Russia is an important case study for crisis communications specialists, facing challenges in areas ranging from politics to corporate scandals.
As a rule, local public relations agencies publish briefs that unanimously say: ‘we manage crisis communications’. In reality, there is a lack of expertise in this important area of corporate communications. One reason for this is the relationship between media and newsmakers: editors (especially in the regions) prefer to ink long-term agreements with companies to place any news stories about them on a paid basis.
(Image: Flickr / Nico Palx)
Media outlets see the publication of stories about companies as a form of advertising and a source of income. Another reason is that corporate communications departments do not generate truly informative news about themselves and so fail to attract serious newsmakers.
However, the most attractive subjects for media outlets in terms of generating interest are the crisis situations that occur in companies from time to time. Global statistics shows that practically every mid- or large size company suffers a crisis every three years.
Being able to deal with crisis successfully is an essential part of every press service or corporate communications department. Every public relations specialist knows this, but they rarely manage to live up to it. That is why the Kremlin press service did not react on time when Vladimir Putin “disappeared” from public sight for four days, provoking rumors about a new baby, plastic surgery or ill-health. And that is also why, after Russia’s dispute with ex-oil giant Yukos ended in a $50 billion verdict in favour of the company shareholders, the wave of comments by different state bodies was so inadequate.
Depending on the case, such reactions to crisis situations ultimately impact the national image, corporate image or the image of high-profile individuals.
Western companies try to be very carefully when operating their business in Russia but some do not have sufficient understanding of the Russian mentality. In 2013, Louis Vuitton placed a giant suitcase in Moscow’s Red Square as part of its brand promotion in Russia. Through its Russian partner, Louis Vuitton had all the bureaucratic permissions for this advertising performance, but it could not predict the ensuing wave of public protests that forced them to quickly remove the suitcase and pay a fine to the Moscow authorities.
Case Study 1. The Yukos case
The Moscow-based oil and gas company Yukos was acquired from the Russian government by oligarch Mikhail Khodorkovsky’s Bank Menatep during the controversial “loans for shares” auctions of the mid-1990s. In the period 1996-2003 Yukos became one of the most successful Russian companies, producing 20 per cent of Russia’s oil output (as much as Libya or Iraq), and Khodorkovsky (photographed left after his release from prison in 2013) became an advocate of democratisation, international co-operation and Russian reform. In October 2003 Khodorkovsky – by then the richest man in Russia – was arrested, and the company was forcibly broken up for alleged unpaid taxes and declared bankrupt in August 2006. Courts in several countries later ruled that the real intent was to destroy Yukos and obtain its assets for the government. In 2014 thelargest arbitration award in history, $50 billion (EUR 37.2 billion), was won by Yukos’ former owners against Russia. Source: Wikipedia
Procative vs reactive: who shot first?
Meanwhile, Russian companies sometimes occupy proactive (or even aggressive) public relations positions in order to protect their business interests. In June this year, anti-missile producer Almaz-Antey held a press conference claiming that last year’s Malaysia Airlines Boeing 777 crash in Ukraine was not caused by a rocket produced by their company. During almost three hours a company spokesman used infographics to try and convince the journalists that the company was not the culprit in the tragedy. Earlier, Almaz-Amay has been placed on European sanctions list and lost many contracts with western partners.
In many cases Russian corporate communications experts make crucial mistakes in their handling of crisis communications. They depend on many factors in their work: how to attract media, how to persuade their bosses to choose the right tactics, how to meet authorities’ expectations, and so on. As a result, they often lose valuable time in providing relevant information in the initial crisis period to win points in battles with media outlets.
When a Russian-made Soyuz cargo spacecraft crashed back to earth only a few days after its take-off in May this year, the state-controlled agency Roskosmos issued statements in which there was little mention of a crisis situation. Moreover, the absence of “one-voice” policy helped spread rumours that astronauts on the International Space Station, who were waiting for essential cargo from the Soyuz booster, might not come back home on time.
On the other hand, attempts by public relations teams to prevent negative news about a company or individual from spreading can fail because of peculiarities in the way the Russian media works. Recently there was a fatal case when a passenger died on board a plane. All relevant information about the case was gathered from the captain, cabin crew and flight control specialists before the jet landed and the public relations team prepared a Q&A. The next day 29 media outlets reported the case. However all the media reports quoted only one unidentified source of information. None of the reporters called the airline’s spokesperson to check the details of the case. Ten years ago, it was not possible to issue news stories that did not have at least three sources.
Case Study 2. Missile crisis
On Tuesday, June 2, state-run Russian aerospace and defence firm Almaz-Antey said its own analysis of the wreckage of the Malaysia Airlines plane brought down on July 17 last year, killing 298 people, indicated it was hit by a BUK missile, a type of missile that has not been produced in Russia since 1999. “Neither the company nor its enterprises could have supplied these rockets in the 21st century,” Almaz-Antey’s chief executive, Yan Novikov, told a news conference run by the Kremlin press service at which the company used 3D visuals and computer animation. Furthermore, Novikov said Ukraine’s armed forces had still had nearly 1,000 such missiles in its arsenal in 2005, when it held talks with Almaz-Antey on prolonging their lifespan. Criticising sanctions imposed on Almaz-Antey by the European Union, he said: “The corporation was not involved in the Malaysian Boeing catastrophe. Correspondingly, the economic sanctions applied to the corporation for that are ... unjust.” Dutch investigators who are leading an international investigation say their “leading scenario” is that it was hit by a Russian-made BUK. Source: Reuters
PR or propaganda?
When Russia’s national currency suffered its steepest drop in 16 years in December 2014, official propaganda said that this was the result of actions by international traders. Millions of Russians were in a panic. Mass media leveraged this message and the trust of the public. Six months later officials revealed that the devaluation of the ruble had been executed by the government through Russia’s central bank. The revelation was so carefully and quietly made that most people missed it. This government-led devaluation took place during the last two years, when Russia’s officials said that the national currency was reliable, even going so far as to convince people to save their money in rubles.
Another example concerns the oligarch Sergey Polonsky who invested billions in real estate construction in so-called Moscow City, an ambitious development project. Competitors decided to destroy his business and Polonsky fled Russia for Cambodia. Russian authorities accused him of fraud and forgery and pressed for his deportation back to Russia. This was accompanied by a public relations campaign against him in media. He was named as a thief of shareholders’ money but he could notrespond to this charge as he lacked the public relations resources.
Another businessman, Dmitry Kamenshchik, who entered the airport industry many years ago, also faced serious reputation troubles recently. He owns a business in Domodedovo International Airport in Moscow through off-shore companies and prefers to keep a low profile. When a terrorist act killed 37 people and wounded 170 in January 2011, Kamenshchik and his team said that it was impossible to identify the terrorist who carried an explosive device in the terminal. However, when the government tried to identify who was the original owner of the airport business, they failed to do so (for more information, see the blue column on the left). Kamenshchik claimed that he was not the owner, merely a manger. In this situation, Domodedovo International Airport’s press department was forced into a reactive position, having to respond to numerous attacks from local media outlets.
Case Study 3. Afraid to own up?
On January 24, 2011, a suicide bomber detonated a bomb in the international arrivals hall in Moscow’s Domodedovo Airport, killing 37 people and injuring 172. Official investigations into the attack put pressure on the airport to reveal its owner, information that the airport had previously managed to keep hidden. The attempt proved to be unsuccessful, though in September 2013, Dmitry Kamenshchik was identified as the beneficial owner of the airport. In June this year, Kamenshchik was named among other senior executives as subject of criminal charges over security lapses in the run-up to the 2011 bombing. According to Russia’s Investigative Committee, “The investigation will check... whether Dmitry Kamenshchik and Valery Kogan are among the real owners of the airport.” According to a June 8 article on The Moscow Times website, some observers are criticising the investigations as attempts to force a sale: the report quotes Roman Gusarov, chief editor of aviation portal Avia.ru, saying “There are certain interests that want to get their hands on this very liquid and highly profitable business.”