Pugnacious Goldman Sachs Flack Goes Off the Attack

(Feb. 24) -- Along with its more obvious ramifications, the months-long run of negative publicity for Goldman Sachs has had a decided entertainment value. And for that, much of the credit goes to Lucas van Praag, the dapper and combative Goldman PR chief best known for his loquacious put-downs and seething disdain for the reporters who cover his company.

But over the past few days, as Goldman reorganizes its efforts to un-tarnish its brand -- and with the media having made van Praag himself part of the story -- he has studiously avoided opportunities to flaunt his intellect.

Van Praag declined to comment for a profile of himself in The New York Observer. He stayed mum when, late last week, the New York Post reported that Goldman had turned to Public Strategies, a PR firm that has a crisis "war room" specialty (and ties to the former Bush administration), to help it reposition itself. And he went conspicuously unquoted in the New York Times' devastating examination of how Goldman helped hide Greece's troubled debt deals as currency transactions and made no comment afterward.

Until recently, van Praag would have pounced on the opportunity to scold the Times for beginning its report with a description of a deal that never actually happened, which is what the paper did. Here, as an example of vintage van Praag, is what he said to the London Times when it reported -- wrongly -- that Goldman CEO Lloyd Blankfein would take a $100 million bonus this year: "There's speculation, and there is stupidity. This speculation transcends the simply stupid and takes it to an entirely new level."

This time, though, no such zingers were forthcoming. (Nor did van Praag wish to comment for this article.) Goldman spokeswoman Andrea Raphael told AOL News, "He'd rather not be the subject of stories." Asked whether van Praag was deliberately trying to tone down his act, she said, "I can't even answer that."

The subtext: Van Praag is removing himself from the spotlight, at least for now. As he withdraws into the shadows, so ends an interesting experiment in corporate image-shaping.

PR From a Different Playbook

When bad news strikes, the standard PR playbook calls for a swift, public apology by the CEO, followed by a promise of reform. You can see that strategy being used by Toyota over its recalls over accelerator problems, for instance. If corporate PR executives want to comment on a story in the normal course of business, they issue a canned, sterile statement consisting of a single sentence or two.

Not van Praag. After The New York Times reported that Goldman had demanded billions from AIG, threatening to drain it of cash before the insurer took tax money to stay afloat, van Praag went so far as to give an 846-word, line-by-line rebuttal in The Huffington Post.

There's a minority school of thought, led by Washington, D.C., crisis consultant Eric Dezenhall, that holds that in embracing such pugnacious tactics, van Praag has it right and everyone else is wrong. The best thing for a besieged company to do, Dezenhall argues, is fight, fight, fight, and disarm its enemies of as many weapons as possible.

"When your client is an archetypal cultural villain, you become disabused very quickly of the fantasy that there is a way to get people to like you through futile public relations stunts involving happy talk," Dezenhall says. "Mitigating attacks is the only reasonable goal. To do this, you need to include a concoction of strategies that [includes] establishing with your critics that you're going to hit back when you disagree with them."

MarketWatch's David Weidner took one of those punches when he suggested that Goldman had turned in impressive results in 2008 partly through "market manipulation." Van Praag exploded, saying, "Perhaps publishing online financial commentary means there is less editorial oversight. If so, there is a real danger that nonsense can get dressed up as reality when, in fact, it is nothing more than a chimera produced by a febrile mind."

And when The Wall Street Journal reported that bankers had started taking bets on when Blankfein would resign, van Praag said it was "preposterous" for the company to even consider publishing "such effluent."

It's van Praag's way of trying to keep reporters on their toes -- they know if they get the slightest detail wrong, he'll be all over them like a swarm of ants. Ants, that is, who happen to teach at Oxford (which van Praag does, as a visiting fellow).

It's telling that most people contacted for this story would comment only anonymously. Some are afraid of incurring his wrath, they said. A few -- like TheStreet.com's Dan Freed -- are collecting van Praag anecdotes of their own, just in case van Praag moves them to write their own profiles of him. "I'm saving the little I know for myself!" Freed says.

"Something 'of the Night' About Him"

It's hard to imagine van Praag enjoying taking a back seat as part of Goldman's new strategy. Most PR people are essentially messengers or order-takers for their CEOs or clients; van Praag, by contrast, has been a boss almost his entire working life. Before he came to Goldman, he was an investment banker, then the head of a manufacturing firm and, later, a publishing company.

At Goldman, he is a partner and managing director -- an exalted position that's unique for a PR executive in finance. When van Praag, who favors the type of tailored suits found on London's Savile Row, defends Goldman's bonuses, he's literally defending his own bottom line.

"He has total buy-in" from Blankfein, says one reporter who covers the bank. "That's why he can operate like this. Normally, the PRs are the last to know. I think Lucas is second to know."

In person, say reporters who've tangled with him, the 60-year-old van Praag is witty, charming and much more even-keeled than his media persona suggests. He litters his conversation with wisecracking asides, like a good radio-show panelist. In an article (or especially an excerpt from an article in a blog post), these one-liners make him sound flame-happy; face to face, he brings his listeners in on the joke.

He's "clubbable," as older Brits say about someone they'd introduce to their inner circle. "He's known for being arrogant, but it's superficial, and he's not that bad when you get to know him," says one reporter who has lunched with him.

But even when van Praag is pouring on the charm, he leaves some ill at ease. He's "completely charming, very old school," says one reporter. "But there's something 'of the night' about him." This reporter has van Praag's number stored in a cell phone under "Lucas van Dracula."

If van Praag believes a story is wrong -- or just bad for Goldman -- he will go beyond issuing an eviscerating sound bite and seek to actively undermine it and its author. He seems to regard facts the same way Goldman regards cash, as a fungible asset to be deployed selectively in exchanges that benefit the firm.

Greg Gordon, an investigative reporter for McClatchy Newspapers, published a series of stories on Goldman's sale of risky mortgage investments at the same time it was also hedging against them with credit default swaps. He says Goldman cooperated with the stories -- but once they were out, van Praag went ballistic.

"There is nothing to be taken away from the story other than the fact that [the] reporter fails to comprehend the subject matter," van Praag said. (Van Praag's official statement also said the articles contained "sensationalist fabrications.") "He accused me of committing a heinous journalistic crime," Gordon says. "So I had to chuckle. Lucas is at least now speaking to me."

Another reporter canceled a story about a merger that Goldman was advising on after van Praag denied the deal was taking place, only to see the same story emerge in a rival newspaper a week or two later. Upon confronting van Praag, the reporter was told Goldman's initial denial was "true at the time."

Even as he eases out of his pugilistic, press-baiting stance, van Praag isn't retiring from the practice of PR's dark arts. Recall that when the New York Post ran its long (by its standards) piece detailing Goldman's use of Public Strategies -- which posited that the move was a slap in the face for van Praag -- the spokesman himself was not heard from.

But he wasn't entirely silent on the matter. When a Wall Street Journal blog called for a follow-up piece, van Praag confirmed "that the investment bank had hired Public Strategies ... back in 2001." And with that he had his revenge, this time without showing his fangs.