State Affairs Company attacks public interest groups

This article was first published as "An Open-ended Attack on the Public Interest"in PR Watch, Volume 3, No. 3, 3rd Quarter 1996. The original article was authored by John C. Stauber and Sheldon Rampton and is used here with permission. As with all SourceWatch articles, feel free to edit and revise.

State Affairs Company attacks public interest groups
Over the past half century the tobacco industry, led by Philip Morris, has used front groups like the Tobacco Industry Research Committee and the National Smokers Alliance (a SAC client) to protect its $100 billion a year in gross profits.

Philip Morris is currently a major force and financier behind "tort reform"--the big business campaign to radically reduce the damages that companies must pay for the deaths, pain and suffering caused by their products. Tobacco, an addictive drug, kills millions world-wide every year. An internal SAC document notes that tobacco companies "have faced an explosion of litigation from 1993 to 1994. 'Tobacco makers spent $600 million on legal fees in 1990 and the annual figure has climbed since then.' ... As a barrage of class action lawsuits hit cigarette manufacturers, ... PM's strategy is to challenge all efforts to regulate smoking through the courts."

In addition to tobacco, Philip Morris is a major player in the food industry. Its agenda includes not just fighting against tobacco lawsuits and trial attorneys, but also defending its agribusiness assets from real or perceived attacks on its other products. PM subsidiary Kraft, for example, manufactures cheese using cows injected with recombinant Bovine Growth Hormone. Oscar Mayer, another PM division, is sensitive to nutritional criticisms of its fatty meats.

The State Affairs Company, therefore, targets groups such as Consumers Union, the squeaky-clean publisher of Consumer Reports magazine; the "food police" at Michael Jacobson's Center for Science in the Public Interest; the Consumer Federation of America; the nationwide door-to-door consumer canvass group Citizen Action; and a slew of Ralph Nader-founded organizations including Public Citizen, Trial Lawyers for Public Justice, the U.S. Public Interest Research Group, and the Center for the Study of Responsive Law.

The Secret Consumerist Conspiracy
An undated document titled 'Proposal for Consumer Research Project" provides insight into the strategy behind SAC/CW's research.

"Oftentimes the consumerist agenda may be a hidden one which should be disclosed," the document states. "Strategy: Working through think tank or university relationship, educate public through target media about inner workings, potential conflicts of interest and agenda of Consumers Union and its primary source of funding, Consumer Reports. ... There is a need to protect the public from hidden, undisclosed consumerist agendas. ... Release by university or think tank. ... How does the media work with consumer advocates? In a time of intense media cynicism, why do these groups receive so little scrutiny? ... Legislative remedy: reporting and disclosure requirements ... Introduce a series of disclosure bills at the state level, building up grassroots pressures to stimulate Congressional hearings; corrective legislation."

Before Contributions Watch, SAC had previously created "University Research," another entity which scouted at the state level for any dirty laundry on political opponents and public interest groups. The "Proposal for Consumer Research" advised on techniques for vacuuming up data at state offices while disguising SAC's involvement.

"Do all work as University Research," the proposal advised. When paying fees at state offices, "bring personal checks." To further obscure the chain of command, legal counsel Henry Hart advised that University Research should set up its own bank account. "You should not open the account using the Employer ID Number for the State Affairs Company since this would make it easier for a plaintiff to attempt to make the State Affairs Company liable for the liabilities of University Research, Inc."

SAC's strategy for investigating and attacking legitimate public interest groups was also outlined in a February 1995 SAC document titled "Advocacy Groups at the Plaintiff's Bar: The Abandonment of Membership." Apparently prepared for an overhead projector, the document sums up "The Situation: Ecocrats turning from soft path of conservation and enviro-grassroots organization go hard path of litigation and litigation journalism."

"Ecocrats" is SAC-talk for mainstream DC-based environmental groups with legal departments and the ability to sue corporations, and recoup their legal costs if successful--public interest attorneys such as "Andrew Kimbrell (Foundation on Economic Trends), ... Eric Olson, ... Natural Resources Defense Council; John Echeverria, counsel, National Audubon Society."

SAC's "Objective: make it increasingly difficult for plaintiff's lawyers to use environmental groups as a litigation, lobbying and media tool. Gain leverage. Drive wedge between ecocrats and grassroots organizations repelled by ties to wealthy plaintiff's lawyers. ... Introduce and back a variety of state reform bill[s] across the country that require disclosure of financial ties ... Underwrite legal research monograph that will document the financial and other ties of trial lawyers to environmental groups."

"Any coverage ... forces advocacy groups to expose and defend financial ties to trial lawyers," the document advises. The "media tactics" recommended are to "identify and recruit surrogates; arrange exclusive with national news organization (example: Keith Schneider, New York Times); roll-out national study."

Enemies Lists
By January 1996, this strategy had evolved into the founding of Contributions Watch and a fat contract with Philip Morris. "Enclosed is the redraft of the advocacy groups research project," David McCloud wrote on January 16, 1996 to Victor Han, the PM Vice President for External Affairs. McCloud's proposal targeted 15 public interest organizations, including Consumers Union (CU), Public Citizen and Center for Science in the Public Interest (CSPI), with more to be added. A "Checklist" prepared by SAC further outlined the research process and added additional groups to the investigation including the Environmental Defense Fund, Sierra Club, Audubon Society, and Greenpeace.

Under terms of the proposal, Contributions Watch was to be a "document review team," preparing a "monthly verbal report" and "document packages" for Philip Morris, providing information about the targeted consumer groups including "IRS form 990; audited financial statements; state charitable forms; ... annual reports/annual meeting notices; review of on-line media, internet home pages and networks; federal and state bulk mail permits; publications; ... state trial lawyer associations; ... research on current and former boards of directors and executive staff; court awards and settlements documents."

This work in turn provided an opportunity for the State Affairs Company to extend its client list beyond Philip Morris, offering Contributions Watch as a "public interest" front group that other companies could also use to attack citizen groups. SAC actively courted new clients, offering access to CW's mountains of data on consumer organizations in exchange for a yearly "subscription" fee of $10,000 to Contributions Watch.

A "target subscription list" identifies the companies that Contributions Watch viewed as potential clients for its public-interest-bashing agenda: Monsanto, Texaco, WR Grace, Exxon, General Motors, Ford Motor Company, Procter & Gamble, BlueCross/BlueShield of New Jersey, Shell Oil, Mobil Oil, Chemical Manufacturers Association, US Chamber of Commerce, Washington Legal Foundation, and the law/lobby firms Gibson, Dunn & Crutcher; Crowell, Moring; Kirkpatrick & Lockhart; and Skadden Arps.

On September 13, for example, SAC's Chuck Francis wrote to Susan Scholle Conor, the General Counsel of BlueCross/BlueShield insurance of New Jersey, outlining the services that SAC/CW could offer: "Aggressively monitor the activities of consumer advocacy groups; ... review public filings of such groups in New Jersey ... to determine linkages, organization, sources of funding etc.; collect ... copies of materials distributed by these groups; ... monitor grassroots organizing sessions and follow their activities; ... We are prepared to do the above program for a minimum charge of $10,000 per month."

Francis was already working for other BlueCross/BlueShield companies to help them combat the five million member Consumers Union. BlueCross companies in many states are transforming themselves from 'non-profit' to 'for-profit' entities, and attempting to transfer into their for-profit coffers hundreds of millions of dollars in assets developed as non-profits. Consumers Union is successfully fighting this profiteering.

On August 21, Chuck Francis wrote to Mark Brooks, attorney for Honda, which manufactures vehicles that Consumer Reports has criticized as dangerously unstable.

"For the past several weeks we have been working closely with The Wall Street Journal on the major story we discussed," Francis wrote. "We have extensive research on Consumers Union. I think it would be extremely valuable for us to coordinate our efforts. ... I hope we may meet or talk as soon as possible about the possibility of State Affairs Company becoming a part of your team on this project."

Francis used the Wall Street Journal article again in an August 27 pitch to Duncan MacDonald, General Counsel for Citicorp Credit Card Division. Francis even invoked the name of accused Oklahoma City bomber Timothy McVeigh as he bragged outrageously about the upcoming media blast that SAC had secretly conspired to detonate: "PS: ... You will enjoy a major column targeting Consumers Union to appear soon on the Wall Street Journal editorial page. Quoting Tim McVeigh, 'something big is going to happen.' "

The Handmaiden's Tale
The big bang occurred on September 19 when Wall Street Journal deputy features editor Max Boot aired a long attack on Consumers Union titled "Guardian of the Lawyers' Honey Pot." The piece reads like it was written by Chuck Francis, and internal documents including the SAC bill to Philip Morris indicate it may as well have been.

Max Boot visited the officers of Consumer Reports and interviewed the staff of Consumers Union. According to a CU representative, Boot's line of questioning seemed scripted, and closely mirrored points contained in internal SAC documents.

Ironically, while Boot was preparing his attack on the integrity of Consumers Union, the Columbia Journalism Review ran a cover story by Trudy Lieberman, the senior investigative editor at Consumer Reports. She specifically mentioned Max Boot, and wrote that "Unlike the [Wall Street Journal's] meticulously researched in-depth news column ... the editorial page rarely offers balance, is often unfair, and is riddled with ... distortion and outright falsehoods of every kin and stripe."

Wall Street Journal editor Robert L. Bartley responded to Lieberman's piece by simply repeating the Philip Morris/SAC party line: "The editors of the Columbia Journalism Review ... haven't noticed that the consumer movement ... [is] among other things a handmaiden to the tort liability bar."

Other SourceWatch resources

 * State Affairs Company
 * Contributions Watch