Market watch

By David Weidner, MarketWatch

NEW YORK (MarketWatch) -- I had to look it up to be certain, but once I did, everything regarding Goldman Sachs Group Inc.'s public relations strategy became crystal clear.

The word was chimera, and it means a couple of things: it can refer to a mutant organism or substance. In this case, it probably referred to its second definition: a fanciful mental illusion or fabrication. Chimera is derived from Greek mythology. A Chimera is a fire-breathing monster usually represented by a winged lion, goat and serpent.You see where I'm going with this, right?
Goldman's public relations chief, Lucas van Praag, used the word to describe recent press coverage of his firm which lately has been criticized for bonuses and its hardball negotiating tactics with American International Group Inc. and bonuses. And though the quote pre-dates the coverage, the bank's role in masking debt in Greece.
Some of this criticism is "chimera produced by a febrile mind," van Praag said.
OK, I had to look that one up too. It means fevered and delusional.
This is classic van Praag: the $20 words, the haughty condescension, the arrogant dismissals. The message is you're emotional and don't have your facts straight. We're reasoned and objective about our own matters. You, dear media critics, don't know what you're talking about.
"There is speculation and then there is stupidity," van Praag told the Wall Street Journal. See post in WSJ's Deal Journal.
In recent days van Praag has gone from company mouthpiece to the story. He was ripped apart in a New York Observer piece by Max Abelson. He was ridiculed in the blogosphere. New York Magazine compiled his most stinging quotes. See New York Observer profile of van Praag.See New York Magazine's compilation of van Praagiciticisms.
One could argue van Praag bungled his job so badly that Goldman has had to retain the outside PR firm Public Strategies to rehabilitate its image, a development reported Sunday by the New York Post. Goldman disputes the timing, saying Public Strategies has been working with the firm for close to eight years. See NY Post story.
The point of these attacks seems to be that van Praag is doing Goldman a disservice. His snobbish retorts and rebuttals, once appropriate for a firm viewed as the cream of Wall Street investment banks, sounds harsh when so many have lost so much due the financial crisis from which Goldman seemed to profit.

A 'no-win position'

It would be easy to say van Praag and Lloyd Blankfein, Goldman's chief executive, are Wall Street's Marie Antoinettes, but the reality is far worse. They've been compared to Emperor Palpatine and Darth Vader and, in deference to the younger set, Lord Voldemort and Severus Snape.

To me, the better analogy for van Praag is his own. He has been cast as Goldman's Chimera, at least in the classic sense. He is at times a serpent, a goat and the firm's lion depending on the audience.
It's a critical mistake to assume that van Praag, or any corporate spokesman, is speaking to us, whether "we" are the media or readers and viewers. His audience, as noted by the blogger, Epicurean Dealmaker, is the public, but not first. That distinction goes to Goldman's employees, the traders and investment bankers whose loyalty has played a large part in the success of the firm. See blog post on van Praag.
"I'm sure there's a lot of pressure internally to fight back," said Steve Frankel, a partner specializing in financial services communication at Joele Frank, Brimmer Wilkinson Katcher. "Investment bankers read every word of every story that's written about the firm.
"The (Goldman) PR strategy is to answer every criticism aggressively and in this situation and others, sometimes that approach makes it a bigger story."
Some PR pros believe van Praag has, on occasion, been too aggressive and should have "dialed it back" but even critics refer to him as among" the best in the business."
That is to say on that front that matters most, van Praag has held the line with panache. He's made the arguments of Goldman's traders and bankers very well.
It's a trade-off and maybe not a bad one. Public criticism is going to be there whether van Praag issues a firm-wide mea culpa or not. What may not survive is the morale of the firm. If van Praag is seen admitting mistakes, how does that play in house? Given what we know about most Wall Street firms, the answer is not well.
"During crisis, many corporate communications executives are in a 'no-win' position. Van Praag may be one of them," said Alan Towers, a corporate reputation consultant and head of TowersGroup Inc. "Reputation is built or broken by corporate culture, not communications. Even the top PR person usually has limited influence over culture, but is 'responsible' for reputation. I've seen these executives commit career suicide by pushing a defiant message management forces on them, then get fired when the company caves and needs a scapegoat."
To take it a step further, van Praag seems to be betting that a firm built on loyalty will stay loyal to him. Probably a good bet at Goldman.
This isn't to say the last few weeks have been a weekend at the Amalfi Coast. A person close to van Praag said the personal attacks have bothered him and he's been surprised at the intensity of the criticism not only against him, but directed at the firm.
There is, however, no surprise at the criticism itself. Goldman is, in many ways, the last bank standing on Wall Street. In part, Goldman is singled out because it doesn't have a commercial bank component such as J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 40.19, -0.66, -1.62%) or a retail brokerage arm such as Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 27.43, -0.28, -1.01%) . It's also much more opaque and successful; at least that's the view internally.
Van Praag's emergence as the face of the serpent doesn't necessarily mean he's in trouble or that he's doing a bad job. Goldman is responsible for the actions of Goldman. Van Praag is responsible for explaining why.
He's doing it with a lot of vituperation, hurling gasconade upon foofaraw -- which is exactly why they hired the beast to begin with.