Fleishman Hillard - Controversy

Controversy

In May 2004, San Francisco Chronicle reporter David Lazarus questioned whether codes of conduct were broken when Marc Bien, who he interviewed with the understanding that Bien was Vice-President of Corporate Communications for the telecommunications giant SBC Communications, was actually found to be an employee of F-H. Lazarus wrote, in a follow-up article on a possible strike at SBC: "I quoted an SBC spokesman the other day defending the company's use of hundreds of outside contractors—a contentious issue in the contract talks with union members. Turns out, according to internal SBC documents, that the spokesman, Marc Bien, himself is a 'nonemployee' who is actually on the payroll of public- relations powerhouse Fleishman-Hillard. He is, in other words, an outside contractor, as are dozens of other Fleishman employees who assist with SBC's corporate spin. What makes the case unusual, though, is that Bien, who has appeared in this column many times representing SBC's position on a variety of matters, bears the title of SBC vice president of corporate communications. His business cards say as much, and he works in the firm's San Francisco office. Internal documents show that about a half-dozen SBC vice presidents are in reality Fleishman employees. Yet they present themselves as SBC executives."

The City of Los Angeles sued Fleishman Hillard and the general manager of its Los Angeles office in 2005 for defrauding the city and padding its bills, including falsifying timesheets, when F-H did work for its Department of Water and Power programs from 1998 to 2004. In April 2005, Fleishman Hillard issued a public apology and paid a $5.7 million settlement to the city. The firm responded that “On the basis of that investigation, the agency believes some senior executives of the Los Angeles office, who are no longer with the firm, caused certain bills to be presented to the city that appear to be improper and indefensible." The lawsuit came about after the Los Angeles Times ran a series of investigative stories. As a result of the case, several of the firm’s executives were terminated.

in 1989 Standley H. Hoch left the General Dynamics Corporation in St. Louis and joined G.P.U., the large Parsippany, N.J., utility that owns the Three Mile Island nuclear plant as CEO. Mr. Hoch had two mandates: trim management and lower costs, and fight to repeal the Public Utilities Holding Company Act of 1935, which makes it difficult for utilities to operate across state lines.

In 1990, G.P.U. paid about $600,000 to Fleishman-Hillard, G.P.U.'s only outside public relations agency, largely to supplement the company's lobbying effort. Early in 1991, Hoch hired Susan Schepman away from the agency. Energy reporters say she spent much of her time placing Mr. Hoch in the forefront of the debate over the act's repeal.

Everything was fine until April 1991, when an anonymous letter sent to G.P.U.'s board and to a local regulatory commission exposed the intimate relationship between Mr. Hoch and Ms. Schepman, suggesting that it predated their arrival at G.P.U. The letter contended that Ms. Schepman had influenced Mr. Hoch to hire her agency without competitive bidding. Ms. Schepman had, in fact, been one of Fleishman Hillard's executives responsible for the General Dynamics account when Mr. Hoch was there.

Fleishman-Hillard was granted a contract for the State of Ohio for an anti-overdose campaign, newspapers pointed to a potential conflict of interest as they previously worked for Purdue Pharma and managed crisis communications for their highly addictive product OxyContin.