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Congress Probing AIG Spin Shop
Congress is demanding information from AIG about reports that the bailed-out insurance giant has four PR firms on its payroll -- and about its recent PR blitz aimed at discrediting former CEO Hank Greenberg.
In a letter sent this morning to AIG chief Ed Liddy and obtained exclusively by TPMmuckraker, House Oversight committee chair Ed Towns requests detailed information on AIG's PR expenses, specifically mentioning Hill & Knowlton, and Mark Penn's Burson-Marsteller, two high-priced experts in Washington spin that have signed on to represent the firm.
For both the PR firms, Towns wants to know: when and why they were hired; which staffers at the firms have worked with AIG; and which subcontractors they've hired, and for what. Towns also wants copies of all documents exchanged between AIG and both of the two firms, including bills and payments.
Burson-Marsteller and Hill & Knowlton are both among the heaviest of hitters in shaping Beltway opinion. Just yesterday, Burson announced (sub req.) that Dana Perino, President Bush's last White House press secretary, had signed on as "chief issues counselor." In addition to CEO Penn, who masterminded Hillary Clinton's presidential campaign, Burson's roster also boasts former Clinton administration communications director Don Baer, former Clinton speechwriter Josh Gottheimer, and top Bush adviser Karen Hughes. As for Hill & Knowlton, it has represented Wal-Mart, the CIA, and a string of other big-name clients. Stacie Paxton, the DNC's national press secretary during the 2008 campaign, recently joined the firm as a vice president.
In the letter, Towns also demands more information on AIG's coordinated attacks on Greenberg just before the former CEO's congressional testimony earlier this month -- which we wondered about the time. Greenberg has been publicly sparring with AIG, which he left in 2005, over who's to blame for the company's collapse last fall.
Towns writes:
On the eve of the hearing, the Committee was surprised to hear allegations that AIG was contacting the news media and others to attack Mr. Greenberg's credibility, and circulating an anonymous paper entitled "The Greenberg Legacy". I would be extremely disappointed to learn that any of the billions of taxpayer dollars invested to support AIG may have been diverted to finance a public relations campaign against critics of the AIG bailout.
Later in the letter Towns asks:
Was the paper, "The Greenberg Legacy", authored and circulated by, or at the behest of, AIG? If so, please identify all outside contractors who had a role in the creation, review, or distribution of that paper.
There's little doubt that "The Greenberg Legacy" -- which notes the various ongoing investigations into Greenberg, then declares "we don't understand how he can be viewed as having any credibility on any AIG issue" -- was produced and put out by AIG. Pro Publica reported that fact right after it was released, and a Word Document version of the paper obtained by TPMmuckraker lists AIG as the creator, and "herr" -- almost certainly AIG spokesman Mark Herr -- as the author.
Towns wants the information -- which AIG is legally required to give him -- by April 28.
Since September, AIG has received $182 billion in federal bailout funds, and is over 79-percent owned by US taxpayers.
Late update: We missed this story by Time from late last week on AIG's PR operation.
It adds a bit of detail on what Burson and H&K are doing for AIG: According to AIG spokesman Nick Ashooh, writes Time, "Burson-Marsteller handles controversial issues and Hill & Knowlton fields inquiries from Capitol Hill and prepares congressional testimony for company officials."
And it includes a response from Ashooh to the charge that the bailed-out company is spending too much on spin: "If the criticism was we were running image-advertising or doing sponsorships to make ourselves look better, I could see that. But we're doing a lot of information-processing. It's really been just responding to inquiries [from Congress and the media.]"
We've put in our own request to AIG for a response to today's letter from Towns, but haven't yet heard back. Which is strange, since it looks like their public relations operation isn't lacking for resources.
Josh
Zachary
US tax dollars at work telling the US taxpayer how great AIG is after AIG helped destroy the American and world economies.
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April 14, 2009 3:02 PM | Reply | Permalink
Would this be the same Burson-Marsteller the New York City Board of Elections hired last summer to "educate" voters about the wildly expensive and wholly non-securable electronic voting machines being foisted upon us? The 6.5 million dollar contract with B-M was announced one day after Mayor Bloomberg called a press conference to admonish city workers for "failing to appreciate" the economic crisis faced by the city and state.
See:http://re-mediaetc.blogspot.com/2008/07/nyc-elections-board-hires-spin-doctors.html
April 14, 2009 3:31 PM | Reply | Permalink
1> We own 80% of AIG, and it owes us something like $80B.
2> As 80% owners, and as significant creditors, we should want AIG to try and become profitable so it can pay us back and make our 80% worth more.
3> Part of AIG regaining profitability involves it defending its brand.
4> Part of defending its brand is telling its story.
So what is the problem? Either you want AIG to succeed (so you can get your money back) or you don't. Pick one.
April 14, 2009 3:38 PM | Reply | Permalink
1-4 would be defensible if that is what AIG was doing instead 5>, which is trying to put lipstick on a stinking dead pig's rotting head. Attacking their critics is not telling their story. It's just a way of trying to disguise the fact that AIG's leaders are a bunch of stinking rotten dead pig heads. Waste of money (something they're good at), and it ain't gonna work (also something they're good at).
April 14, 2009 4:02 PM | Reply | Permalink
Uh-huh...well, maybe this will help contextualize the entire discussion about the sentiment of Main street with Wall Street.
Lets call it the five stages of grief main-street is going through...
1: Denial
2: Anger
3: Bargaining
4: Depression
5: Acceptance
So, right now, I'd say we're still working through the bargaining stage. Once we realize that the bargaining aspect of this situation is not bearing fruit we'll get to the next stage, the Depression, which really is nothing more than the dawning realization that our economy is so screwed beyond repair that no amount of money is going to salvage it.
Thats when we get to Acceptance; which is when we come to accept the fact that there is not enough money in the US to salvage AIG or anyone else on Wall Street, and that no, they really are not too big to fail, and can we finally let them die, die, die.
Thus, I beg of all of you...can we agree that the five stages as now being complete, and get to burying the rotting carcasses of Wall Street?
Just bury them already!
April 14, 2009 4:25 PM | Reply | Permalink
Can't help but remember the last campaign... Mark Penn took home more in a month than Robert Gibbs made in an entire year. Money doesn't necessarily by competence.
April 14, 2009 5:12 PM | Reply | Permalink
"Attacking their critics"?
If you know anything about the relationship between AIG and Greenberg (which I gather you don't), you know that the events of the last 6 months are but Round 16 in a 25 round battle. Regardless, why can't AIG defend itself? You don't like them? Fine. You think Hank is a saint? Then you are a fool, but fine. But AIG can't even be part of that discussion? What sort of fairness is that?
And whether it is a good spend or a bad one, who other than the company's management would you have make that call? Shall we have Barney Frank make line-by-line spending decisions for all the TARP companies? ("Hey, Barney! What kind of stationery can we buy?" "Hey Barney! Is this color carpet OK?") Or do we really want Elijah Cummings deciding whether B of A can raise its ATM fees?
Do you guys see where this goes? Does anyone on the planet think that the people I mentioned are at all suitable to the task?
The best analyses I've seen tell me that AIG will most likely repay what it owes the Fed. I'm not sure how much is left after that, but so what. But the real question here is whether the taxpayers or their representatives want to behave in such a manner as to make that repayment less likely. That would seem to me to be irrational.
And likewise, you really do need to ask yourself whether you want that 80% to be worth more or to be worth less. I would think that the rational answer is "more", but that's just me.
Certianly the taxpayers and political class are entitled to say that they are so angry that they would rather destroy AIG then get their money back. That would be the political/financial version of the golfer throwing his entire set of clubs, bag and all, into the pond because he is so furious at his bad shot. I understand the cathartic effect of that act.
But it is still a stupid thing to do.
April 14, 2009 6:07 PM | Reply | Permalink
"Certainly the taxpayers and political class are entitled to say that they are so angry that they would rather destroy AIG than get their money back."
These are not two mutually exclusive things.
AIG can be destroyed by selling it one part at a time and the taxpayers would get most or all of their money back. This is what corporate raiders have been doing for years - buying a company and selling it piecemeal at a profit.
April 15, 2009 1:56 AM | Reply | Permalink
Lots of maybes in your suggestions. First business of order: fire pr folks and top execs. Obviously they don't know how to do it right. Or did they do it so wrong on purpose? I would think that would require jailtime. Even congress can't do any worse. Especially if there is transparency.
April 18, 2009 2:43 PM | Reply | Permalink
Johann:
I agree, assuming that you mean "manage an orderly divestiture process" rather than "destroy". Selling the operating companies to generate cash is a sensible plan. But until those businesses are sold (and selling multi-billion dollar businesses these days is kinda hard: the credit and capital markets are not yet fixed, and a bunch of the likely buyers have lost large chucks of their market cap, too, making the buyer population very small) they remain in the AIG family, and they are subject to the AIG brand and reputation.
In order to preserve the value of those businesses, there are things you have to do. Managing the brand and reputation ar among those things. Doing so is neither unwise nor inappropriate.
April 15, 2009 3:23 PM | Reply | Permalink