Hill+Knowlton Strategies

As December approaches, I have the honour of getting excited about Xmas, as well as the infamous Vale Day.

Running the media element of the flagship Investor Relation day for Vale (CL), the second largest mining company in the world, in London I get to be part of a fantastic event held at the NYSE Euronext.

This year Murilo Ferreira (CEO) and Luciano Siani (CFO) made their first appearance in london in front of the media since their appointments. The media which included attendance from key newswires, nationals and trades were ecstatic at the opportunity of speaking with the Executive team which do not often travel to London.

On the back of the event, 23 significant pieces of coverage were secured mainly focused on the fluctuating price of iron ore. Murilo Ferreira suggests that  in 2013 “Prices will not change so much. We expect only minor movements”.

Below i have included a few pictures from the event.

I am already looking forward to Vale Day 2013! 

Vale Day 2012: Official picture at NYSE Euronext

Vale Day Press Conference

This week I attended a seminar regarding the Bribery Act, which featured a panel including Richard Alderman of the Serious Fraud Office, some lawyers and a corporate investigator. The room was filled with other lawyers and quite a few large corporates keen to know what the impact of this gold-plated British version of the  Foreign Corrupt Practice Act might be for their business and their clients. 

There has been a lot of speculation in the media about the impact of this legislation and perhaps some scaremongering, but for organisations in the oil, gas and mining sectors the risks are clear. These are industries that as a matter of routine work in far flung parts of the world that have very different standards of governance and transparency to what they are accustomed to in say the UK. Of course the act will only apply to organisations with interests in the UK, but given that London’s capital markets have been popular for a long time with natural resource companies, we can expect this to impact a significant portion of the industry.

There is an absolute defence available for firms that can demonstrate ‘adequate procedures’ and although what constitutes adequate has not yet been defined by the Ministry of Justice or the Serious Fraud Office, I suspect that many larger firms in the energy and mining sector will already have the ‘”gold standard” of procedures that Mr Alderman referenced frequently during the discussion. 

That said there are other reasons that the impact of the Bribery Act should be of concern to businesses. Perhaps most significantly because we are currently experiencing a boom in merger and acquisition activity. It is important to note that the act will not apply retrospectively, but the glut of deals that we have seen so far since the start of the year are unlikely to end anytime soon and one wonders if the organisations buying assets in the UK fully comprehend the liabilities for their other operations that they are acquiring with the asset as a result of the Act.

The other aspect worth bearing in mind for businesses as a whole, but the natural resource industries especially, is the use of agents and the extent of liability for joint venture operations. Joint ventures are a regular feature of the natural resource landscape and very often firms based in the UK will use them as a means to enter a market where foreign stakes are limited. I’m not sure what the extent of the risk of liability is for these corporate structures, but am going to ask the question at the next seminar I attend on this subject.

Of course it is also worth noting that the SFO has been handed a paltry sum of only £2m for enforcement and the likely cost of a trial, if it comes to it, will put the prosecution rate fairly low, but as any organisation prosecuted under FCPA will tell you, reputations are expensive things to lose and the SFO is not shy of pursuing trophy prosecutions, especially when Mr Alderman moves on and his successor is looking to make a name for him/herself.

This will be an interesting one to watch as the guidance is published and the Act comes into force.

Unless you’ve been living under, ummm, a rock (sorry) for the last two months you’ll be aware that for more than two months, 33 miners have been trapped more than 700 metres beneath the Chilean desert.

And unless you’ve not turned on the TV or radio, or read a newspaper, or checked a news website in the past 24 hours, you’ll be aware that the last step of the rescue operation is underway. As we post, 7 miners have been rescued.

The story has been truly incredible, and if I were Chilean, I’d be feeling very proud of my country right about now.

Here at H&K, the Energy & Industrials (& International) team has a penchant for infrastructure (we’re cool, I promise) and we’ve been fascinated by the whole saga, particularly as it nears its close. The miners have survived longer below ground than the victims of any other mine collapse and will exit through the deepest rescue chute ever drilled.  The Telegraph has some great infographics on the rescue process and the technology behind it.

It’s a cliché, but the whole operation has been a fantastic showcase for the engineering industry.  Unfortunately, the people who dedicate themselves to making things work go unappreciated and unacknowledged as most of us conduct our day to day lives.

The Christian Science Monitor has a great piece on the PR winners and losers of the miner rescue:

• Geotec and its equipment manufacturers — Center Rock Inc. made the drill bit and Schramm Inc. made the truck-mounted drill: the big winners. The T-130, as the Schramm rig is known, has become a bit of a celebrity.
• Precision Drilling Corp., the Canadian company whose is drilling a backup rescue shaft. The company was little known in South America before the accident.  That’s changed, and I’d expect a few orders coming their way.

And last but not least a shout out to Zephyr Technologies, the Annapolis,Maryland-based maker of the remote monitors of vital signs that miners are wearing during their ascent. Anyone who has had the pleasure of spending a little bit of time with me knows I am fiercely proud of my home-town. As a native-Annipolitain, I can’t say I’m surprised that home-grown talent is contributing to the rescue efforts.  We’re a talented little town, I tell you!

Now, usually, I find the shameful self-promotion and exploitation mentioned in the CSM piece more than a little cringe-worthy (I know, perhaps a little ironic coming from a PR person) but, for these unsung heroes of the past 24 hours, I salute you.

The past week has seen two seemingly unconnected events spring to the headlines. On Monday, 25 people were killed in a West Virgina mine exposion (US). Just two days earlier, a Chinese coal carrier ran aground on the Great Barrier Reef. It’s still sitting there and so far has lost about three tonnes of oil into the sea.

I say “seemingly unconnected” because geographically the two events are about as far apart as you get. The respective industries are also unrelated.

However, according to the New York Times, the owner of the West Virginian mine escaped prosecution in 2007 despite a warning that it was showing a “potential pattern of violations”.

Similarly, the Courier Mail reports that as many as 10 ships a month use a network of small channels through the Great Barrier Reef as shortcuts to open ocean, in a bid to cut transit times and increase the profitability of voyages originating from mineral-rich Queensland.

However the same story also notes that the ship’s owner, the China Ocean Shipping (Group) Company or COSCO, has a recent history of maritime accidents.

There are two points to take out of these examples.

Firstly, that regulation exists for a reason. On the whole I think governments tend to want to minimise their footprint on a given industry because it costs a lot of money to play kindergarten cop – taxpayer money that could be spent on other things, like hospitals, schools or roads. However if industries want to play in the “self-regulated” sandbox, it’s beholden on those industries and their constituent companies to establish a strong framework within which to operate.

Secondly, the role of crisis communication has to shoulder a degree of blame in instances like these, whether that’s through public affairs channels or the daily news media. I see crisis communication as a tool that makes it possible for an organisation in a crisis to get back to doing business as usual as quickly as possible. I don’t believe there’s anything wrong with that, because intrinsically it means fixing the crisis itself.

Problems come up when people forget what they should be doing. By definition, public relations is a management function that’s concerned with building and maintaining mutually beneficial relationships between an organisation and its stakeholders (“the public”). At Hill & Knowlton we refer to it as Shaping Conversations, because as an external advisor that’s what we can do.

It’s not about press releases, parties and supporting the latest ad campaign. It is about maintaining an organisation’s right to operate in the eyes of the public. Too often, good crisis management helps organisations resolve serious problems, and then once the press office phones stop ringing everyone moves on.

That’s not good enough. Crisis managers should use the elevated adrenalin coursing through the Board’s collective system as motivation to change the way things are done. It requires an attitude shift – from constantly trying to look better, to constantly trying to be better. In established, highly-competitive industries such as shipping and mining this is often perceived as a costly albatross to carry.

This is the wrong view to have. People are more forgiving of companies that apologies when they make mistakes, make good when they cause harm, and improve their performance when something has gone completely awry. Serial offenders, on the other hand, raise public ire and draw heat from governments who are sensitive to voters’ demands for justice. That game can be far more costly.