Bloomberg News

Putin Spin Doctors Pitch Russian Pancakes, Ignore Ukraine

May 16, 2014

Ukraine

An armed pro-Russian fighter takes position at a checkpoint in the eastern Ukranian city of Slavyansk on May 15, 2014. Photographer: Vasily Maximov/AFP via Getty Images

Readers of ThinkRussia.com could be forgiven for believing BMX biking, advances in nanotechnology, and the opening of a Russian pancake house in New York are the biggest headlines from the ex-Soviet state.

What’s missing from the English-language site, aimed at foreign investors, is anything on the violence in Ukraine, Russian President Vladimir Putin testing his military’s combat readiness, or his government’s crackdown on the press.

ThinkRussia.com is run by Ketchum Inc., a New York-based public relations firm that has been helping Putin’s government burnish its image since 2006. The unit of ad giant Omnicom Group (OMC:US) Inc. received more than $10 million from the Russian government and OAO Gazprom (OGZD), the state-controlled natural gas exporter, in the year through November 2013, U.S. government data show.

More on the Crisis in Ukraine:

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  • Ukraine Crisis Echoes 1914, German Ex-Leader Schmidt Says

Ketchum isn’t the only foreign PR company with Russian government clients. Portland Communications, a London firm owned by Omnicom, has represented Gazprom. Hudson Sandler, also in London, works for Gazprom’s oil arm and the Russian Direct Investment Fund. And Brussels-based based G+ Europe, another Omnicom agency, has advised Putin’s government at G8 summits and has helped shape its media strategy.

“It’s a dangerous game to align yourself with Putin when you’re based in the U.S. or U.K.,” said Daniel Moss, a professor of public affairs at the University of Chester in Britain. “It could be damaging to your firm, and your U.S. or European clients may feel uncomfortable.”

Robyn Massey, a spokeswoman for Ketchum, said the firm’s work with Russia is focused on economic development and investment. It’s not advising on foreign policy or the Ukraine crisis and is complying with sanctions, she said.

Topless Putin

Hudson Sandler Chief Executive Officer Andrew Hayes said in an e-mail that “communicating in challenging times is even more crucial for our clients, and we are helping them do just that.”

Putin spokesman Dmitry Peskov said the Russian government is “very satisfied with Ketchum, and that is why we are continuing to use their services.” Portland, Omnicom and Gazprom declined to comment. G+ didn’t return calls and e-mails.

A Snapshot of Ukraine's Past and Future

With thousands of troops deployed near the Ukrainian border, Russia risks undoing years spent burnishing its reputation. The country plowed billions of dollars into the Sochi Olympics in February, and Putin has put his personal weight behind the St. Petersburg International Economic Forum, a gathering of global business and political leaders that the White House is pressuring CEOs to skip.

His government built Russia Today, a 24-hour English-language news network aimed at raising the country’s profile abroad. And the president has boosted his own image with the publication of photos of him riding bare-chested on horseback and tracking Siberian tigers.

PR Megaphone

There’s little wrong with helping a government -- even one that’s a potential adversary -- get a fair hearing and build a “national brand,” said Paul Simpson, a professor of communications at London’s University of Greenwich.

Such work, though, should be “as much about being a conscience for an account as it is a megaphone,” Simpson said. “It can’t be based on being blind to the unethical reality of the situation on the ground.”

So far, nothing in U.S. or EU sanctions prevents PR agencies or other professional-services firms from taking on most Russian clients, even those with links to the state. Both sets of measures largely affect military and political figures rather than companies or organizations.

Moscow’s Micex stock index closed up 0.75 percent today. The jump came after a decline yesterday on a statement by U.S. Secretary of State John Kerry that Russia faces “sectoral economic sanctions” if it attempts to undermine Ukrainian presidential elections scheduled for May 25.

Ketchum received about $3.5 million from the Russian government for work from December 2012 through November 2013, it said in filings to the U.S. Department of Justice. U.S. companies that do advocacy work on behalf of foreign governments must register their activities and revenues. No comparable legislation exists in Britain.

No A+

Gazprom also paid Ketchum $7.5 million for work that included corresponding on the company’s behalf with virtually every major U.S. media outlet, the filings show.

Another big Ketchum client: The U.S. government. Since 2009, Ketchum has won more than $37 million in contracts from agencies including the Department of Health and Human Services and the Department of Agriculture, according to U.S. government contract records.

“I wouldn’t give Ketchum an A+ for ethics,” said Guy Golan, an associate professor of public relations at Syracuse University’s Newhouse School of Public Communications. “I assume most U.S. citizens wouldn’t be too happy” with its work for both governments, Golan said.

Spokesmen for Health and Human Services and the USDA didn’t respond to e-mails and phone calls seeking comment.

Saddam Hussein

ThinkRussia.com says it’s “managed by Ketchum on behalf of the Russian Federation.” The site offers an upbeat view of the country, with the “Business & Economy” tab highlighting innovative tech companies and the “Policy Initiatives” section featuring a recap of the 2014 Global University Summit, held last month in Moscow.

From Saddam Hussein’s Iraq and Muammar Qaddafi’s Libya to Sweden and Denmark, governments worldwide have long hired outside PR companies. Portland is registered to work for Kazakhstan, which Human Rights Watch says muzzles free speech and often tortures people held in detention. The Kingdom of Bahrain, which has violently suppressed anti-government protests since the 2011 Arab Spring, has worked with Washington-based Qorvis. Qorvis declined to comment.

Apartheid Leader

With the U.S. and Europe considering stronger sanctions on Russian companies and business figures, PR agencies report new clients are inquiring about their services.

“We’ve turned down two people who are on the sanctions list,” said James Henderson, CEO of Bell Pottinger, a London firm that has worked with unpopular figures such as Belarus President Aleksandr Lukashenko and former South African apartheid-era leader F.W. de Klerk.

The firm represented Rosneft, whose CEO Igor Sechin has been sanctioned by the U.S., in its acquisition of oil venture TNK-BP in 2012, though that work is now done. It is currently advising Basic Element, an investment group with holdings in energy and other industries controlled by Russian billionaire Oleg Deripaska (who hasn’t been targeted by sanctions).

Until the U.S. orders agencies like Ketchum to pull back from Russia, the PR firms aren’t violating sanctions and have every right to earn their money abroad, said Brian Basham, a PR consultant who has advised Kazakhstan President Nursultan Nazarbayev and Julian Assange of Wikileaks.

“Assuming Ketchum have broken no laws, they’re free to represent who they like,” Basham said. “It’s a question of advocacy. We need to know as much as possible, and people like Ketchum help to keep us informed.”

To contact the reporters on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net David Rocks, Kevin Miller


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