A must read: The Epic 1990's Blowup between PR Giant Hill & Knowlton, the Church of Scientology, and...

8/12/2019 A must read: The Epic 1990's Blowup between PR Giant Hill & Knowlton, the Church of Scientology, and Psych Dr

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MONKEY USINESS

When PR giant HillKnowlton teamed

up with the Churchof Scientologynobody dreamedthat it would end ina holy war fyou were big enough,

rich enough, and your reputation was in trouble

enough, sooner or later you came to see Robert KeithGray. That was what the Scientologists had heard, and sothey had come.

t was October of 1987, and the dapper, silver-hairedprince of spin-doctordom sat at a round cherry table inthe conference room of the Washington office of HillKnowlton. Through the smoked glass windows, Gray svisitors could gaze out upon the pricey view of theKennedy Center and the glistening Potomac. But thedelegation from the Church of Scientology Internationalhad more practical matters on their minds. Led byHeber Jentzsch, the church s president, the visitorsstated their case.

There had been some problems within themovement, the Scientologists admitted. People had goneover the line. But those troubles had been dealt with,and still Scientology was misunderstood, maligned,treated unfairly by the news media and the government.

So they had taken the advice of Gerald Feffer, theirlawyer at Williams Connolly, and begun shopping fora big PR firm to improve their image.

Gray listened politely. He was an extraordinarilyopen-minded individual. He had to be, to represent the

y Patrick] Kiger

clients he d attracted over the years, from Haitiandictator Baby Doc Duvalier to mob-linked Teamsterpresident Jackie Presser, from tobacco companies to theMarxist regime in Angola. Gray firmly believed that people and organizations had a right to have their side of thestory told - and all the better if they were willing to payHill Knowlton to be the storytellers.

Still, this new client made even Gray s stalwart staffa bit nervous. Scientology was a new religion that hadspread across the globe since it was founded in 1954by disciples of a science fiction writer named L RonHubbard. Its followers trod the path of spiritualimprovement through Dianetics, a regimen designedby Hubbard to rid them of painful memories datingback to the womb and previous lives.

The church aggressively marketed its religion,charging fees in the thousands of dollars for variousstages of the process. Just as aggressively, Scientologistsfollowed Hubbard s directive to combat enemies of thefaith. The latter ranged from psychiatrists whoprescribed the drugs and electroshock treatments thatwere anathema to Scientology s beliefs about the mind,to government agencies believed to be linked in aconspiracy to destroy the religion.

y the time Hubbard died in 1986, Scientology hadweathered its share of controversies. In the 1970s a

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Scientology organization called the Guardian Officeburglarized offices at the Justice Department and theInternal Revenue Service, pilfering church-relateddocuments. After the plot was uncovered in 1977, theFBI raided Scientology centers in Los Angeles andWashington, and 11 members of the sect - including

Hill Knowltonwould secretlydispatch privateinvestigatorsto infiltratethe church

Hubbard's wife, Mary Sue- went to prison. Criticsalso charged that thechurch used high-pressuretactics to get membersto pay thousands forScientology courses,a practice that theScientologists saw as nodifferent from otherchurches' fundraising. In1986, according to the osAngeles Times Scientology

paid an estimated $5 million to settle lawsuits byformer members and seal them from public view.

Not surprisingly, Scientology's record made some atHill & Knowlton nervous. I was very suspicious,recalls the former Hill Knowlton executive who was atthe initial meeting. Were we getting a snow job fromthem? Still, he wanted to keep an open mind; theScientologists did seem sincere.

A few days later, the executive went to talk with Gray.What do you think? Gray asked.

I don 't know, the executive responded. It's potentiallya very dangerous account.

Both men realized that Hill Knowlton needed toknow more about Scientology than it could find out in aNexis search, or even from the government sources thefirm used to check out foreign regimes. So Gray and hislieutenant hit upon a solution: Hill Knowlton wouldsecretly dispatch private investigators, including phonyrecruits, to infiltrate the church and make sure itsleaders weren't up to anything illegal. Meanwhile, HillKnowlton agreed to represent the Scientologists on atemporary basis.

For the privilege of being investigated by HillKnowlton, the Scientologists would post a $50,000retainer and pay an additional minimum of $5,000 amonth, plus expenses, to start. As Gray explained in aletter to Jentzsch, tha t was the price for the damagethat representing Scientology might do to Hi JKnowlton's reputation. The policy of this firm, Graywrote, is ... to compensate the firm for business or

professional loss which unfairly but predictably attendsour relationship.

Gray's caveat would prove eerily prophetic. Over thenext three and a half years, Hill Knowlton'srelationship with the Church of Scientology would turninto a debacle for both organizations. Hill Knowltonlost millions of dollars in business because of theScientology contract, and was wracked by internalturmoil that insiders say contributed to the fall of bothGray and Hill Knowlton's New York-based chiefexecutive, Robert Dilenschneider. The Scientologists, inturn, found themselves deserted by their high-pricedspin doctors just as they suffered perhaps the most disastrous blow imaginable to their image, a scathing Timemagazine cover story in April of 1991 that proclaimedScientology the cult of greed. (The Scientologists, whodeny the allegations, subsequently sued Time fordefamation. The suit is still in discovery.)

Eventually Hill Knowlton found itself under attackfrom the Scientologists, who had come to see the PRgiant as another villain in the dark cabal to destroy theirreligion. In a $14.7 million federal lawsuit filed in LosAngeles in 1992 and later transferred to Washington,Scientology charged that Hill Knowlton had illegallyterminated the contract between them. The reason, thechurch charged, was pressure exerted upon the WPPGroup, the British conglomerate that owns Hill &Knowlton, by pharmaceutical manufacturer Eli Lilly.In the Scientologists' scenario, Lilly- a major client ofanother WPP-owned company, J. Walter Thompson -demanded that Hill Knowlton drop Scientologybecause a Scientology-affiliated group was crusadingagainst Lilly's hugely popular anti-depressantmedication, Prozac. Hill & Knowlton has contendedthat it was within its rights to quit the relationship.

This June, with the trial about to begin, the suit wasmysteriously settled out of court. None of the litigantshave been willing to reveal details of the agreement, andmost of the 57,000 pages of Hill Knowlton andScientology internal documents and 75 depositionstaken by attorneys for both sides are likely to remainunder permanent seal, thanks to a restraining order.Current and ex-officials from Hill Knowlton, Eli Lilly,and WPP declined to be interviewed for this story.

Still, the information that has emerged in hearingsand legal arguments supports the Scientologists'scenario. t lays bare a high-priced marketplace of

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image manipulation, where candor is scarce and loyaltyfragile. It's a world in which a PR firm can denyresponsibility for the truthfulness of the information itpitches; Hill Knowlton's contract with Scientology,for example, spelled out that the agency cannot verifyfacts suppl ied it by the church. And it's a world wherethere are no set rules - unlike, say, those followed bylawyers - that require a PR firm to disclose conflictsof interest to a client, or reveal ulterior motives behindthe advice it gives.

What we were dealing with, says Scientologyofficial Weiland, is a question of professional ethics -or perhaps a profession of questionable ethics.

Hill & Knowlton may had have qualms aboutScientology, but the church had every reason to viewhiring Hill & Knowlton as the equivalent of buying aMercedes Benz or a Rolex. The New York-basedcompany was then the nation's largest PR firm, with aheavyweight client list that included scores of Fortune500 companies. The jewel of Hill Knowlton's empirewas the operation it had built, at great cost, inWashington. Gray, who'd left for a while to star t hisown firm, Gray Company, had been lured back in1986 with a $21 million buyout; he returned with ateam that included some of the most high-poweredlobbying talent in the capital, people like FrankMankiewicz, former press secretary for Bobby Kennedyand chief executive of National Public Radio, and GaryHymel, former top aide to House Speaker Tip O'Neill.

But inside, the juggernaut was under stress. Withthe acquisitions had come a bloated, high-salaried staffand costly office space, and the Washington operationwas under pressure to slash expenses and generaterevenue. To exacerbate the uncertainties, HillKnowlton had a new owner. For most of the 1980s thePR giant had been part of JWT Group, which alsoowned the J Walter Thompson advertising agency. Afew months before Gray met with the Scientologists,however, JWT had been swallowed up in a hostiletakeover by a British outfit named WPP Group. Oncean obscure manufacturer of shopping carts - itsinitials stood for Wire and Plastics Products - WPPhad been transformed by a then-41-year-old Londonfinancier named Martin Sorrell who dreamed ofbuilding a global advertising and public relationsempire. WPP had paid $566 million for JWT, nearlytwice what the company was trading for on the open

market. Hill Knowlton would find itself pushed hardto generate income to pay off that debt.

So it was good news for Gray when his investigatorsreported that they had discovered no crimina l activityby Scientology leaders; Gray gave the go-ahead for thelucrative relationship. Along with other HillKnowlton staffers, Gray was soon steeping himself inthe teachings and history of the new church. InDecember of 1987 Gray and his staff received a two-daybriefing from Scientology president Jentzsch andReligious Technology Center chairman David

Miscavige, described in news reports as Hubbard'ssuccessor. At Scientology's expense, Gray flew toCalifornia, and the Scientologists gave him a tour oftheir 12-story world headquarters in Hollywood. TheScientologists gave Hill Knowl ton a full library oftheir scripture, plus a good number of Hubbard's 6,000taped lectures, and the 12 volumes of detailed directiveson administration of the religion. Hill Knowltonstaffers would devote half the time they billed to thechurch-which sometimes exceeded $100,000 amonth - simply to studying Scientology.

Even before he'd finished checking up onScientology, Gray had proposed that Hill Knowltoncould help the religion attract new members. Wedon't need any help with that, Scientology's Weilandrecalls telling the PR firm. The Scientologists weremore interested in countering bad press; theypresented a file with a decade's worth of unflatteringnews articles to Hill Knowlton executives. We wanted them to help us deal with these negativeperceptions, Weiland explains.

It seemed a tall order. But when Hill Knowltoncommissioned a poll on attitudes about Scientology, thefirm made a surprising discovery. Thi rty years' worth ofcourt cases, newspaper exposes, and deprogrammers'condemnations notwithstanding, only 20 percent of thepublic had even heard of the Church of Scientology.Recognition was surprisingly low, which was

heartening to us, recalls a former Hill Knowltonexecutive who worked on the account. It was less of afully completed canvas than we had thought.

In a contract approved by the church in August of1992, Hill Knowlton laid out a plan to giveScientology's image a radical makeover. One of itsavowed goals: Develop activities designed to bring thechurch into the mainstream of society. HillKnowlton envisioned expanding Scientology's alreadyextensive media machine, which included a publishing

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house and a film studio in Palm Springs. t wanted toexplore the production of feature films laden withScientology messages, and proposed TV and radioprograms that would serve s controlled mediavehicles. To deal with reporters, Hill Knowltonwould help select and train spokespeople for the church,and would develop a grassroots member responsenetwork which would try to shape the coverage oflocalnewspapers, radio, and television stations.

Hill Knowlton hoped to supplant the critics'picture of Scientology s a manipulative cult withthe image of a wholesome faith whose civic-mindedmembers tutored inner-city kids, cleaned up theenvironment, and vigorously opposed drug abuse.The PR firm promoted an anti-d rug rock concert inBoston, a children's singing group that visited hospitalsin Chicago, and a Plant Seattle Green program.Scientology was identified as the sponsor at theseevents, but there was no direct effort to recruit newmembers or distribute literature.

Hill Knowlton also came up with the idea thatNarconon, a church-supported organization Scientologymodestly touted s the most effective rehabilitationprogram there is, should open a 25-bed drug clinic incrack-plagued Washington. There, addicts would betreated with a regimen of saunas and megavitamin dosesoriginally prescribed by Hubbard himself, and wouldpractice Dianetics-like therapy. The PR firm offered tohelp obtain the necessary permits and city councilsupport, envisioning that the clinic would open its doorsby the end of 1991.

In one sense, the church was a flack's dream; theScientologists were detail-oriented, precise, and listeneddiligently to Hill & Knowlton's counsel. Members ofWeiland's staff in Hollywood were in daily contact with

Unlike, say, Jesus,L Ron Hubbardhadn t believedin turning theother cheek.

the PR firm. They werevery enthusiastic andreceptive, and a good clientin that respect, recalls aformer Hill Knowltonmanager who workedextensively on the account.

But in dealing with thepress, the employeeexplains, what sometimesgot in the way was the

church's teachings themselves. Unlike, say, Jesus,L Ron Hubbard hadn't believed in turning the othercheek; the Scientologists' response to what they saw s

hostile press was to hire private detectives to investigatethe reporters.

'The advice from Bob Gray and myself was thatthey needed to be more conciliatory and more patientin their approach, and not s combative, recalls aformer lieutenant to Gray. They would attract moreflies with honey.

The Scientologists paid big bucks largely to buy theaccess that Hill Knowlton promised. They believed theimage that Gray cultivated of himself s a Polonius whowhispered into the ears of the powerful. That image waspart illusion; in her book on Hill Knowlton, ThePower House journalist Susan Trento describes howGray would seek to impress visiting reporters by talkinginto a dead phone, pretending tha t it was a call from theWhite House. But the PR firm was hardly impotent .H K heavyweight Frank Mankiewicz once tookWeiland to New York for a meeting he had arrangedwith Business Week publisher John Patten; the twopersuaded Patten that, despite complaints from antichurch activists, he should publish Scientology ads.

It wasn't surprising, then, that the Scientologistswould ask for Hill Knowlton's help on another keyissue. From the start, Scientology leaders had informedHill Knowlton of their antipathy toward psychiatricdrugs and psychiatry; the profession took a dim view ofHubbard's modern science of mental health. At thetime Scientology hired Hill Knowlton, its anti-drugorganization, the Citizens Commission on HumanRights, was busy waging a campaign against Ritalin, adrug prescribed to hyperactive children.

Now, in early 1990, the Scientologists had a newtarget: Prozac, the anti-depressant medication widelyhyped s the wonder drug of the 1990s. While therapiststalked optimistically of listen ing to Prozac, theScientologists attacked the drug s a menace that coulddrive users to suicide and murder. They pointed to casessuch s Joseph Wesbecker, a Kentucky man who'd goneto his workplace a month after he began taking Prozacand killed eight employees with an AK-47. Scientologyportrayed W esbecker s a man driven mad by Prozac -though, s the Wall Street ournal would report,W esbecker had a history of suicide attempts and violentfantasies during periods when he wasn't taking the drug.

The Scientologists hoped to instigate a congressionalinvestigation of Prozac. For help, they turned to GaryHymel, the well-connected lobbyist who was one of

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flict of interest, representing an enti ty which was at warwith Lilly?

What do you want to do? Sorrell asked.We would prefer not to run your business, Step told

him. It's your call.Sorrell hated to lose either client. Scientology, after

all, was the third-biggest account in Hill & Knowlton'soffice. Eli Lilly though, was a bigger fish. Public relationsalways comes up a loser to advertising, Sorrell said.That seems like a good business decision, Stepresponded.

When Gray heard that Eli Lilly was making trouble, hetried to counter by preparing a letter for Dilenschneiderto give to Sorrell. Over the past two and a half years,Gray wrote, the church officials patiently have taughtus the intricacies of their religion and their worldwideefforts to promote it. The church had been a modelcustomer, and it would professionally be unconscionable to desert them now over a non-germane issueinvolving a non-client of this firm. But Gray caredabout more than professional ethics; he also feared

Hill Knowlton might have to pay back Scientology'sinitial fee and costs. Dilenschneider, though, didn t passthe letter along.

Trouble was brewing elsewhere inside HillKnowlton. In late November the firm's European CEO,David Wynne-Morgan, wrote a memo to New Yorkwarning that the U.S. operation's link to Scientologywas threatening all ofH K's European pharmaceuticalbusiness. Word was starting to get around about theScientology contract. In Europe, where severalgovernments had come down hard on the church, thatmeant trouble.

Gray tried to defuse such criticisms by arguing thatHill Knowlton's representing Scientology was goofor the pharmaceutical industry; the PR agency couldmoderate the church, soften its attacks on drugcompanies.

For a PR firm to give one client advice in order tobenefit other clients' business seems a clear conflict ofinterest. But Hill Knowlton's Washington office didn'tstop there. The firm was vying for a potentially lucrativecontract with SmithKline Beecham to promote a newanti-depression drug, Pax.ii. The drug was similar to

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Prozac and designed to compete with it. In an internalmemo, a staffer in Hill Knowlton's Washington officenoted Scientology's opposition to psychiatric drugs andrecommended a preparedness campaign in case theScientologists mounted an attack on the new drug. Ina later deposition the staffer, who now works for anotherfirm, would contend that he did not use insideinformation that Hill Knowlton had gleaned fromrepresenting Scientology.Federal Judge Stanley Sporkin, who oversaw theScientology-Hill Knowlton litigation, would view thesituation differently. There is adequate evidence in therecord to support CSl's claim that its relationship withH K was one of great sensitivity, based on trust andconfidence, and that H K breached that relationship,he wrote in a March 1994 memorandum.

By year's end Eli Lilly was growing increasingly irritated.Hill Knowlton had told the Scientologists that,because of the conflict of interest issue, it could do nomore work on the Prozac campaign. But that wasn'tgood enough for Eli Lilly. By helping Scientologyimprove its image, Hill Knowlton was still boostingthe credibility of Scientology's attacks. So Lilly toldJ. Walter Thompson that it might pull its advertising.As a shot across the bow, Lilly cancelled the one contractit had with Hill Knowlton, a $160,000-a-year accountwith H K's British operation.

More and more, Sorrell was breathing hard down HillKnowlton's neck. He d already told Dilenschneider,

Gray's boss, that he felt the church was not an appropriate client for Hill Knowlton. Now Sorrell was callingDilenschneider and putting him under what the Hill

Knowlton executive would later describe as enormous pressure.

In late 1990 and early 1991, the church had o therthings to worry about. Richard Behar, a reporter forTime, was working on a big story about Scientology.Behar had written a caustic article on the church forForbes in 1986, estimating Hubbard's personal fortuneat $200 million and describing the church as one of themost lucrative businesses around. The Scientologistswanted Hill Knowlton to do something to mitigatean article they suspected would be a reprise.

At Scientology's behest, in late 1990 Mankiewicz hadconsulted a source inside Time and reported back thatthe s tory wasn't even scheduled yet. The Scientologistswere still concerned. I kept talking to Hill

Knowlton, Weiland recalls. I'd say, 'Look, guys, something is going on.' They'd say, 'We're in Washington, wecan't do anything. '

Meanwhile, Eli Lilly continued to turn up the heat. Inearly April at the annual stockholders' meeting, Lilly

chairman Dick WoodHill Knowltonwould say, We'rein Washington,we can't doanything '

lamented that Scientology'sattacks on Prozac were acause of Lilly's falling stockprice. Later that month,Ron Burns ofJ. WalterThompson and Eli Lillyexecutive Gary Clarkdiscussed the situation.Clark was both conciliatoryand blunt. He told Burns

that while he appreciated the urgency and seriousnesswith which WPP was dealing with the Scientologysituation, Eli Lilly's tone on the issue would be changing.It will be an all-out war, he explained, and anyoneassociated with the enemy will be dealt with accordingly.f Lilly didn t hear from J. Walter Thompson that the

Scientology account had been cancelled by summer, thepharmaceutical giant would begin interviewing otheradvertising agencies.

On Sunday, April 28, Time s article on Scientologyhit the street. Entitled The Thriving Cult of Greed andPower, it charged that the church was a ruthlessglobal scam that bilked followers of their life savingsand had driven one true believer to suicide.

Despite their well-connected PR advisor, theScientologists were caught by surprise. For the next twofrantic days, Weiland and other Scientology officials inLos Angeles were constantly on the phone with Gray andother Hill Knowlton staffers in Washington. According to Weiland, there were disagreements about strategy.Hill Knowlton tried to dissuade the church from lash-ing out against Eli Lilly whose fingerprints theScientologists felt were all over Behar's scathing prose.Gray reportedly counseled a softer approach; he talkedof an opinion piece defending Scientology in Newsweek.

On Tuesday, as the Scientologists continued thelong-distance debate with their PR advisors, theywere unaware of fateful events coming to a head.In Philadelphia, SmithKline Beecham executivesconfronted Hill Knowlton, with whom they had justsigned a $1.5 million contract to promote the drug thatwould compete with Prozac. The drug company hadseen the Time article, which ment ioned Hill



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Knowlton's relationship with the church, and was notpleased that the PR firm had neglected to inform themof the connection. The deal, they informed HillKnowlton, was off.

Gray was caught in an agonizing squeeze. As he laterexplained in a deposition, I felt very strongly, because Iidentified with [Scientology's] positions and its people.He hated to give up the revenue flowing into theWashington office. But I couldn't be unsympathetic toother offices where they were losing enormous amountsof business because of our continued representation.

That same day, Dilenschneider wrote to Sorrell andconfirmed that Hill Knowlton would no longer berepresenting Scientology.

On Wednesday, May 1, Gray, as a courtesy, calledGerald Feffer, the Williams Connolly attorney whohad originally sent the church to Hill & Knowlton, andconfided to him that the PR firm would be bowing out.But the Scientologists themselves apparent ly remainedin the dark. On Thursday, May 2, according to thechurch's lawsuit, a Hill Knowlton official contactedthe church and suggested that prompt payment of thelatest $300,000 bill would enhance Hill Knowlton'sability to respond to the Time article. Scientology paidup. That evening, however, Weiland talked to one ofGray's assistants, who intimated that something wasamiss. Scientology executive David Miscavige tried fruitlessly to track down Gray, who finally called him thenext day, Friday, May 3, to break the news: Scientologyand Hill & Knowlton were kaput.

Hill Knowlton had acted just in time. The sameday that Gray called Miscavige and Feffer, Lilly toldJ. Walter Thompson it had decided to drop the agency.Sorrell staved off the cancellation by calling Indianapolisto tell them Scientology was history.

The affair left an unpleasant aftertaste in the mouths ofHill Knowlton's Washington executives. It wasevident that Martin Sorrell and others had beenblackmailed, or intimidated, or extorted into droppingthe account, says the former Hill Knowlton executivewho sat in on Scientology's initial presentation.

By December 1991, Dilenschneider had been forcedout of the New York headquarters. Gray hung on longenough to garner the title of Hill Knowlton chairman, but the promotion was largely ceremonial; WPP'sEnglish management was moving to take greater controlof the firm. From then on, all clients had to be approved

by a committee headed by European CEO DavidWynne-Morgan. In the summer of 1992 Gray wasrep laced as head of the Washington office by lobbyistHoward Paster. Shortly after, Gray retired, moved toMiami, and started his own boutique agency.

The Scientologists dug in their heels with a tenacitythat would have made L. Ron Hubbard proud. Theymounted their own counterattack against Timespending 3 million on an ad campaign in USA Today.The ads blared the sort of shrill rhetoric that HillKnowlton had counselled against, linking Time and EliLilly with Adolf Hitler.

Hill Knowlton's desertion, church officialscomplained, killed many of their ambitious imageenhancing projects, such as the Washington drug rehabclinic. The church was not about to let that slight gounanswered.

In May of 1992, Scientology filed its suit in federalcourt in Los Angeles against Hill Knowlton, inaddition to WPP, Sorrell, and Eli Lilly. In a pressrelease, church president Jentzsch used the occasion tolevel yet another attack upon Prozac, charging that thedrug caused a great many more dead and injuredthan the L.A. riots.

Meanwhile, Hill & Knowlton has been struggling torebuild. Since 1990 the firm's fees have dropped by 29percent, and the one-time industry kingpin has slippedto third behind Burston-Marsteller and Shandwick.Paster, now chairman and CEO of Hill Knowlton, hasindicated that Hill Knowlton is less eager these days totake on controversial clients, no matter what they pay.

The Scientologists don t seem to have suffered toobadly. Last August, a week after Scientology lawyersfinished deposing witnesses in the since-settled HillKnowlton lawsuit, a much more upbeat event took placeat the First Baptist Church on Randolph Street NW.As television cameras recorded the scene, the Clintonadministration's drug policy director, Lee Brown, raisedhis right hand and joined 50 District schoolchildren inpledging to serve as a drug-free marshal. Until he gotup on stage, Brown later admitted to the WashingtonPost he hadn t known that the event was sponsored bythe Church of Scientology. Nevertheless, he had noqualms about taking part. Anything that [can] be doneto minimize the number of youths who are involved indrugs, we want to be involved in, Brown concluded.Hill Knowlton's counsel about the virtues of a subtlesoft-sell seemed to be paying off after all. - Patrick/. Kiger profiled Jim Miller in the May-June Regardie's.


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A must read: The Epic 1990's Blowup between PR Giant Hill & Knowlton, the Church of Scientology, and...

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Transcript of A must read: The Epic 1990's Blowup between PR Giant Hill & Knowlton, the Church of Scientology, and...