A Guide to Doing Dark PR in Russia
This edition is based on the investigative article by Russia! magazine, an independent English-language print and online publication devoted to the most original coverage of people, trends, ideas and events taking place in or around Russia. www.readrussia.com. FALL 2013
The city of Tolyatti in 1972. It didn’t change much since.
Dark PR is a standard, time-honored set of devices that businessmen use to target a company in a hostile takeover – by making its core shareholders and management more willing to sell (or step down) and by generally driving down the takeover price. These devices are common in Russia along with groundless criminal investigations and Duma deputies’ inquiries. Because of frequent use, Dark PR has turned into something slightly comical: specific media outlets (such as compromat.ru and Moscow-post. ru) are dedicated to featuring Dark PR news that can range from setting a secret UFO base to organizing a revolution. However, when police raids and searches accompany the smear campaign, it nonetheless can be very effective. Here is our useful Dark PR primer with step-by-step instructions (and lurid examples from recent Russian business history) that should serve your most corporate raiding needs. The primer is based on the recently leaked email exchange posted on RussianPRleaks.com, when corporate raiders launched a massive smear campaign against Togliattiazot (TOAZ), major Russian ammonia producer. The campaign, likely orchestrated by Dmitry Mazepin, owner of Uralchem and a minority shareholder of TOAZ (his name and those of his top managers are frequently mentioned in the email exchanges), became a sensation among the Russian PR folk and will probably end up in the public relations textbooks.
The city of Tolyatti was the Brezhnev-era showcase of industrial might of the USSR. It was built around several large industrial plants, such as the largest Soviet car producer VAZ and Togliattiazot, the ammonia producer. Photo: Flickr
1. I n s t i g at i n g a bo g u s l aw s u i t ag a i n s t yo u r ta rg et Environmental violations, tax evasion, supporting the political opposition, or “promoting gay lifestyles,” made illegal in Russia this year, are all available options. No matter how frivolous your claims are, the authorities would still investigate the target of your allegations (especially if you provide an “incentive” to the investigators – that should discourage them from dropping the case if the target asks them), disrupting the target’s normal course of business, and making it as hard as possible for it to continue its operations. Togliattiazot, a major Russian producer of ammonia and urea, has been targeted by a lawsuit from a minority shareholder, Uralchem, claiming losses of more than US$ 200 million from a failed deal to sell its stake to a small affiliated company because it was denied access to shareholder records. Even though ToAZ provided evidence that Uralchem and the purported buyer for the stake were affiliated companies and the “buyer” had no funds or other assets sufficient to finance the deal, the case against ToAZ has remained active for two years.
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Apparently, if you do not name any specific persons as defendants, criminal investigators would not accept contrary evidence from the target company’s officers, which was the case with the shareholder lawsuit against ToAZ. The Russian court system makes it possible to file suits against a company or a person even if you are not affected by their alleged actions – a mere report of illegal activities could be enough to set things off. A very handy thing when you need it. If you play your cards right, you can have law enforcement agencies put a freeze on all transactions in your target’s stock. This will scare off prospective investors, causing the stock price to plummet. Even if you do not achieve this particular coup, you can still have the media publish reports on the alleged or at least possible freeze on stock trading. ToAZ’s attackers used this trick, as a leaked email suggests: “have your journalist write a story that there have reports circulating that criminal investigators are considering putting a freeze on ToAZ stock,” the client writes to dark PR experts handling the media campaign against ToAZ. “Have him call the prosecutors’ office, the court, and the police investigators” to find out more… And this brings us to the second, and arguably most essential, technique in the dark PR armory.
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2. A n n o u n c e th at the ta rg et i s b u y i n g a n e x pe ns i v e We s ter n s o cc er c l u b ( or a hotel ) Conspicuous consumption by billionaires is likely to irritate the 99%; support for unorthodox lifestyles and politics will irritate the traditionalists, and industrial pollution is likely to tick off everyone. The shocking “news” does not have to be real, it only has to be reasonably plausible. This was also a technique used, over and over again, in the campaign against ToAZ. False news of the purchase of Vaduz, a Lichtenstein-based football club playing in the Swiss National League were designed to raise the ire of the general public, and the “subscription model” made it possible to keep the stories online even after ToAZ denied all allegations. When the company attempted to fight back, denying all these allegations, some of which were too outlandish to believe, the PR artists ran a fake interview with the CEO in several “pocket” media outlets. While it was a little more believable, refuting most of the fake allegations, it also was written in an arrogant, selfish, highly unpatriotic tone clearly designed to upset anyone who might be reading it. ToAZ formally denied that its CEO, or any other corporate officers had anything to do with the interview, but, once again, the subscription model ensured the “interview” would stay online on the “pocket” media websites.
3. A n n o u n c e th at the co m pa n y i s a thr e at to th e e n v i ro n m e n t That’s simple. You need to simply create a bogus environmental organization (such as “Green Patrol”, in Togliattiazot’s case). The environmentalists should write letters to the media and residents alerting them that the company in question is likely quietly subjecting them to slow death. Ideally, you should place several articles in the local media. The company will not be able to ignore the accusations, but when it tries to provide proof that its environmental standards are of the highest standards, it will look even more suspicious! In Togliattiazot’s case, the Dark PR team spent a small fortune on getting coverage of the alleged company’s threats to the environment and used it in further efforts.
4. O rg a n i ze g r a s s root s prote s t s. You need to organize the protests against the company to show the government that the company does not enjoy the support of the citizens and therefore can be closed down without any political consequences. This is a highly effective technique, and it can be affordable if done right. You don’t have to hire every single participant in a protest rally – you only have to bring in a handful of the loudest and most outspoken. They will serve as the core of the protests and provide newsbites and interviews for any media people who show up at the event. Several emails exchanged by media outlets, PR artists, and the client described the mechanics of protests against Togliattiazot: several media-friendly individuals were brought in to Tolyatti for the occasion, inciting the crowds and giving interviews for about 15 minutes before disappearing and leaving the rest of the crowd to wonder what exactly they were doing there.
5. C l a i m that th e targ e t i s th e
Ideally, you need to encourage government officials to initiate a tax-ev can probably accomplish it if you place articles about your target suppor In the ToAZ case, multiple reports of transfer pricing were run to “flesh o evasion launched against the company. The fake CEO interview added fu edly stated that the company was “actively managing its tax burden,” as vironmental protection to the government,” which “was its responsibility the company’s connection with Boris Berezovsky – the recently decease Vladimir Putin’s regime – claiming that as a citizen of a free country, th one he damn pleased (the clear implication being that Russia is not free) cause blood pressures to rise in the Kremlin.
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vading investigation. By the way, you rting the opposition figures. out” a criminal investigation into tax uel to the fire: in it, the CEO purports well as cutting costs by “leaving eny anyway.” The CEO also “confirmed” ed political refugee and opponent of he US, he, the CEO could support any). This was pretty much guaranteed to
The city of Tolyatti in 1972. It didn’t change much since.
6. State yo u r s u pport for g ay r i g ht s We believe in supporting gay rights (and people should be able to kiss on the metro!), but it’s not considered comme il faut among the government folk. You can simply organize multiple letters from various (often fake) LGBT-organizations in support of the target: if they support the company, it means that the company supports them. In Togliattiazot’s case, numerous LGBT-organizations that nobody has heard of, issued letters and organised public events in support of the ammonia producer and went around the city knocking on people’s doors asking them to sign petitions in support of TOAZ.
7. Attac k th e r e p utat i o n o f th e co m pa n y’s to p ma n ag e m e n t Ideally, you should employ more than one device: direct support from opposition figures, living in exile, tries to steal the company, is trying to sell the company to the Chinese and fire everyone! In Russia, CEO is often the main asset of the company via his connections with the market, with the government, and with sources of financing. If you put enough pressure on the CEO, he or she will have less time to fight off a corporate raid. In Togliattiazot’s case, the Dark PR professionals took special aim at the reputation of ToAZ’s CEO Vladimir Makhlai and that of his father, Vladimir. In one email, the PR company insists not only on publishing false news about an alleged dispute between Sergei and Vladimir, but also insist on including unfavorable photos of the managers. As in other fields, in Dark PR, details are everything!
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9. s tat e that th e co m pa n y i s be i n g s old. to the c h i n e s e.
Who i s beh i n d i t? The main law of Dark PR is that there is always someone behind it. This guide would not be complete without some information on how to react if you have become a victim of a smear campaign. You just need to find out who is behind it. If you collected substantial evidence, you can appeal to the authorities or take it to the media. In the case of Togliattiazot, according to the leaked emails, the man who orchestrated the PR attack on the company is, most likely, Dmitry Mazepin, TOAZ’s minority shareholder and owner of chemical production company Uralchem. Mr. Mazepin tasked the same PR specialists who were working on attacking TOAZ with whitewashing his personal reputation and that of his close associates. He simultaneously istigated several lawsuits against Togliattiazot and filed several criminal cases. Visit readrussia.com for continued coverage of this story and other business and media news.
This is a special edition of RUSSIA! newspaper. To learn more about RUSSIA! and to read more original coverage, please visit www.readrussia.com.