Leading P.R. firm caught in fray between Swiss, Jewish clients

NEW YORK — A prominent public relations firm is at the center of an international imbroglio because of the competing interests of two of its now-former clients — the Swiss government and the Jewish Agency for Israel.

The controversy involving the New York-based Ruder Finn comes as a slew of parties are attempting to negotiate settlements with Swiss authorities amid revelations of their financial dealings during and after World War II.

One of those parties is the World Jewish Restitution Organization, of which the Jewish Agency is a charter member and its head, Avraham Burg, a co-chairman.

When Ruder Finn's Jerusalem office distributed a news release on behalf of the Jewish Agency late last month saying that Burg promised to expedite class-action suits against Swiss banks in his capacity as WJRO co-chairman, the Swiss government fired the firm, which had represented the Swiss for about a year.

And as soon as the Swiss dumped Ruder Finn, the firm turned around and dropped the Jewish Agency from its client roster.

Now Burg is preparing to sue Ruder Finn for what he has called "the abandonment of a client and a breach of trust."

In many ways, the flap reflects the Swiss sensitivity to the recent bruising the country's public image has taken amid revelations about its Holocaust-era financial dealings.

For more than a year, Switzerland has been accused of hoarding the wealth of Holocaust victims in dormant bank accounts as well as bankrolling the Nazi war effort.

But the controversy also raises questions about a public relations company's desire to restore what had been a lucrative client at the expense of one with less financial promise.

The case is particularly striking because Ruder Finn — founded by two Jews who became friends in Hebrew school — represents some high-profile Jewish clients, including the United Jewish Appeal.

According to Peter Finn, chairman of the P.R. agency's executive committee and son of one of the founders, severing ties with the Jewish Agency "was really a matter of principle."

Putting out a news release against the Swiss "was not what we were hired to do," he said, adding that an unsupervised staffer in his Jerusalem office had made an "innocent mistake" by issuing the release in question.

"Whether or not we're working for the Swiss government, we have been working long and hard to improve communications between the Swiss and the Jewish world."

Finn's father, David — the firm's chief executive officer — said that while he supported, and was aware of, the efforts of Burg and others to work out financial settlements with the Swiss, he believed that Burg had crossed a line when he threatened to get involved in lawsuits against Swiss banks.

For its part, the Jewish Agency says that before it hired Ruder Finn, it had made clear to Ruder Finn's representatives in Jerusalem that they could not simultaneously work for the Swiss government.

"They said the relationship with the Swiss was over and it was now OK to work with us. Only on that basis were we willing to hire them," said Jewish Agency spokeswoman Sharon Gefen.

But Ruder Finn officials here said that its Jerusalem office was aware of its activities with the Swiss.

Ruder Finn worked for the Swiss government during 1997 for a monthly retainer of $30,000, according to Peter Finn.

But there had been a hiatus in the relationship during the first three months of 1998 while the Swiss government considered whether or not to renew the contract, according to a source in the Swiss Embassy in Washington.

There was disagreement among the Swiss about how effective Ruder Finn was in the court of American public opinion, the source said.

As a result, much of the money and work that had gone to Ruder Finn was diverted to the lobbying firm that represents their interests in Washington, Barbour Griffith & Rogers.

Ruder Finn began working for the Jewish Agency in February. Although a formal contract was still in the works, a monthly fee of $5,000 was agreed upon, said sources on both sides.

The Jewish Agency, funded by money raised in the diaspora, works primarily to facilitate the immigration and resettlement in Israel of Jews from around the world.

Unbeknownst to the Jewish Agency, according to agency sources, Ruder Finn renewed its business relationship with the Swiss government on April 1, though this time at the reduced rate of $5,000 per month.

Shortly after the P.R. firm's Jerusalem office distributed the news release in which Burg promised to file class action suits against Swiss banks, the Swiss fired Ruder Finn.

"This appearance of having them work on both sides of the line was damaging for us and for them," said Caroline Heimo, director of communications for the Swiss Embassy in Washington, explaining the Swiss decision.

Ruder Finn responded by severing relations with the Jewish Agency.

"The World Jewish Restitution Organization was never our client and we should not have been asked to send out that release," David Finn said in a May 8 statement.

Gefen of the Jewish Agency contends that no subjects were declared "out of bounds" in its agreement with Ruder Finn, and that being dropped by the P.R. firm came as a shock.

Ruder Finn's principals are clearly eager to restore their relationship with the Swiss government.

"I am personally confident that when the Swiss really examine the facts I hope they will resume their work with us," David Finn said in a telephone interview.

"We would not take Switzerland as a client if we felt they weren't trying to reach an honorable settlement," he said. "We think we're in the right position to be helpful, and that's where our efforts have been."

David Finn founded the firm with Hebrew school chum Bill Ruder in 1948, the year the state of Israel was born. The firm has long worked on behalf of both Jewish and Israeli interests, Finn is quick to point out.

During the Six-Day War in 1967, Ruder Finn devoted its entire New York office staff, pro bono, to work on behalf of the Israeli government, he said.

Since then, Finn has served on the boards of many Jewish groups. In addition to having represented UJA, the firm also does work for Hadassah as well as dozens of Israeli high-tech groups.

"I've devoted my life to Jewish causes," said David Finn, clearly stung by the controversy. "No one who knows me would think I'd do anything against the interests of the Jewish people in any way."