Just a Little Bit Pregnant

Hubris has a very high cost. Photo courtesy of freedigitalphoto.net

Hubris has a very high cost.
Photo courtesy of freedigitalphoto.net

The higher people are in business or social circles, the more they believe they can get away with. It’s hubris, writ large.

When Scott London, a top Southern California partner of the global audit firm KPMG was feeding inside information to a golfing buddy, he reportedly reassured his friend not to worry — the amounts at stake were too small for the SEC to become suspicious or to cause any trouble.

Wrong, on any number of counts.

The SEC was interested. After confronting and turning the golfing buddy, investigators captured London on tape and informed KPMG, which fired London (though he wasn’t initially identified).

London quickly outed himself and sought to explain it away by saying he was just helping a friend who was down on his luck. Besides, he said, only two clients were affected. It was an approach that would make a crisis PR person proud — get out front and try to control the tone of media coverage.

But it didn’t hold up for long. The next day, a federal indictment said at least five clients were affected and London received numerous expensive gifts in exchange. The takeaway is simple: If you want a Crisis PR storyline to last, it must be credible and arguably true. Fairy tales may make a client feel good for a moment, but they fall apart quickly.

The devastation is still unfolding.

KPMG had to resign from two clients — a loss of millions of dollars in annual fees. Ties with other clients may be severed — either because of leaked information or because clients want to escape any potential taint.

As the client list shrivels, a number of KPMG employees are expected to be out of jobs.

London was right about one thing, though. Not much money was involved — an estimated $1.2 million that the golfing buddy made off the tips and less than $100,000 in gifts to London.

A pittance, compared to the damage it’s causing. Hubris has a very high cost.

—–

“Because Reputation Is Your Most Valuable Asset”

Gillott Communications is a Los Angeles-based public relations firm that specializes in high-stakes Crisis & Reputation Management. If you don’t already subscribe, please sign up for our blog Insights on High-Stakes PR. You can reach Roger Gillott directly at 310-826-8696.

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