June 17 (Bloomberg BusinessWeek) -- President Barack Obama used his first Oval Office address on June 15 to order BP Plc to set aside “whatever resources are required” to compensate workers and business owners harmed by the Gulf of Mexico oil spill.
Yesterday, at the White House for a private tongue-lashing, executives of the London-based company agreed to do just that, putting $20 billion in escrow and canceling payment of a dividend to shareholders. Now, Congress is preparing to go on the attack, with Chief Executive Officer Tony Hayward set to face a verbal drubbing today from a House panel over charges that his company cut corners in pursuit of profit.
BP is maintaining a careful public equilibrium while oil continues to spill into the Gulf, Bloomberg Businessweek reports in its June 21 issue. Executives haven’t gone into hiding, nor have they been defensive as more and more demands are made on the company’s purse.
Still, they aren’t taking the political piling-on lightly. Coordinating the approach is a crisis-management team, assembled over the last two months, of high-priced Washington insiders. Orchestrating the response is the Brunswick Group, whose Washington managing partner, Hilary Rosen, has connections throughout the city as the former head of the Recording Industry Association of America and from previous jobs that include working for Senator Dianne Feinstein, a California Democrat.
Massaging the Press
To help massage the press, Brunswick has retained John Feehery, who served as an aide to former House Speaker Dennis Hastert. Other recent hires include Alex Castellanos, an adviser to Republican presidential campaigns, who comes aboard with his own media and advertising firm, Purple Strategies.
WilmerHale, a law and public policy firm populated by top officials from President Bill Clinton’s administration, is helping contend with multiple legal issues and investigations. And to help BP fight the war against viral innuendo, Ogilvy Public Relations Worldwide is advising on digital media such as Facebook and Twitter.
Brunswick, Ogilvy, Rosen, Feehery, and Castellanos all declined to comment. Officials at WilmerHale didn’t respond to requests for comment.
The experts talk daily to plot strategy and dissect the day’s events. In prepping Hayward for his hearing, says one adviser, the basic message was: Don’t say anything you don’t know to be true.
White House Meeting
At yesterday’s White House meeting, BP officials were accompanied by WilmerHale partner Jamie Gorelick, a former deputy attorney general under Clinton, and Michele Davis, a Brunswick partner who was former Treasury Secretary Henry M. Paulson Jr.’s spokeswoman.
Senator Jeff Sessions, an Alabama Republican whose state’s coastline is affected by the spill, said none of this counsel is doing much good.
“I don’t think their repeated statements that they are moving to efficiently compensate people who have suffered damages and to protect the beaches and estuaries has been perceived as very credible,” Sessions said.
BP is getting much the same reception all over town.
“The issues of their own credibility have damaged them so much” that things they’re saying “are just not remotely resonating with people,” said Jack Quinn, a former White House counsel under Clinton who founded Quinn Gillespie & Associates, a lobbying firm. Quinn isn’t doing any BP work.
BP’s American depositary receipts rose 45 cents to $31.85 in New York trading yesterday. They have dropped 47 percent since April 20, when an explosion aboard the Deepwater Horizon drilling rig killed 11 workers and triggered the spill.
Fitch Ratings cut BP’s credit rating six notches on June 15 to two levels above junk on concern over the potential cost of cleaning up the spill and meeting future liabilities. Standard & Poor’s downgraded BP by one level last week.
Even before the spill and resulting fallout, BP had some of Washington’s top fixers on retainer, including Ken Duberstein, a former chief of staff to President Ronald Reagan, and Tony Podesta, brother of John Podesta, who ran Obama’s transition team.
All this talent is pricey: BP paid Duberstein $400,000 in 2009 and $100,000 so far this year, according to lobbying reports. Superlawyers such as WilmerHale’s Gorelick likely bill between $900 and $1,100 an hour, said law firm consultant Peter Zeughauser.
There is a danger that the BP public-relations effort, highlighted by television ads that promise the company “will make this right,” may make matters worse. Obama pilloried the company in a June 4 speech for running what he called a $50 million image campaign while the leak goes unplugged.
A push to use Twitter isn’t catching on, either. While posts by Hayward and other executives at @BP_America have almost 15,000 subscribers, that feed is dwarfed by tweets mocking the company at @BPGlobalPR, which has more than 167,000 followers.
One recent entry: “Our credit rating has been downgraded to BBB. We’ll assume that means ‘Big Bountiful Bonuses.’”