Ecuador’s eye-popping PR deal revealed

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The government of Ecuador is paying more than $6.4 million for the services of two U.S. public relations firms, a stunning figure in the niche business of foreign government lobbying.

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The contract, which was revealed in forms released on Thursday by the Justice Department, states that the government of Ecuador is employing the American firms to improve the country’s image and combat “the activities of multi-national organizations and corporations to diminish the reputation of Ecuador.”

The documents show that the New York-based PR firm MCSquared has been working for the South American country since last year, and began partnering on the contract in December with Fitzgibbon Media — a firm that represents WikiLeaks founder Julian Assange, who received asylum in Ecuador.

Last month, the Washington Free Beacon noted that the public relations firms hadn’t notified the Justice Department about the contract, which is required under the Foreign Agent Registration Act (FARA). MCSquared funded the trip of a California mayor to visit the Amazon in September, according to media reports.

Any person or firm that does PR, advocacy or consulting work for a foreign government, state-owned corporation or international business is required to file paperwork describing the activity. The requirements date back to World War II, when they were intended to uncover whether Nazi Germany was making attempts to influence American public opinion.

The law requires a person or firm to register as a representative for the foreign agent within 10 days of signing the contract.

The Ecuadorian government approved the $6.408 million, 12-month payout for the firms in April 2013, the contract says, “to conduct of studies and formulate strategies of communication, information, image and communication publicity at an international level.” However, it is not clear when the actual contract began. MCSquared partnered with Fitzgibbon Media in December 2013, the documents show.

Neither firm responded to a request for comment on Thursday about the contract.

The public relations work is related to a long-running battle between villagers from a region in the Amazon called Lago Agrio and the oil giant Chevron. Ecuadorian courts ruled that the oil company owed billions of dollars for failing to properly clean up drilling sites in the country, starting a bitter legal fight that now spans several countries.

The villagers have been trying — with the help of Manhattan attorney Steven Donziger — to collect the $9.5 billion judgment elsewhere in the world, because Chevron has little to no assets in Ecuador. 

A federal judge in New York in March denied a payout in the U.S., saying the ruling in Ecuador had been obtained through corrupt means. 

MCSquared has issued press releases about the New York ruling and helped stage protests outside Chevron meetings, the documents show.

Ecuador’s payout for the PR services is substantial, as some of the more lucrative FARA contracts only go to the $2 million mark, though others have been valued higher.

But the large price tag could be because the work requires a lot of heavy lifting, including weekly strategy sessions between a “reputation and crisis team” consisting of lobbyists, consultants, diplomatic specialists and lawyers and the Ecuadorian government. Further, at least one person will live in Ecuador to handle any immediate crisis-related needs, according to the MCSquared documents.

Throughout the yearlong contract, the firms will craft messaging and “talking points” for officials while conducting surveys regarding American attitudes toward Ecuador. Finally, they will use the data and insight they’ve collected to “design and implement a solution to strengthen the international reputation of the country, containing the crisis, mitigate identified risks of future crises, and take advantage of opportunities that arise in the international level.”

The documentation for the contract with Fitzgibbon Media is much less detailed, only specifying that the firm will assist in the representation. 

Months after the ruling in New York favoring Chevron over the Ecuadorian farmers, MCSquared brought some of the villagers to protest outside the company’s annual shareholder meeting in Midland, Texas. 

In a statement issued in May, MCSquared alleged that Chevron-Texaco “used substandard and illegal oil production methods to save money when it operated in Ecuador. The company has spent hundreds of millions of dollars in endless legal subterfuges and public relations efforts to subdue the Ecuadorian victims and its advocates in order to avoid its moral and legal responsibility.”

Chevron has used the U.S. court verdict to cast doubt on the validity of paying the multibillion-dollar judgment in other countries, including Canada and Argentina. 

Outside the trial, the company has also accused the South American villagers and their representatives of dirty tricks. 

A Businessweek piece uncovered that some of the non-Ecuadorian protesters at the shareholders meeting in May had been paid $85 each by a Los Angeles-based production company to be there. MCSquared has denied involvement in hiring the fake activists.