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How Did They Do That?

 

FROM: July / August 2005, PAGE 10 BY: Richard S. Levick

How could an underdog litigant undermine a major merger? Through a joint communications and litigation campaign precisely timed for maximum impact.

In December 2004, The Shanfari Group of Companies countersued the National Bank of Oman (NBO) over debt claims that Shanfari regarded as wholly illegitimate. The suit, which requested appointment of a financial committee to review pertinent documents, was also the first step to recover significant amounts owed by the bank.

NBO was in a tailspin. The bank had posted losses of more than $130 million in 2003, and former CEO Aubyn Hill had left the region altogether. The problem for Shanfari, though, was that NBO was planning to merge with Bank Muscat to create the biggest bank in the Middle East. This would significantly minimize the likelihood that NBO’s pre-merger practices would see the light of day. And that would make it practically impossible for Shanfari to recover its lost funds.

What could Shanfari do? For one thing, it could stop the merger.

The Power of Integration: A Model of Precision

It was inconceivable that legal action alone could do the job. Immense public pressure would also have to be brought to bear on both banks’ shareholders as well as on Omani regulators. Toward that end, Shanfari would have to look beyond its own lawsuit and focus on issues of burning concern to the region itself.

Strategically, and tactically, Shanfari did everything right.

First, it began its media campaign before filing suit, thus grabbing the advantage of an early attack. Moving early meant Shanfari’s message—that an open, transparent financial community in Oman serves the interests of all honest parties—was the message. It also meant Shanfari was cast at once in the hero’s role.

Second, the campaign created a powerful Web site that reinforced the respectability of Shanfari’s position. The site, www.goodgulfbanking.org, was optimized with embedded keywords to attract more visitors via search engines. Total hits tripled in the third month, reaching people in 60 countries.

Full details on Aubyn Hill were also prominently posted, since the media wants a “villain” as much as a hero. Of particular importance, neither Shanfari’s name nor the details of the litigation appeared anywhere except in the legal archives. Attention instead focused on NBO and the merger, not the details of claims and counterclaims.

Third, the campaign used the site to drive increased media coverage. As more articles were posted, more articles were inspired. There were two dozen high-profile stories through the early months of 2005.

Fourth, the campaign targeted high-impact publications like the Middle East Banker and Gulf News. These publications were as important as the Wall Street Journal in maintaining pressure, especially on the Central Bank of Oman, the key regulatory entity. Moody’s December 2004 downgrade of NBO was prominently featured and predictably catalyzed a new flurry of media interest.

Fifth, Shanfari used an additional lawsuit that it filed in January 2005 to keep the story alive. It sent press releases in multiple languages and further coverage ensued.

Sixth, NBO’s moves were carefully scrutinized. When the bank issued a press release to reassure the market that the merger was going forward, it was interpreted—quite correctly—as a sign that NBO was starting to sweat.

Digging in for the Long Haul

In early 2005, the merger was indefinitely postponed. Thus ended Chapter One, a masterpiece of issues management and communications.

New chapters are now in the offing. The litigation is ongoing, and the larger issues of institutional transparency must still be resolved. But effective communications always require long-term commitment—especially in a campaign based on the premise that much more than a lawsuit is at stake.

Richard S. Levick ( rlevick@levick.com) is a lawyer and President of Levick Strategic Communications, which has directed media for top firms around the globe.