Is a PR Crisis Brewing For Edelman in China?

Rui Chenggang has long been a golden boy of Chinese state TV – an interviewer of presidents and CEOs, as well as a patriotic crusader who campaigned to kick Starbucks out of the Forbidden City, Beijing's historical jewel. On the side, the star business news anchor owned a stake in a subsidiary of global PR firm Edelman from 2007 to 2010. Now Mr. Rui has been detained by Chinese prosecutors, and while authorities have kept silent about the reason, local media have highlighted his past link to Edelman, suggesting it was a conflict of interest while he was an anchor at state-owned CCTV network. Alan VanderMolen, global vice chairman of Daniel J. Edelman Inc., said the company had not been contacted by investigators, and that nobody at Edelman had been questioned, to the best of his knowledge. He also said Edelman had launched its own internal fact-finding effort after it learned of Mr. Rui's detention, and that it was taking the issue "very seriously." An empty anchor's chair The TV star was reportedly detained soon before his business show was to air Friday -- while his co-anchor went ahead with the broadcast, his microphone remained in place in front of his empty chair. It has been widely assumed that Mr. Rui was swept up in a vast anti-corruption campaign in China. Weeks ago, another top CCTV personality – the head of the network's financial channel, Guo Zhenxi – was detained in a bribery probe. Mr. Guo and Mr. Rui were reportedly close (and pictures of them together surfaced on social media), but it was unclear whether the cases were connected. Several less high-profile CCTV executives have also been detained. Fact-finding at Edelman In 2007, Edelman acquired a majority stake in a Chinese PR firm called Pegasus, in which Mr. Rui was one of three founding shareholders. After the transaction, Mr. Rui had a 7.92% share in Pegasus, Edelman said. The anchor was a mere investor who was "not in any way involved in the business," Mr. VanderMolen said. Mr. VanderMolen said the company had expected Mr. Rui to sell his shares immediately. But that didn't happen until 2010, when his shares were purchased by Steven Cao – the Pegasus co-founder who is currently the CEO of Edelman's holding company in China. Mr. Rui and Mr. Cao had been instructed to complete the share transfer "swiftly, and it took them a while to do that, longer than we would have liked – why it took them that amount of time I'm not sure," Mr. VanderMolen said. As soon as the PR company learned of Mr. Rui's detention, "we immediately started to ensure our compliance people were looking at gathering all facts relevant to what had happened historically with Pegasus, and also just looking at our operations to make sure we are completely compliant," Mr. VanderMolen said. Mr. Rui was a frequent attendee of the World Economic Forum in Davos, Switzerland, where he interviewed influential guests. Edelman noted that in 2009 and 2010, Pegasus managed corporate sponsorships for companies helping underwrite CCTV's presence at Davos. It did not name the sponsors. An anchor with attitude Mr. Rui's official biography on the CCTV web site said he has interviewed more than "300 worldwide chairpersons and CEOs of Fortune 500 companies, and more than 30 heads of state." His questions sometimes needled people. He once asked former U.S. Ambassador to China Gary Locke, "I hear you flew here coach. Is that a reminder that the U.S. owes China money?" Fluent in English, in 2005 Mr. Rui was a Yale World Fellow, in a global leadership program. He was also champion of nationalist issues: He wrote a 2007 blog post complaining about the Starbucks at Beijing's Forbidden City, the former imperial palace. It touched off a bigger protest, and the U.S. coffee company pulled out.

Is a PR Crisis Brewing For Edelman in China?

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