it have any independent
responsibility to the public to make sure that the
information disseminated is accurate?

Are there other issues of public policy at stake when


a public relations firm that is politically well-
connected, on behalf of a client who has been
indicted for illegal acts, disseminates materials
attacking and discrediting people who are making
accurate statements? Is corrective industry or
legislative action warranted?

Findings

** Hill and Knowlton partners knew of BCCI's


reputation as a "sleazy" bank at the time it
accepted the account in October, 1988. Some
of this information came from then
Commissioner of Customs William von Raab, in
response to questions from a friend who was a
partner at Hill and Knowlton.

** Hill and Knowlton made contacts with


Capitol Hill on behalf of First American, and
BCCI's lawyers, Clark Clifford and Robert
Altman, on issues pertaining to BCCI. Materials
prepared in part by Hill and Knowlton and
provided to Capitol Hill were provided to
federal bank regulators in the spring of 1990 in
an effort to discourage those regulators from
crediting allegations in the media that BCCI
secretly owned First American.

** In 1988 and 1989, Hill and Knowlton assisted


BCCI with an aggressive public relations
campaign designed to demonstrate that BCCI
was not a criminal enterprise, and to put the
best face possible on the Tampa drug money
laundering indictments. In so doing, it
disseminated materials discrediting persons
and publications whose statements were later
proved accurate about BCCI's criminality.

** Important information provided by Hill and


Knowlton to Capitol Hill and provided by First
American to regulators concerning the
relationship between BCCI and First American
in April, 1990 proved to be incorrect. The
misleading material represented the position
of BCCI, First American, Clifford and Altman
concerning the relationship, and was contrary
to facts known by BCCI, Clifford and Altman.
There is no evidence that Hill and Knowlton
partners knew the information to be
inaccurate, or reason to believe that their
clients' account was correct.
Retention and Initial Services to BCCI of Hill
and Knowlton

On October 10, 1988, BCCI was indicted in


Tampa on drug money laundering, sparking an
immediate need by BCCI to respond by every
means possible. As Abdur Sakhia, one of BCCI's
senior officers in the United States,
recommended Hill and Knowlton.

I started the Hill and Knowlton connection. The


day we were indicted we were inundated by
everyone. I said we have to tell our side of the
story. I am not capable of telling it. You need to
have a PR firm to handle this. To me, BCCI's
problems here were like Johnson and Johnson's
Tylenol crisis, or the indictment of Drexel for
insider trading.(10)

Hill and Knowlton had been purchased by a


London advertising and public relations
conglomerate, the WPP group and now had
offices in London. A British BCCI director, John
Hilbery, who lived in London, had contacts
there, and BCCI's main offices in London hired
the firm, at a rate of $50,000 per month.

At the outset of the retention of Hill and


Knowlton by BCCI, some Hill and Knowlton
partners in Washington expressed concern
about the account.
As former Commissioner Von Raab testified:

I was in my office when a friend of mine from


Hill & Knowlton came to me and he said, Willie,
he said, BCCI wants to hire Hill & Knowlton and
they want me to work on it.

And he said, what should I do? And I said, don't


work on it, it is a sleazy operation. Well, the
result was, Bob Gray and Frank Mankiewicz
worked on it. My friend left Hill & Knowlton.(11)

Before the month of October was over, Hill and


Knowlton had deployed a team of six of its
public relations professionals in New York,
Tampa, and Washington, D.C., as well as 16
additional Hill and Knowlton staff in ten other
countries. The firm's initial work included such
standard public relations tasks as handling
BCCI's press strategy, developing various BCCI
officials as press spokesmen, creating a public
relations history of BCCI and a public relations
position paper to be used to rebut the Florida
indictments, and developing a recommended
advertising campaign for BCCI in major
newspapers around the world.(12)

Hill and Knowlton documents found by the


Subcommittee at BCCI's document repository
in Florida describe this work in some detail.

A document evidently generated by Hill and


Knowlton in London in October, 1988, entitled,
"BCCI Worldwide Action Program," carried
recommendations for generating positive press
for BCCI through interviews between BCCI
officials trained by Hill and Knowlton on what
to say with influential journalists such as Lou
Dobbs at CNN, Louis Rukeyser at PBS, and
James Stewart of the Wall Street Journal.

A second Hill and Knowlton document dated


October 27, 1988, described as "Background on
the Tampa Indictments And BCC Position on
Compliance," described the approach to be
taken by BCCI officers in these interviews:

Management of BCCI was surprised and


shocked to learn in news reports that the bank
and nine of its employees had been indicted in
Tampa, Florida on charges of laundering drug
money. The bank had no warning that it or any
of its people were under investigation, nor is
its management aware that any employee
anywhere had violated long-standing bank
policies to do business in a manner fully
consistent with the laws and regulations of
every jurisdiction in which it operates.

The specific facts of the charges are not known


to BCCI at this time; the bank has, however,
reaffirmed its commitment to legal integrity
and pledged to cooperate with all legal
authorities in the resolution of these troubling
developments. BCC has taken the further step
of launching an extensive internal review
under the direction of a special committee of
outside directors to review the allegations.(13)

Senior BCCI officials to whom the document


was being distributed knew at the time that
many of these statements were inaccurate.
Even mid-level BCCI officials knew that some of
these statements were inaccurate. For
example, according to BCCI officers such as
Amjad Awan and Akbar Bilgrami, both
convicted of money laundering, BCCI had
never, even on paper, created a package of
"long-standing bank policies" against
committing any kind of criminal act, let again
directed against laundering money.(14)

Creating an anti money-laundering policy after


the fact was one of the urgent tasks
management was about to engage in as part of
BCCI's damage control operation. BCCI official
Akbar Bilgrami was in this period told to write
a memorandum concerning a meeting which he
had not attended in which BCCI had supposedly
reiterated its policies against money
laundering with BCCI's banking staff in Miami.
According to Bilgrami, he declined the request
to write the memorandum for two reasons.
First, its substance was misleading. Second, he
felt ridiculous trying to write an account of an
event at which he was not even present.(15)
Bilgrami made clear his understanding that the
notion that BCCI had an anti-money laundering
policy in place prior to his indictment was
absurd.(16)

The backgrounder on BCCI prepared by Hill and


Knowlton at the time for use with the press
stressed BCCI's total institutional commitment
to conservative and ethical practices:

BCC draws upon Eastern traditions of trust,


confidentiality, hospitality and cordiality in
business dealings. The bank has an unusually
egalitarian management structure with many
functional, as opposed to ceremonial, titles for
managers . . .It stresses conservativism,
prudence and liquidity in its deposit taking and
lending activities. . . Although it has never
publicized the fact, BCC is a major participating
in recognized charitable and philanthropic
programs around the world . . . The BCC Group
as a matter of corporate policy adheres strictly
to the rules and regulations of all countries in
which it does business . . . Financial
transactions of the bank are subject to four
levels of review by regional auditors, by
central auditors, external auditors (Price
Waterhouse is the bank's outside audit firm)
and by the auditors of various state banking
authorities.(17)

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