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Lord of the lies; how Hill and Knowlton's Robert Gray pulls Washington's strings.

This article is adapted from The Power House: Robert Keith Gray and the Selling of Access and Influence in Washington, recently published by St. Martin 's Press.

In the old days, when Robert Gray was a staffer in the Eisenhower White House and had visitors in his office, he'd have his secretary interrupt him from time to time with fake telephone calls from the President. Back then, the occasional deception helped the Nebraska native wire his White House career. Three decades later, the tricks were the same but the stakes a fittie higher. This time around, deception helped Bob Gray set the American agenda.

"A reporter would walk in, and he would instruct his executive assistant to come in and announce there was a call from the White House," a former Gray and Company executive recalls. "Totally fabricated. They would come in and they would say, 'Mr. Gray, Mr. Meese is on the phone,' and he would pick up a dead fine, carry on a conversation of four or five short, rapid sentences as though he was in constant communication and hang up. And then, of course, the reporter, dazzled, would report that a White House phone call came in."

Access: The illusion of it has long been the energy source of Washington's unelected power elite--the lobbyists, PR sorcerers, and counselors who work their quiet magic on the nation's laws in back rooms the general public doesn't even know exist. And no one has nurtured that illusion better or longer than Bob Gray, one of Washington's most powerful, and most respected, influence peddlers. For 30 years, at his own firm and at Hill and Knowlton, he's set a standard--not a particularly high one for what Washington lobbying can get away with.

Of course, Gray would probably relate his story as a Horatio Alger tale: A boy from Hastings, Nebraska, comes to Washington, works hard, and makes it to the top. When he started in the world of public relations in 1961, he had no expertise in either government or substantive policymaking. But he did have a talent for making people believe he was well-connected, and in the power-crazed world of Washington, he found an audience not only eager to believe he was a player, but willing to pay him handsomely to prove it.

In relatively short order, his illusion became reality: Gray did favors for people; he thrived on the party circuit; he was a perfect host and perfect guest. He cultivated Washington society wives, raised money for the Republican party, and took care of the politically powerful. Soon enough, Gray did know almost everyone in town who mattered. And he knew exactly how to profit from that knowledge: Take all comers, regardless of who they are. Whether the client was Haiti's "Baby Doc" Duvalier or the Church of Scientology, the only criterion was that the client paid--and paid well.

Gray's professional life is a study of how, if it's done fight, pulling strings for profit can come to look an awful lot like status. But it's not, unfortunately, the story of one man. In part because of Gray's success, the brand of insider politics he fine-tuned has become an entrenched and unhappy part of our legislative process. And any understanding of how we got here must take into account the career of Robert Keith Gray.

In 1961, the year he parlayed his White House experience into a power position in public relations, Gray went as respectable as Washington could get. As vice president and director of the D.C. office of Hill and Knowlton, Gray had signed on to perhaps the most conservative firm in the field.

Founder John Hill saw himself and his employees as public relations counselors, much like lawyers. Instead of simply taking instructions from his clients and putting out press releases, he genuinely tried to advise them. If a company was getting bad publicity because of bad policy, Hill would advise that the policy be revised. He would routinely turu down clients if he felt they wanted "to shade the truth," explained George Worden, a Hill and Knowlton official. "He was a very moral man."

Robert Gray, on the other hand, didn't pay particular attention to ethical considerations. He wanted to be a player. And his first step was to create the illusion that he had already achieved that goal. One of his initial requirements was a limousine, not just for convenient transportation, but to enhance his image. His second, third, and fourth requirements: parties-- going to the right ones, sometimes three a night, and hosting some of the more memorable events in the tedium of Washington night life.

In 1966, for instance, he gave a party at his home in suburban Virginia for the Saudi Arabian ambassador and his wife. "Visitors to the hillside home ... were greeted by what appeared to be Arabs in full Arabic costume," reported the Omaha World-Herald. "[It] turued out they were mannequins .... But the ambassador, unlike the fixtures in their tarbooshes and other Arabian regalia, was wearing a conservative blue suit."

More important than the tableaux was the guest list. And on that count, Gray was cleverer than the average social climber. He found out who mattered in Washington, and then he called their wives. Mamie Eisenhower was just one of his grande dames. "He plays his social life smooth," former Nebraska Senator Carl Curtis says. "We've been to a lot of his parties and it would be filled with women old enough to be his grandmother. Wealthy [women]--he was the favorite escort of the oldest women." But they weren't just old. They were connected.

More contacts inevitably led to more clients. Before long, Gray provided services to accounts that included the American Petroleum Institute, Procter and Gamble, and the National Association of Broadcasters. Still, Washington power is a volatile thing, and Gray made his smartest move by looking ahead. By 1967 he'd joined a 50-member committee to elect his friend, Richard Nixon, to the White House. And when Nixon won, Gray became the big gun of Republican lobbyists.

How did he use his power? Consider one client who went away happy, El Paso Natural Gas. El Paso hired Hill and Knowlton to drum up support for legislation that would allow El Paso to buy out its competitor, Pacific Northwest Pipeline Company. (El Paso's earlier attempts to do so had been blocked by a Supreme Court decision on the grounds that it would have meant higher costs for consumers.)

Hill and Knowlton went to work on Warren Magnuson of Washington state, chairman of the Senate committee considering the legislation. The PR firm drafted a dummy, fill-in-the-blank resolution and distfibuted it to chambers of commerce in Magnuson's home state. Later, when the senator held heatings in Seattle, Hill and Knowlton helped provide witnesses, prepared testimony, and handled the press. It supplied background materials to state and local officials, as well as sample letters to send to Congress; it contacted newspaper editors with volumes of canned materials, and many of those editors wrote supporting editorials.

By the time El Paso got its way, it had paid Hill and Knowlton hundreds of thousands of dollars, a pittance compared to the cost of the $360 million buyout that the PR firm had made possible.

Get a wife

A few more legislative coups like that one, and Bob Gray was king of the Hill. In 1980, he left Hill and Knowlton and set out on his own. In typical Gray style, he located his new offices, not on Capitol Hill, as many of the labor unions had done 20 years earlier, nor on K Street, in Washington's business and legal district, but in a beautiful old brick building on the canal in fashionable Georgetown. Gray paid $750,000 for the 19th|century building, a former power plant that once provided the energy for Washington's old street car system. With its towering but long-dormant smoke stack, Gray's new quarters were imposing. His gray and silver stationery read simply: "The Power House, Washington, D.C."

Gray's timing, as usual, was impeccable. This was the dawn of the Reagan era, and his was the perfect setting for carrying out the carefully crafted illusion of power, access, wealth, and influence, from the arched 25-foot windows to the blown-up photos of the Reagan inaugural. "[The] Power House was just a unique setting at the time .... "said Pate Felts, a Gray and Company senior vice president. "[It] was really a sexy place."

The illusion of power was also reflected in the names of those who occupied the offices. Gray had learned early on that Washington is a two-party town, and, in order to prosper, he had to create the appearance of access to both Republicans and Democrats. He lured Gary Hymel, who for years had worked as a top aide to House Speaker Tip O'Neill, and he snagged Bette Anderson, a former high-ranking Carter administration Treasury Department official. And to complete his power base, Gray revived a trick from his old dowager-cultivating days. Only this time, he didn't escort the wives-of to parties; he hired them.

There was Noreen Fuller, the first wife of Vice President Bush's former Chief of Staff Craig Fuller. There was Nancy Thurmond, wife of Senator Strom Thurmond, then chairman of the Senate Judiciary Committee. There was Washington socialite Joan Braden. Keeping the wives of the powerful happy was smart business. Not that they knew anything about lobbying, but they contributed to the illusion of access. "Need a favor from Henry Kissinger? Call Joan Braden," The New York Times wrote. "A prominent Washington hostess with many highly placed friends, she regularly counts Mr. Kissinger among her dinner guests."

The stars brought in clients from the Kennedy Center to Montgomery Ward. Yet perhaps the most crucial wife in Gray's roster didn't work for him at all but Ursula Meese's husband would be one of his biggest catches.

"[Gray] was friends with the Reagans and all that, but he did not have a lot of contact with them," said Larry Speakes, Reagan's deputy press secretary in the early eighties. Ed Meese was a natural point of entry for the master of illusion.

Meese was the only one of Reagan's three top aides who was impressed by Gray. James Baker came from a rich, socially prominent family and had headed Gerald Ford's 1976 presidential campaign. He did not need any Washington introductions, either politically or socially. Michael Deaver, a skilled PR man himself, could see right through Gray's carefully crafted illusion of power and access. But Meese was new to Washington, had come with little money, and was vulnerable to offers of introductions to the "right" people, and to overtures of kindness and friendship during his times of trouble. He was just the type of person with whom Gray could ingratiate himself, and he had the kind of influence with Rea| gan that would make Gray's time and effort worthwhile.

The Meeses' financial difficulties were no secret. Meese's wife Ursula, The Washington Post wrote, "has worn borrowed evening clothes to fancy dinners because the family finances are tight." Gray knew an opportunity when he saw it; he had one of his clients create a job for Ursula. He convinced millionaire William Moss to create the William Moss Institute, a philanthropic foundation to poll Americans about their concerns for the future. It was associated with American University, another Gray client. Gray then recommended Ursula Meese for director of the institute at $40,000 a year, thereby increasing the Meese family income by about 66 percent. "Ursula Meese was hired only because she was married to the attorney general," a senior Gray and Company executive said. "I was there when she was hired and I remember the terms of the agreement and it was clear."

A few phone calls, and Gray had ensured that his White House calls would get returned. Buying influence was easy, and sometimes it was cheap. For example, Gray had known Caspar Weinberger for years, and it just happened that Weinberger's son needed a job. Gray paid Caspar Jr. $2,000 a month, and when Gray's clients needed something from the Pentagon, Gray and Company went right to the top.

Of course, keeping influence was sometimes trickier than getting it. Joan Braden's contacts, for instance, gave Gray and Company one of its most prestigious accounts--the government of Canada. But Canada also illustrated a problem with Gray's star system, as the big names often had no experience in PR.

Braden won the account through her friendship with Canada's then-Ambassador Allan Gotlieb. Once the account was secured, it was turned over to young, low-paid account executives, who saw it as a fat cow ready to be milked dry. "Everybody who could fancy the slightest reason for piling on, piled on," Joan Braden said in her memoir, Just Enough Rope. "Why were six people from the press department attending a conference in Ottawa?"

The Canada account ended with great public embarrassment. Gray and Company sent The New York Times a press release that misspelled the ambassador's name, the name of the reporter, and the name of the ambassador's guest at the luncheon the press release was promoting. The Times ran a story saying that Canada's publicists could not even spell the names correctly. Canada canceled the contract, and Joan Braden quit.


Still, Gray's business could survive, in part because, as the eighties progressed, the illusion-machine was on full power.

When Gray courted the media, he left nothing to chance, hiring personal aides or special assistants whose primary responsibilities were to get him favorable publicity. A mention in The New York Times and The Washington Post style sections could work wonders. High social visibility was encouraged, especially among top-tier people like Frank Mankiewicz, Alejandro Orfila, and Braden. The regular appearance of well-known Gray and Company stars at social and political functions and the drum beat in the press contributed to the firm's image as the most talented and well-connected in town.

When The New York Times wrote about Gray in 1982, he carefully orchestrated the interview as he had done so many times before. Clip files on Gray are filled with stories like this:

His hair is silver-gray, his suits are impeccably tailored, and he is always in a hurry .... "Get me Jim Baker," Mr. Gray calls to his secretary .. . Mr. Gray can get just about anyone in town on the telephone, maybe even the President now and then .... Just now, he is talking to Mr. Baker. "James!" he booms. "How are you doing? . .. We want to help you anytime we can .... You know that." Then Mr. Gray brings up the real reason for the call: Mr. Reagan's minimum profits tax ... He hangs up the phone and telephones Robert B. Peabody, president of the American Iron and Steel Institute, one of his clients. "Bob," he says, "how're you doing? I just had a telephone call with Jim Baker on minimum profits .... "

Illusion? By now, it was harder to tell. The get-itwhile-you-can attitude of the Reagan years brought a steady stream of clients to the door of the Power House. But while business was thriving, it was also changing. As his Ursula Meese-style access-mongering began to work, Gray gravitated toward big contracts with clients a lot more questionable than the government of Canada. Gray and Company "was a company without a moral rudder," said Sheila Tate, a former Hill and Knowlton employee and later Nancy Reagan's press secretary, discussing the firm's controversial clientele; the only criterion Gray seemed to have in selecting his clients was the size of their wallets.

Most of Gray's international accounts were rightwing governments tied closely to the intelligence community or businessmen with tlie same connections. Gray represented Adnan Khashoggi, the "selfemployed" Saudi Arabian businessman who was involved with Iran-contra. "Khashoggi was notorious for using us and not paying us," a senior Gray and Company employee said. Another questionable client was the government of Haiti during the reign of the murderous "Baby Doe" Duvalier. The Gray rationalization would have been dazzling if it weren't so appalling. Adonis Hoffman, a self-described liberal, was one of the executives who worked on the account: "The Haitian people were suffering .... We were working for the people in this hemisphere who have the lowest standard of living, who are entrenched in the deepest poverty." One of the reasons the Haitian people were so poor, of course, was the systematic pillaging of resources by the government Gray and Company represented. Baby Doe was using this devastatingly poor country's meager resources to pay, among other things, Washington's most expensive PR and lobbying fun3 to improve his image.

Domestically, one of the more notorious reputations Gray tried to sanitize was that of American fugitive Marc Rich. A billionaire, Rich fled to Switzerland in 1983 to avoid a 65-count criminal indictment. A year later his company, Marc Rich & Co., AG, pleaded guilty to 38 counts of tax evasion and paid a $150 million fine. Gray and Company turned the fine into a celebration--a media event. The deal was announced with great fanfare by New York's then-U.S. Attorney Rudolph Guliani, who accepted a huge, oversized check as if he had just won the Publisher's Clearinghouse Sweepstakes. The fine was publicized as one of the largest in American history. In reality, though, it was pocket change for Rich, who was charged with gouging the American taxpayers for as much as Charles Keating had with his savings and loan boondoggies.

Another Gray catch was the Teamsters Union. Jackie Presser, a former car thief and one of a long line of corrupt Teamster officials, saw in Gray not just an effective lobbyist but a man who could confer social and political acceptability. "That was the odd couple .... Jackie just worshiped the ground Bob walked on. You know why? Because Bob was sort of the image of respectability and elegance and grace, and represented polite Washington society. And he accepted Jackie," said Mark Moran, a Gray and Company official.

Gray worked hard at maintaining the relationship. In Washington, he held a 50th birthday party for Presser at The Palm restaurant, known for the caricatures of famous people on its walls. At Gray's behest, Moran performed a service that typified the Gray touch: "I arranged to get Jackie's picture put up at The Palm .... We arranged for the table, and then we waited to see if Jackie picked it up. He didn't see it. ... Then Bob showed it to him, and Jackie went bananas. He thought that was the greatest thing," Moran remembered. "They put it next to the picture of Eugene McCarthy .... They couldn't have picked a better place."

Not all of Gray's efforts went so smoothly. One especially embarrassing incident involved the government of Morocco. Gray had pioneered a number of innovative PR techniques, such as "video news releases.'' The idea was to get television networks and local radio and television stations to air these advertisements as their own news stories. Gray and Company had started with a radio show called "Washington Spotlight." During these programs, the radio stations did not disclose that they were produced by Gray and Company or that Gray had been paid by clients to do them. But by 1984, "Washington Spotlight" was a big success: There were 656 subscribers to the "Gray and Company Network," and another 1,476 stations in the Mutual Broadcasting System and National Public Radio Network that received the program by satellite each month. Soon the program was being broadcast bi-weekly.

Riding this success, Gray decided to try the same idea on television. The company's PR packages began appearing on CNN as news stories: In March 1985, it sent by satellite "an exclusive interview" with King Hassan Il, the autocratic ruler of Morocco. At the time, the king was being criticized for signing a treaty with Libyan leader Muammar Qaddafi. In a standup outside the palace, a Gray correspondent warned viewers that the West should not react harshly to the treaty and that any criticism of Morocco should be "tempered with the acknowledgement" of the country's strategic importance to the United States.

CNN and Channel 5 in Washington ran the story as if it were their their own. At no time did either the network or the station disclose that Morocco was a Gray client that was paying the firm a minimum of $360,000 to improve its image

in the United States, or that Morocco had paid Gray and Company to produce the piece. Eventually, it ended in embarrassment after The Washington Post revealed that CNN was running videos made for clients of Gray and Company as news stories.


The obvious impetus to take on clients like Hassan was the huge fees Gray could collect. And the more money a client had, the more pressure there was internally to gouge him. "You'd see hours pop up any time a client had money," Carter Clews, a Gray and Company senior vice president explained. "I remember [one executive] pointed out that no phone call takes less than an hour. 'Always keep that in mind,' he said, 'once you pick up that phone, that's an hour. It doesn't matter how long you talk.'"

Another Gray and Company vice president remembered a client who was billed for expenses associated with a party to which he was not even invited. She said wine bought as Christmas gifts for clients was secretly included in their bills the following month. She maintained that even Gray's practice of taking clients' children to the circus each year, for which the company got credit in the press, was eventually charged back to the clients.

The urge to make the big bucks, combined with fiascos like Morocco's, impelled Gray to sell his firm in 1986. In true Gray fashion, he cut a sweetheart deal: In June 1986, JWT Group, Inc. agreed to buy Gray and Company and make it a part of its subsidiary, Hill and Knowlton. The merger agreement created an entirely new division of Hill and Knowlton called Hill and Knowlton Public Affairs Worldwide and put Gray in charge as its chairman. Hill and Knowlton returned Gray to its board of directors and made him chairman of its policy committee.

Gray matter

But Gray's charm by the end of the eighties was wearing thin. The anything-goes Reagan era was over, and compounding Gray's poor judgment in clients was a growing public distrust of lobbying. Influence-peddling abuses were starting to surface, and Americans literally began to pay for them. The cozy relationships among the lobbyists, Congress, and the executive branch became publicly evident in one scandal after another. Members of Congress worked in tandem with lobbyists to generate "grassroots" support for pet issues. The White House had recruited lobbyists to help with controversial appointees needing Senate confornation. The very organizations designed to protect America from an abusive system had become part of the system, and Gray was predictably in the middle of it. Still, his connections were strong enough to keep his clients out of trouble.

In 1989, HUD investigators were looking into contributions made to a charity called Food for Africa by consultants and housing developers with whom Thomas T. Demery, the assistant secretary for housing, routinely worked. During the first 20 months after Demery assumed his HUD position, Food for Africa raised $546,000, more than half of which came from companies and individuals who had interests in HUD housing programs. In the nine months prior to that, Food for Africa had raised $34,000.

California Rep. Tom Lantos, whose government operaorions subcommittee had oversight of HUD programs, began hearings into influence-peddling at HUD in the spring of 1990. Just before Demery was scheduled to testify, he hired Hill and Knowlton to advise him on how best to make his case to the news media and Congress. Remarkably, Lantos announced at the heating that the subcommittee was not going to investigate the relationship between Food for Africa and HUD contractors, a key portion of the inspector general's report that had started the HUD investigation in the first place.

Why not? Back in 1985, Lantos and Illinois Rep. John Porter had rounded the Congressional Human Rights Foundation, and in 1988 Lantos had asked Gray to donate office space at Washington Harbour, one of the most expensive addresses in town, for the foundation. The Hill and Knowlton switchboard forwarded calls to the foundation. A private nonprofit organization, the foundation was dedicated to publicizing human fights abuses around the world. Ironically, it did not have to look much farther than its landlord's clients to find governments with poor human fights records---Haiti, Turkey, Indonesia, South Korea, Morocco, and China are some of the world's most egregious human fights abusers.

But even friends in the fight places can do only so much to offset a string of bad publicity. Gray signed on the Church of Scientology, and later Time magazine ran a highly critical cover story titled, "Scientology--The Cult of Greed." He also signed a contract with the Catholic Church, agreeing to help change public attitudes towards abortion, a move that prompted severe public criticism as well as internal bickering at the finn. Other clients included the People's Republic of China--after the Tiananmen Square massacre. And then there was Citizens for a Free Kuwait, a client the company may never recover from. (See sidebar, page 16.)

In the wake of so much bad publicity, staffers began abandoning the firm for greener, and possibly cleaner, pastures. The biggest blow came in April 1991, when four top Hill and Knowlton executives publicly and abruptly left to start a competing firm, Capitoline. As more and more top executives left, morale dipped to an all-time low. From a staff of 250 during the Persian Gulf war, the office now had 90 people. Rows of offices now sat empty, and Hill and Knowlton alumni could only laugh when they recalled the fights over who got the offices along the Potomac River.

In the fall of 1991, with Gray's contract due to expire, many expected him to retire. After all, he would be 70 years old. Had he finally taken one too many controversial clients, been implicated in one too many scandals? Was he ready to call it quits?

Of course not. Bob Gray signed on for another three years. And the illusion of power is certain to continue.

How much reality remains? A former Gray and Company executive gives an answer that goes to the heart of why Americans around the country have become so distrustful of Washington. "We were thought to be real because we were thought to have the influence and the access and the power and the understanding of how the system worked. It became almost a self-fulfilling kind of myth. The more people gave us credit for doing things, the more influential and effective we became. There is no answer to the question of was it real or was it just hype to protect [Gray's] own veneer. But the story is it didn't matter. It didn't matter to people here and it didn't matter to the clients and it didn't matter to the media, because everybody was playing the game."

This article is adapted form the Power House: Robert Kieth Gray and the Seling of Access and Influence in Wahsington, recently prublished by St. Martin's Press.
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Title Annotation:Washington, D.C. public relations consultant
Author:Trento, Susan B.
Publication:Washington Monthly
Date:Sep 1, 1992
Previous Article:Closing Pandora's Box: Arms Races, Arms Control, and the History of the Cold War.
Next Article:Kuwaitgate.

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