One of the biggest challenges facing a company under fire is to resist the temptation to downplay the severity of the crisis. And while there is no shortage of crisis communications advisors who may advocate telling white lies or less inflammatory half truths — a practice euphemistically known as “spin” – that approach almost invariably makes the situation worse. Goldman Sachs’ misguided PR effort to combat its mounting reputational crisis is a textbook example.
When the SEC first unveiled charges alleging that Goldman misled investors when it sold a package of risky subprime mortgage-related securities known as Abacus, the mighty investment bank wasted no time to thunder that the civil allegations were “completely unfounded” and vowing it would “vigorously” challenge them. A few hours later, Goldman issued a second statement, saying that it had lost more than $90 million on the transaction and proffered that it couldn’t have honestly believed the investments would fail given the firm’s own exposure.
Admittedly, quite a few reporters initially bought Goldman’s argument, repeating it without any objective analysis. However, all Goldman’s strategy bought them was time – not a free pass – as the media wasn’t duped for long. Within days, The New York Times reported that Goldman had insurance in place on the Abacus transaction to offset the $100 million loss and, separately, internal Goldman Sachs emails made public by a Congressional committee also suggest that Goldman handsomely profited as the housing crisis escalated. The Columbia Journalism Review has gone so far as to warn reporters to be wary of Goldman’s “forked tongue.” In addition to combating charges of fraud, Goldman must now deal with the fallout from being publicly accused of lying.
Regretfully, there are now other known incidents of spin that suggest that Goldman views the intellect of Congress and the public as cynically as the investors who were long on the Abacus deal. Goldman took out prominent ads in Politico, a newspaper closely read by Washington’s political elite, trumpeting that it was the biggest issuers of Build America Bonds; the ads neglected to mention that Goldman earns considerably higher commissions on the bonds. Goldman also seems to have leaked a story that it is mulling a requirement to compel its top executives to donate a certain portion of their earnings to charity. Giving to charity is an admirable initiative but it won’t alleviate the public’s anger about the firm’s perceived ill-gotten gains.
Goldman’s lament that the SEC’s charges are politically motivated is pretty tenuous. Decrying politics is a tad hypocritical given that many people believe that Goldman’s political connections were responsible for Washington making the firm whole on its AIG contracts. In any case, the interests of the SEC and The New York Times are closely aligned in making the fraud charges stick so the argument just won’t fly with the newspaper at the forefront of the media hunt for the rest of the story. Tongues are wagging that the SEC gave the Times a sneak preview of the fraud charges before they were even filed, perhaps as a reward for its dogged reporting. Even if the fraud charges are dismissed on summary judgment, the Times has pretty much secured itself a Pulitzer Prize.
Finally, there’s the issue of Robert Khuzami, the SEC’s enforcement chief and a prosecutor whose credentials include taking on organized crime. Although it’s been reported that Robert Khuzami previously oversaw a team of lawyers at Deutsche Bank who also were closely involved in structuring subprime mortgage-related investments similar to Abacus, Goldman would be wise to resist even veiled attacks on the enforcement chief. Given Khuzami’s impressive track record standing up to hardened criminals without the proverbial white collars, the public will likely relish the prospect of a proven legal tough roughing up Goldman’s top brass, regardless of the merits of his case.
For Goldman Sachs to survive this reputational crisis, the firm will have to devise a credible strategy that addresses both the legal and moral issues relating to its profiteering from the housing collapse. Its practice of deception and playing with the facts could potentially doom the firm. Because here is a secret that a spinmeister will never tell you: When you utilize spin as a strategy to minimize a crisis, the crisis will almost invariably spin right out of control.
Newspaper journalists suffer from a misguided belief that reporting great stories is all you need for success. Yes, a good editorial product is critical for a newspaper to survive, but an equally important – and decidedly less glamorous – component is getting their take on the news out there before their audience has seen or heard it already elsewhere. When it comes to print newspapers, that means getting those trucks rolling out to the newsstands pretty early in the morning.
The Journal will soon be launching a special section devoted to New York City. Robert Thomson, the WSJ’s editor, must believe that his newspaper can dethrone The New York Times as the city’s most influential newspaper. ”My advice to New York Times readers is cancel your subscription, read it on the Web for free and buy The Journal,” Mr. Thomson recently told The New York Observer.
I won’t debate Mr. Thomson as to whether he can best the Times‘ local coverage – or even that of the Daily News or NY Post for that matter – but I will challenge him on his advice to buy the Journal. After being a loyal Journal subscriber for more than two decades, I recently threw in the towel – and not because of the extreme makeover the Journal has undergone since Mr. Thomson took over the paper. I simply couldn’t buy the newspaper when I needed it.
Although much has been written about News Corp’s transformation of the Journal into a mainstream newspaper over the last two years, significant changes to its distribution, at least in New York City, have largely gone unnoticed. During the 20 or so years I’ve lived in Manhattan, I always knew that when I opened my apartment door at 6:00 am, the Journal would there waiting for me. Further, I knew that calling the customer support center in Chickobee, MA to suspend delivery when going out of town would be a painless process.
Not anymore.
In the past few months, there have been big hiccups in distribution to my neighborhood. The newspaper hadn’t arrived by the time I left in the morning and were not yet available at the local newsstands. ”Not in yet,” is how the guy at the counter greets me most mornings when I stop by to try to grab the Journal. It seems I’m not the only one hearing it as he told me that he loses at least a half-dozen Journal sales a day because of the paper’s late delivery. I’d be much more understanding if I was out at 4:30 am looking for the paper or if the newsstand in question was out in the suburbs somewhere, but we’re talking 6:00 am in the middle of Manhattan.
Adding insult to injury, News Corp. has transferred the once-reliable customer care center to some incompetent outsourcing firm overseas. After 30 minutes on the phone with them trying to resolve my missed deliveries, I recently became so exacerbated I simply cancelled both my Wall Street Journal and Barron’s subscriptions (News Corp. owns both). Sadly, in the process I may have cancelled another subscriber’s subscription, as the woman on the phone called me by the wrong name. (Apologies to Mr. Levy, whoever you are!)
To be fair, I’ve had troubles in the past with my New York Times delivery, but the newspaper always managed to resolve the issue fairly quickly. It’s a good thing – since the paper is now my first-read of the day. As for the Journal, I read it online when I get to work.
Mr. Thomson, the WSJ editor I mentioned earlier, bragged to the Observer that the Journal is already “developing a closer relationship with an ever-larger number of women” and that the New York edition will help snag a broader array of readers. Maybe so – but he better hope they aren’t early-risers living in midtown Manhattan.
New York may be renowned for having some of the finest restaurants in the world, but few have called our neighborhood in midtown Manhattan home.Around the corner from Grand Central Terminal, the area around Madison and 42nd Street had always been more of a “passing through” area rather than a destination spot for people in search of a good meal.Thanks to Benjamin Prelvukaj and Jason Avery, however, that’s all changed. Prelvukaj is co-owner of Benjamin Steak House and Avery is chef and co-owner of Pera, which bills itself as Mediterranean cuisine.Benjamin and Pera are the restaurants of choice for Starkman & Associates and the clients we’ve taken there are always grateful for the introduction.
Opening a 150-seat restaurant on a non-descript block on 41st between Madison and Park took guts. Previous restaurants in this space inside the Dylan Hotel didn’t last long, including Britney Spear’s ill-fated NYLA. When Benjamin Steak House first opened, business was indeed quite slow.
Never one to follow the in-crowd, I gave the restaurant a try and immediately appreciated its outstanding food, responsive service, and friendly staff. I admit to becoming something of a regular.I knew others would eventually catch on despite its off-the-beaten path location and told Prelvukaj he better remember me when they get discovered.“Mr. Starkman, you will always be guaranteed a great place in this restaurant,” Prelvukaj promised with his inimitable smile. Viktor, the restaurant’s amiable manager assured the same.
Prelvukaj and his partner, Arturo McLeod, both hail from Peter Luger’s, a Brooklyn-based restaurant that has long been famed as being one of the top steak houses in New York.Prelvukaj was its former maitre d’ and McLeod was one of its chefs.Benjamin steaks are from the same quality cuts of meat and are prepared in the same family style manner; but whereas Peter Luger’s is infamous for its surly service, Benjamin prides itself on treating customers with old fashioned respect. And if you eat there often enough, the place becomes like ”Cheers” – everyone knows your name.
In addition to serving some of the best steaks in New York City, it offers a wonderful salmon entree and the side dishes are highly recommended, including its non-greasy onion rings and homemade potato chips.Hungry yet?
Benjamin also has the best Happy Hour deal in New York City.Even premium drinks are half price at the bar from 4 p.m. to 7 p.m. and the bartenders at Benjamin are quite generous with their pours.Kenny, one of the restaurant’s longstanding bartenders, is unquestionably one of the best mixologists around.If you can drink more than one of Kenny’s to-the-brim martinis, you’ll need to take a cab home.
Benjamin has long since been discovered, but Prelvukaj is a man of his word.Jackie and I ate there last night and, just as Prelvukaj promised me three years ago, we’re still getting one of the best tables in the house.
I still remember with great delight the email Jackie sent me about a new restaurant called Pera that had just opened in a space across the street. One of the local tabloids had run a piece that morning on its opening and its chef and co-owner, Jason Avery.We knew Jason and were excited he’d come to midtown.
Prior to October 2001, S&A was based on Wall Street directly across the street from a five-star hotel called the Regent Wall Street.At the time Avery was the executive sous chef and the chef de cuisine at its restaurant called 55 Wall Street. Jackie and I frequented that restaurant – it had a Happy Hour in the spirit of Benjamin’s – and Avery always took especially good care of us.
Avery is well on his way to getting the recognition he deserves as one of New York’s most talented chefs. I can confidently recommend everything on Pera’s menu, ranging from its inventive salads to its daily specials. Lamb is among the restaurant’s specialties, and it took Avery months to wean me off his lamb burger before I would sample his other dishes. Avery is always concocting new and interesting appetizers and entrees, and he recites them with a certain relish and zeal that underscores the pride he takes in his craft.I once mentioned an appetizer of peas and feta cheese that I had sampled and loved at my favorite restaurant in San Francisco; Avery made the dish even better.
Pera has an interesting and fairly priced wine list and the service is always quite attentive. The restaurant has an open kitchen, and Avery is always quite visible supervising the line or interacting with customers.Avery treats all his guests like royalty, which is why I frequent the place at least three times a week.
So a tip of the hat — or should I say toque? — to Benjamin Prelvukaj and Jason Avery.Your restaurants are probably the greatest things that have happened to the neighborhood since Grand Central Terminal was first built in 1871.
