11.1.13

How not to counter criticism: the Derwick Associates case

LONDON —. It has become standard in the Western world to expect to find information about everyone and everything via the internet. Individuals and corporations alike consult search engines to form an impression of potential friends, hires, business partners, or supported candidates. Prominent negative information can cost jobs, deals, marriages, and lawsuits. Some persons and firms invest in expensive online reputation management campaigns, as partial recognition of this fact.

Countering bad press has become so important that successful public relations firms and private spin doctors can name their price. The best of this bunch are the ones no one know about. However, public relations or spin, resuscitating public image ultimate relies on analysing claims against a client to determine veracity and undermining the credibility of a client’s critics. Broadly speaking, exposed companies and individuals are expected to take an active role in preserving their images. Some are discreet, some are very loud. Needless to say, the last thing a party trying to avoid public exposure should be doing is to draw more attention to itself, right?

Not in Venezuela. Consider the case of Derwick Associates, a company that appeared overnight, and won 12 thermoelectric contracts from high officials of the Chavez regime in the space of 14 months. Twelve contracts, arguably worth billions of dollars, in fourteen months. There is a journalist in Caracas, Cesar Batiz, who grew suspicious of Derwick’s business, partially due to the fact that he had previously worked in the electricity sector. Batiz started asking questions about Derwick Associates, questions that any competent journalist would ask: why was this company favoured over others? Why did the government grant so many contracts to a company without a track record? How come no calls for public tenders were made? Who decided what, where, when? How much public money was spent? Have the projects been completed? Who are the people behind Derwick? In sum, the sort of questioning to be expected by any company doing public deals in any democracy.

The trouble is that Venezuela is not a democracy, and Derwick Associates is not a regular company. All contracts granted to Derwick were necessarily decided by an unidentified high official, who, almost certainly, received a nice commission from the deal. The Venezuelan contract system is a revolving door of sorts, whereby those granting contracts condition their granting on the basis of percentage of commissions. And so Batiz started digging and found a few road blocks. His enquiries took him to public institutions that point blank refused to answer his legitimate questions. So he upped the ante, and took some of the parties to court, which refused point blank to force public servants to release public information about contracts paid for with public money. There is no such thing as the Freedom of Information Act in Chavez's socialist paradise. Batiz’s editor, Eleazar Diaz Rangel, took an interest in the story, and went himself to the Prosecutor's Office to formally request an investigation. Again, nothing came of it.

Derwick did not respond to Batiz, his articles, or his requests for information. Instead, it sued Oscar Garcia Mendoza, a banker, in a Florida court, for supposedly orchestrating a "defamation campaign". It did not sue Batiz. It did not sue his editor, Diaz Rangel. It did not sue the newspaper where Batiz works, Ultimas Noticias. No. Derwick rather sued a banker with no connection to either Batiz, Diaz Rangel, or Ultimas Noticias. It did not sue in Venezuela, but in the USA. It did not sue in Spanish, but in English, thus facilitating spread of information about its actions online. One can only ask: why?

Batiz's findings never received much publicity in Venezuela. Just another corruption scandal, during the most corrupt administration our utterly corrupt country has ever had. Very few eyebrows rose there. But then Derwick instructed its New York-based lawyers to sue Oscar Garcia Mendoza in Florida, and people started talking about it. Bloggers started questioning the move, and published more information about the affair. And so Derwick, a totally obscure company of two people, went from anonymity to the topic of research of US Federal Agencies. If there was ever a prize for how not to counter bad press, surely Derwick is a deserving winner. Their strategy, of suing, threatening, publishing communiqués, and harassing critics can only be termed as imbecilic in the disused psychological meaning, for, expectedly, it has produced the exact opposite results from those desired.

A year ago, only a handful of people knew about Derwick. Now governments know about Derwick, banks know about Derwick, authorities know about Derwick, even Wikipedia has an entry on Derwick, and worse of all, Google and its ubiquitous archives have many more entries about Derwick.

So here is a piece of free, unsolicited advice for companies, like Derwick Associates or Smartmatic, trying to deal with perfectly valid criticism: be discreet, fly quietly into the horizon in your Falcon 2000 with your fraudulent fortune, knowing that the more you scream and attack, the more attention you will receive. As another blogger aptly put it: intimidating bloggers and journalists is never, ever, a good strategy.  

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