PRovoke Media 01 Feb 2021 // 5:00AM GMT
Part One: 'Election fraud', AstraZeneca, 5G, Rio Tinto, Huawei, McKinsey and Tyson Foods
Part Two: TikTok, Volkswagen, Ebay, Wells Fargo, Amazon and Sherwin-Williams
14. Wayfair falls foul of child trafficking conspiracy
In 2017, after the election of Donald Trump, we warned that “fake news” was becoming an existential threat to the public relations industry, and that the same forces—delegitimization of mainstream media sources, accompanied by the weaponization of disinformation—that helped get the president elected could be used against corporations.
There’s nothing new about phony conspiracy theories creating problems for brands: back in the 70s, there were rumors that the Bubble Yum brand of bubblegum contained spiders’ eggs; around the same time, people accused McDonald’s of using worms to make its burgers; and in the 1980s, there were reports that people believed Procter & Gamble’s logo was a secret sign that the company worshipped Satan.
So it’s no surprise when companies find themselves targeted by fake news that spreads alarmingly quickly on social media—although the difficulty of anticipating and defusing such crises was evident when online furniture retailer Wayfair became the subject of rumors that it was involved in child sex trafficking.
The story emerged after Wayfair listed several cabinets and other items, many of them costing thousands of dollars, that had names that purportedly matched reports of missing children from around the country: Neriah, Samiyah and Yeritza.
Tens of thousands of social media users pieced those observations together with cell phone screenshots, red circles and lots of question marks to accuse Wayfair of selling and shipping children to pedophiles. QAnon—the right-wing pedophilia cult that had previously targeted the Clintons and Washington pizza restaurants—seized on the apparent similarity between the product names and the names of missing children, prompting tens of thousands of posts on social media.
Fortunately for Wayfair, it had an effective early warning system in place, and was able to debunk the rumors before they attracted more mainstream attention.
Said Cindy Otis, a disinformation expert and former CIA officer, writing for Barons: “If other companies are breathing a sigh of relief right now that they have avoided the QAnon behemoth this time, they shouldn’t be. QAnon pages, groups, forums, and accounts are already expanding their list of commercial sector suspects and have already targeted the likes of Amazon, Walmart, Etsy, and Target, among others….
“Coordinated information operations are not just a political concern that comes around every four years. It is critical that companies have a response plan and capability in place and ready to go that includes communications, legal, and security elements for when they inevitably become a target. Organizations that do not have the bandwidth or resources to implement and support a monitoring and response effort should engage outside experts for support. What they can’t do is keep crossing their fingers that they won’t become the next victim.” — PH
15. Ant Group's IPO dreams are dashed
When flamboyant Alibaba founder Jack Ma addressed a Shanghai conference last October, it is unlikely he could have predicted the maelstrom that his comments would unleash. Ma criticized global banking rules, comparing Chinese regulators to an "old people's club" who stifle healthy innovation in the country.
It did not take long for China's regulators to strike back, demonstrating a fleetness of action that—ironically—belied Ma's damning depiction. Under new online lending rules, furthermore, officials said there were "major issues" with the purported $37bn listing of Ma's Chinese fintech giant Ant Group.
Three days before what would have been the world's largest stock market debut, Chinese regulators abruptly suspended Ant Group's Shanghai IPO, with the company forced to pull its listing in Hong Kong on the same day. The moves stunned an investment community that had put in bids worth a record $3 trillion.
In December, China launched an antitrust investigation into Alibaba, before ordering Ant to overhaul its financial business and "return to its payment origins." And Ma's woes didn't stop there – the high-profile billionaire was not seen in public for two months in the aftermath of the crisis.
"Arguably Ant’s undoing revolved around three issues," says the head of a Hong Kong financial communications firm, speaking on condition of anonymity. "Firstly, the firm had an identity crisis. It wanted to position itself as a financial powerhouse while retaining the freewheeling spirit and lighter touch regulation of a technology company.
“Secondly, the firm adopted a high handed communications approach, with Jack Ma’s now infamous speech exemplifying this," adds the executive. "While Jack Ma’s flamboyance, high profile and aggression have been vital ingredients in his success, a more measured approach is wise for anyone working in the highly regulated banking ecosystem, especially when China is going to such lengths to ensure stability in the system as it recovers from the pandemic.
“Finally, Ant could have more been transparent about how it was mitigating risks and working constructively — and publicly — with the regulators in the months leading up to the IPO," concludes the executive. "Ultimately, he flew too close to the sun and paid the consequences."
Another corporate PR source notes that "attacking a regulator never works out in many markets, and it is clear China is no different."
"The challenge will be whether Ma's bravado and marketing chops can return and if foreign money will be shy on any mainland IPOs in the future," adds the corporate PR source. "The complete lack of communications regarding the IPO since it got quashed shows that the government is serious in its intention to breakup the conglomerate. Not a great day for crisis communications for either party." — AS
16. CrossFit’s response to Black Lives Matter
In late May, the murder of George Floyd trickled into the news. But when the video footage that depicted the full 8 minutes and 46 seconds of his horrifying last moments went public, unrest erupted — first in Minneapolis, then rippling across the United States. By early June, corporate America was, for the first time, showing its support for Black Lives Matter en mass. But for the fitness phenomenon CrossFit, the tragedy revealed the disturbing beliefs held by its founder/CEO Greg Glassman.
As the protests ramped up in early June, Glassman picked a fight with the Institute for Health Metrics and Evaluation when it called out racism as a public health issue. Glassman tweeted “It’s FLOYD-19,” going on to say: “Your failed model quarantined us and now you’re going to model a solution to racism? George Floyd’s brutal murder sparked riots nationally. Quarantine alone is ‘accompanied in every age and under all political regimes by an undercurrent of suspicion, distrust, and riots.’ Thanks!’” That alone cost the company its Reebok partnership. But it got even worse from there.
On June 9, BuzzFeed News reported that it obtained a recording in which Glassman can be heard telling gym owners on a Zoom call, “We're not mourning for George Floyd — I don't think me or any of my staff are. Can you tell me why I should mourn for him? Other than that it’s the white thing to do — other than that, give me another reason.” This was in response to a Minneapolis gym owner asking why the company had not posted a statement about the murder.
That same day, the company posted a letter that called Glassman’s statements “incredibly insensitive and hurtful.” The letter asked for the public to accept its “deepest apology” while also defending Glassman and called his comments “a mistake.” But, on June 10, Glassman announced his retirement in response to swift backlash. More than a thousand gyms cut ties with CrossFit. And by the end of the month, Glassman had sold the company.
Crisis expert Richard Levick points to the mistake the company made in initially defending Glassman. “It’s not just the shockingly insensitive multiple comments and tweets by former CEO Greg Glassman — ‘not simply a mistake or misspoken words’ — but a history of highly insensitive and even Ku Klux Klan embracing comments from guns to race.”
Group Gordon’s Andrew Jarrell says, “While the brand eventually parted ways with Glassman and apologized, they took far too long to do so and their apology was insufficient. When you have existing struggles with diversity and a community that is expressing dismay that you've done nothing to show your solidarity with the racial justice movement, letting the CEO go and apologizing is not enough. You need tangible action and concrete steps to show how you are going to change and convince people that Glassman's views weren't reflective of a larger cultural issue at the company.”
Ruder Finn’s Robin Kim adds that “Crossfit still hasn’t fully grasped its power and potential as a brand. This is in part because Crossfit has a hands-off corporate structure: its franchise model means that gym owners can make their own decisions about branding. Some autonomy is good, but Crossfit needs to be clearer and more consistent on what the brand stands for and why in ways that enable it to better manage risks.”
The new owner Eric Roza began his tenure with the statement: "My view is simple: Racism and sexism are abhorrent and will not be tolerated in CrossFit." But Reputation Doctor’s Mike Paul warns that CrossFit cannot simply sweep this under the rug. CrossFit should “be ready to apologize each time the issue is brought up, not just once,” says Paul. “Many a leader has made this mistake to think one and done is the rule. Never. The rule is to own it for life with the same compassion and EQ necessary the first time and each time moving forward.” — AaS
17. Dominic Cummings undermines trust in UK policy
In the wake of the initial national shock and awe of the UK’s first Covid stay at home order on March 24, compliance was extremely high. Weeks later, however, there were reports of an incident that tainted trust in government messaging and policy for good, and laid bare the lie that the country was “all in this together.”
At the time, unelected Brexit architect Dominic Cummings was prime minister Boris Johnson’s most senior advisor. Cummings was discovered to have driven with his family, 425km from his home in London to his parents in Durham, while he and his wife had Covid symptoms. A few days later, they were seen on a “day out” at nearby Barnard Castle.
When the lockdown trip became public in May, Cummings claimed he had driven to the beauty spot to “test his eyesight” after the virus symptoms. The media response was immediate, and damning: across the political spectrum, the call and expectation was that Cummings had to go. He was filmed leaving his home in London while reporters questioned him, and he claimed he had "behaved reasonably and legally”. When asked about how his actions looked, he said: “Who cares about good looks? It’s a question of doing the right thing. It's not about what you guys think.”
When a press conference was called in the Rose Garden at 10 Downing Street on May 25, most journalists assumed a resignation was imminent. To widespread astonishment, Cummings brazenly stated it had been an “essential” journey. To even more disbelief, Johnson supported him, saying he had acted “responsibly, legally and with integrity.”
Crisis management expert Rod Cartwright says this episode will go down not just in the curricula of communications degrees, but in history books: “When our grandchildren study the 2020 pandemic, there will be at least one chapter on the lives lost because of flawed communication. And if they ask for the top reason behind the tragic breakdown in the UK public’s trust in government communication, their teacher would be excused for giving a two-word answer: Dominic Cummings.”
Cartwright says it was “the principle, not the detail” which ultimately did for the PM’s key advisor, who held his post until November: “A brazen absence of accountability, plus a sense that there was one rule for ‘them’ and another for the rest of us, dealt a body blow to the behavioural psychology behind Government comms. To paraphrase Maya Angelou, it wasn’t only what Cummings did or said, it was how he and the whole affair made the country feel.”
As Cartwright points out, at the time of the Edelman Trust Barometer 2020 Spring Update, the UK saw the largest uptick in trust in government globally. In the recent 2021 report, its 15-point decline since last May was the second highest in the world: “Coincidence? I think not. The Cummings affair sits at the heart of the Government’s communications annus horribilis and the countless lives needlessly lost as a result.” — MPS
18. HSBC is caught between two masters
When push came to shove, HSBC did not hesitate. Last June, the bank took to WeChat to share a photo of chief executive Peter Wong signing a petition in support of Beijing's controversial new security law for Hong Kong.
In one fell swoop, the bank signalled its decision to take sides amid rising geopolitical tensions between the US and China, following Beijing's decision to implement the law. After more than a century of studied neutrality, HSBC's capitulation sparked employee angst and a backlash in the US and UK, where the bank maintains its London HQ. Two weeks ago, HSBC CEO Noel Quinn was forced to defend the company's China policy when faced with questions from UK lawmakers — underlining the risks involved in its balancing act.
For HSBC, the bank's dual base strategy in Hong Kong and London has typically been viewed as an advantage. Now, when forced by China to choose sides, that exact advantage has become a liability. And the costs of HSBC's sudden embrace of politics will be impossible for the corporate world to ignore as China forces companies into line.
"HSBC’s challenge in Hong Kong is a classic case of finding yourself between a rock and a hard place," says Jonathan Hemus, MD of crisis management consultancy Insignia. "Faced by the demands of the Chinese authorities (and the commercial impact of non-compliance) on one hand versus their stated values and the expectations of western stakeholders on the other, they were confronted with two courses of action, both of which presented significant downsides. It's a dilemma that those who have managed a crisis will recognise all too well: there is rarely a wholly ‘good’ decision, more often a least bad one."
Already facing pressure from Beijing for the Huawei situation, HSBC also began facing incendiary criticism from the Global Times and local Hong Kong politician CY Leung, calling for a boycott if HSBC did not back the proposed national security law. But half of HSBC's shareholders are Western, including major institutional players Blackrock and Norway's sovereign wealth fund — many of whom have publicly stated their commitment to environmental, social and governance (ESG) criteria for their investments.
Whether HSBC's decision to back the law falls foul of those criteria remains to be seen. At the very least, though, it would appear to be at odds with the company's values — which include "listening, treating people fairly, being inclusive, valuing different perspectives".
"Situations like these demand leadership and courageous decision-making guided by your values, a clear understanding of which stakeholders are most influential and important for your business and a focus on doing whatever is in the best long term interests of your reputation," says Hemus.
HSBC earns 40% of its revenue and more than 60% of its profit in Hong Kong and mainland China. Both are set to rise if the bank can capitalise further on China's $45tn financial services market. And HSBC's public support of the national security law has succeeded—for now—in quieting the criticism it faced for not choosing sides more swiftly.
"Time will tell whether HSBC made the right call," says Hemus. "Other Western businesses with interests in China would be well advised to begin their own scenario planning now, in anticipation of similar challenges ahead." — AS
19. Wetherspoons' Covid insensitivity
While many businesses responded to the pandemic in a swift and empathetic manner, two British entrepreneurs stood out for a rather more crass approach following the initial stay at home orders instituted by the government in March.
First, Tim Martin, the notoriously outspoken chairman of pub chain JD Wetherspoon, issued a video message to his staff telling them they would no longer be paid while the company worked out details of the Government’s furlough scheme, which had closed pubs. Unsurprisingly, the response to Martin's decision to tell 43,000 staff to go and work in Tesco was strongly negative, but Martin doubled down on his position.
Gavin Megaw, Hanover’s group managing director of corporate, brand and strategy and host of crisis podcast The White Swan, said: “By initially telling staff he wouldn’t stand by them, Tim Martin sent a clear message that Wetherspoons lacked a common purpose and a sense of community for its employees at a time when it was vitally needed. That is a toxic approach to management – and one that will not be forgotten.
“He may not think it matters today, but when the world returns to normal the organisation’s reputation gap will be a chasm that will be hard to close. After all, if you have a choice, why would you actively choose to work for Wetherspoons?”
The second perp in the stand is Mike Ashley, the boss of Sports Direct owner Frasers Group, who also responded—possibly too quickly—to the news in March that non-essential retail would close, with an email to all staff 30 minutes after the announcement saying that Sports Direct branches would stay open as sports equipment was essential. Ashley also sent emails to ministers lobbying for a change in the rules.
Again, the response to this apparent disregard for staff welfare did not go down especially well, but Ashley surprised commentators days later by issuing an open letter apologising for his comments. He said: “In hindsight, our emails to the government were ill-judged and poorly timed, when they clearly had much greater pressures than ours to deal with. On top of this, our communications to our employees and the public on this was poor. To reiterate, I am deeply apologetic about the misunderstandings of the last few days. We will learn from this and will try not to make the same mistakes in the future.”
Megaw doubts that Ashley’s conduct at the start of the crisis will impact his reputation: “His unexpected apology drew a line under external matters at a time when many other businesses were also criticising a lack of coherency in Government guidelines. That said, it did highlight a major problem for internal communications within Sports Direct. When challenging times hit, things broke down quickly and employees did not follow Ashley’s lead. Any sensible organisation would review their culture and rewire their internal communications.” — MPS
20. Goya Foods stands with Trump
When Goya Foods’ chief executive Robert Unanue stood beside Donald Trump in the White House Rose Garden and showered the president with praise, the social media outcry was immediate and extreme.
Customers of Goya Foods, which bills itself as America’s largest Hispanic-owned food company, took to Twitter to express their outrage that Unanue would not only stand alongside a president who has imprisoned Latin Americans in concentration camps, insulted hurricane survival victims in Puerto Rico, and made frequent racist references to Mexicans, but describe him in glowing terms.
We’re all truly blessed at the same time to have a leader like President Trump who is a builder, and that’s what my grandfather did,” said Unanue, a Spanish immigrant. “He came to this country to build, to grow, to prosper. And so we have an incredible builder, and we pray for our leadership, our president, and we pray for our country that we will continue to prosper and to grow.”
Within a few hours, “Goya” was a top trending term on Twitter, generally accompanied by hashtags such as #Goyaway and #BoycottGoya.
“It’s shameful and appalling that the president of Goya Foods is praising the most anti-Latino president in the history of our country,” Nathalie Rayes, president and CEO of the political group Latino Victory said in a statement. “We call for a boycott of Goya Foods products and anyone who stands with Donald Trump and against our community.” Prominent Latino politicians including Alexandria Ocasio-Cortez and former presidential candidate Julián Castro joined calls for a boycott.
Unanue defended himself during a Fox News interview, and doubled down on his support for the president, making the familiar—if nonsensical—argument, that his critics were violating his right to free speech by disagreeing with him and suggesting that his comments should have consequences.
“You’re allowed to talk good or to praise one president, but you’re not allowed—when I was called to be part of this commission to aid in economic and educational prosperity and you make a positive comment, all of a sudden that’s not acceptable,” he said. “So I’m not apologizing.”
But there were indications that the public relations team at Goya was taking the social media firestorm seriously. A couple of days after Unanue’s remarks, the company announced it was donating 200,000 pounds of food to families impacted by the Covid-19 pandemic in Mexico—part of its ongoing #GoyaGivesGlobal campaign.
It’s far from clear whether the boycott had any impact on the company’s sales. Similarly, it’s far from clear whether Donald Trump’s frequent tweets mocking the boycott, or his daughter Ivanka’s now-famous photo holding up her new favorite product, had any positive impact.
But as media monitoring company Commetric says: “With boycotts becoming more popular, global, and unpredictable, it is imperative for both in-house and client-focused communications professionals to be constantly vigilant and aware of the social media landscape around them. Reliable and lightning-fast data analysis allows you to stay ahead of the conversation when it comes to fraught issues such as those above.” — PH