17 Corporate Crime Reporter 22(1), June 2, 2003

GRAY PANTHERS ADS TARGETING WORLCOM FUNDED BY IDI

Earlier this month, the Gray Panthers, a public interest group that defends the rights of senior citizens, took out full page ads in newspapers around the country calling on federal officials to stop awarding federal contracts to MCI WorldCom -- which committed one of the largest corporate frauds in history.

Over a picture of two elderly and distraught citizens, the ad screams:

"Washington should not reward corporate criminals like MCI WorldCom with huge new government contracts."

The federal government announced earlier this year that it was awarding MCI WorldCom a multimillion contract for a wireless network in Iraq.

At the bottom of the ads, in small type, is this:

"This ad was paid for by Gray Panthers."

In fact, the $200,000 spent by the Gray Panthers to place the newspaper ads was raised by Issue Dynamics Inc., a Washington, D.C.-based consulting firm that represents the Baby Bells in their fight against WorldCom and that specializes in "bridging gaps between industry and consumer groups on public policy issues."

The ads were placed in the Washington Post, the Washington Times, the Orlando Sentinel, Roll Call, The Hill, the St. Petersburg Times, and the Ft. Lauderdale Sun Sentinel among other papers.

Over the past couple of years, Issue Dynamics played a pivotal role in turning the National Consumers League from a consumer group into a corporate front group. And last year, Sam Simon, Issue Dynamics' founder and president, was named chairman of the board of the National Consumers League.

One of Issue Dynamics major clients is Verizon Communications, which has launched a campaign to make sure that MCI WorldCom doesn't emerge from bankruptcy.

"MCI WorldCom committed the largest corporate fraud in American history, causing $175 billion in investment losses by individual shareholders and pension funds," the Gray Panthers ad reads. "Thousands upon thousands of seniors had their retirements jeopardized. The U.S. government's reaction to the MCI WorldCom fraud has been as shocking as the crime itself."

The ad mimics the arguments in a five-page letter written by Verizon general counsel William Barr last week to SEC chairman William Donaldson.

In that letter, Barr charges that "the SEC's enforcement response to WorldCom's crimes -- the largest corporate fraud in history -- has been to date grossly inadequate and fundamentally misdirected."

Gray Panthers is a small organization with a staff of three and a budget of "a few hundred thousand dollars," according to Will Thomas, director of the Panthers' corporate accountability project. Thomas said that the Panthers get "zero corporate funding," although he then went on to admit that the $200,000 to place the ads in the newspapers was raised by Issue Dynamics.

Thomas said that the Panthers have taken corporate funds for operations in the past, including $25,000 from AT&T in 1999 and $5,000 from SBC Communications in 2001 -- but nothing since.

The Gray Panthers executive director, Tim Fuller, defended the practice of taking corporate money to run ads fighting corporate crime.

"I don't know the source of IDI's budget," Fuller said. "But I have no objection to using the enemy to bring down the enemy. Verizon may get some benefit from this, but it also might change their behavior."

Fuller said it doesn't matter where the money comes from, as long as the word is getting out about corporate reform.

"I'm more interested in really bringing change to the corporate culture," Fuller said.

But John Stauber, the executive director of Madison, Wisconsin-based Center for Media and Democracy, says if that is the case, the Gray Panthers should publicly disclose where the money came from for the ads.

"Well, if it makes no difference, why not disclose it?" Stauber said.

"Lay all the cards on the table, let's be transparent, let's make it clear who is footing the bill. It is absolutely essential that there be transparency. If so-called public interest groups or non-profit corporations are accepting corporate money, lay it on the table."

Stauber said that Issue Dynamics "is one of the leading players helping corporations find public interest groups that will accept industry money and front for industry causes."

"Every public relations firm looks for the perfect third party experts who will carry their clients message," he said. "If the Baby Bells came out and ran these ads, it would look like one corporation waging war on a competitor. The ideal public relations tactic is to find a trusted public interest figure or organization and put the corporate message in its mouth."

"It sounds like that's what is happening now with the Gray Panthers," he said.