So, When DO You Disclose An Extortion Threat?

    New Zealand recently experienced the kind of nightmare scenario dreaded by crisis and security managers everywhere. Do you announce a criminal threat against your product? Or will that simply give publicity to dangerous people? The New Zealand Government held a press conference to announce that an anonymous villain had threatened to contaminate baby formula with 1080 poison unless the authorities stopped using the controversial pesticide to control feral possums.

    The announcement followed suspension of trading in the shares of four local dairy producers, and the NZ dollar fell 8%. Most crucially, the Government admitted the threatening letter had been received four months earlier.

    Prime Minister John Key labelled the perpetrator an ‘eco-terrorist’ and declared the threat likely a hoax, while police called it “criminal blackmail.” But the incident highlights one of the most difficult questions that can be asked in any crisis: “When did you first know about this?” It’s the perfect ‘no win’ proposition. If you say you’ve known about it for a while, the obvious challenge is “Then, why didn’t you do something sooner?” If you say you’ve only just found out, the challenge is “Why didn’t you know in time?”

    So why didn’t the government announce the threat earlier? The official answer is that they were working hard to check product and to develop a reliable test. Why did the announcement come when it did? Prime Minister Key called the timing “just about right,” yet the reality is it had been planned for a week later, and was brought forward only when the media got wind of the story.

    Was it really good timing, as the Prime Minister claimed? Local crisis expert Chris Galloway at Massey University told National Business Review the government was right to go public with the poison threat. He said there is no suggestion the public should be informed every time an extortion threat becomes known to authorities, but added that what made this threat different was a history of high profile crises involving dairy products, most recently the botulism scare in 2013, which turned out to be a very costly and badly handled false alarm.

    By contrast, Chris Claridge, CEO of NZ infant formula company Carrickmore, called the Government’s response unusual and not best practice. He said such threats were “fairly standard” for international food companies, and that the public should not be alerted where no actual contamination has occurred. “What we see internationally,” he said, “is generally they don’t carry out the threats, which are a mechanism to gain publicity.” However, New Zealand’s leading campaigner against 1080 poison, Clyde Graf, totally rejected such fringe tactics. The threat was not a reflection of people opposition to 1080 in New Zealand, he said, but seemed to be a “random nutter.”

    So what is the right answer about disclosing extortion threats? Unfortunately there isn’t one. Chris Galloway argues that you need to bring the public in as a legitimate partner in risk communication. That when people have the right information, rather than panic, they will most often act rationally. It’s a good theory, but when the threat is to a sensitive product like baby formula, rational thinking doesn’t necessarily win the day.

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    Tony Jaques
    Tony Jacques is an Issue Management and Crisis Management Specialist and author with extensive international corporate experience, particularly in Asia Pacific. Tony writes Australia’s only issue and crisis newsletter, Managing Outcomes, and is author of the book Issue and Crisis Management: Exploring Issues, Crises, Risk and Reputation (Oxford University Press, Melbourne).