"Laundering" PR Advice at $3 Billion California State Agency

The California stem cell agency has hired a prestigious New York City PR agency and, according to one watchdog group, has "laundered" its PR advice through lawyers in order to avoid public scrutiny.

The firm is Rubenstein Associates, whose founder, Howard Rubenstein (see photo from the firm) has been described as the "godfather of New York PR." The firm's clients include Super Bowl Champions New York Giants, the New York Yankees, Bloomberg LP and Pfizer.

The Foundation for Taxpayer and Consumers Rights disclosed on Thursday the $10,000 contract with CIRM's outside counsel. The FTCR said that some of the details of Rubenstein's work can be found in 54 pages of CIRM records that the FTCR secured as a result of a public records act request.

The group said,

"The stem cell agency used the tactic (of routing the contract through an attorney) to claim legal 'confidentiality' on public relations strategies...."

The watchdog group said,

"Eight of the 54 pages, which seem to be about specific advice on handling the news media, were redacted because they are 'documents exempt from disclosure on the grounds of attorney-client privilege and attorney work product,' according to Tamar Pachter, general counsel for the stem cell agency."

John M. Simpson, FTCR stem cell director, said,

"'What they've done is launder the public relations advice to a state agency through their outside attorney, Remcho, Johansen & Purcell. Once again the leadership of the California Institute for Regenerative Medicine has shown concern about image, rather than substance, and a continued commitment to secrecy."

Ellen Rose, a spokeswoman for CIRM, said,

"Rubinstein's advice was sought in relation to the news items that appeared in the Australian Herald-Sun about a researcher under investigation for improprieties who worked in the stem cell laboratory run by CIRM's incoming President Dr. Alan Trounson. There was no suggestion that Dr. Trounson was under investigation or involved in any wrongdoing.

"Rubenstein was hired because at the time, CIRM had no communications officer to provide advice and research on the Australian articles and related legal matters. They were hired via our outside attorney because the confidential investigation taking place in Australia may have had legal ramifications for CIRM and knowledge about what was taking place in this area was important for CIRM legal counsel to understand."

The initial, documented overture to Rubenstein came on Oct. 12 last year. However, Bob Klein, chairman of CIRM, has been quoted as saying the Australian investigation was known to CIRM as early as sometime in September or perhaps even August, long before CIRM's former communications director had left.

The practice of using attorneys to cloak certain matters is not entirely uncommon, at least with Rubenstein. Howard Rubenstein told the New York Times in 2006, in connection with celebrity scandals, that if they involve any sort of illegality, he advised "hiring a lawyer who could sit in on meetings, thus giving both star and publicist the benefit of attorney-client confidentiality."

However, this a matter involving a public agency, public dollars and public trust – not some troubled Hollywood personality. The amount is picayune compared to CIRM's overall spending; it gave out grants last year at a rate exceeding $20,000 an hour. But concealing relatively innocuous PR advice can only lead to speculation about what other, more important matters are being hidden because of CIRM's unnecessary desire for secrecy.

Also an issue for concern is the FTCR disclosure that CIRM is currently negotiating another PR contract with Rubenstein. Rose says, however, that it would be with CIRM directly. But given the dubious nature of the Remcho/Rubenstein arrangement, any further dealings with the New York firm would seem to require special scrutiny.

We have queried Rubenstein concerning their views on concealing PR advice to government agencies behind a legal veil. We will carry their comments when we receive them.

You can read reporter Steve Johnson's story in the San Jose Mercury News on the contract here.