It took Declan Kelly and Doug Band just a decade to build Teneo into what they could call, with only a little of the PR men's trademark topspin, "the world's pre-eminent CEO advisory firm".
With unmatched political and corporate connections, they were trusted to protect the reputations of some of the world’s most powerful chief executives. The fees they managed to charge – as much as $1 million (€840,000) per month – left rivals slack-jawed with envy.
Yet it has taken just six months for Teneo to hit two reputational crises of its own, costing both co-founders their jobs and casting doubt over the future of an expansionist 1,250-person consultancy into which private equity firm CVC has poured $450 million.
First to quit was Band, a former aide to Bill Clinton, who helped launch the Clinton Global Initiative, a series of annual meetings at which politicians and business leaders gathered to pledge action on global challenges.
In December he gave an interview to Vanity Fair describing his bitter break-up with the Clintons. Having watched him lean heavily on his Clinton ties to build Teneo, friends and former acquaintances saw the interview as extraordinarily reckless for a man paid to advise others on controlling their message.
By Tuesday morning this week, Kelly was gone too, resigning five days after the Financial Times published allegations that the 53-year-old had drunkenly touched several women at a fundraising party without their consent.
Global Citizen, the charity with which Kelly’s business interests became intertwined, had already ousted him from its board within hours of the May 2nd event.
Three people aware of the matter say Kelly is alleged to have inappropriately touched six women there and say his conduct prompted at least one complaint. Kelly and Global Citizen would not confirm the details, and the charity’s investigation has yet to conclude.
Highlighting the blurred worlds of philanthropy and elite business, the Global Citizen board is led by Christopher Stadler, the CVC executive responsible for its investment in Teneo.
A third Teneo co-founder, chief operating officer Paul Keary, took over as chair and chief executive on Tuesday, but he has never had Band's political ties or Kelly's talent for wooing A-list CEOs. With its best-connected and most silver-tongued founders gone, employees, clients and rivals have been left unsure what will happen to Teneo now.
For Kelly, who had done more than any of them to build the firm, it was a sudden and stunning fall. And it happened on the very day Teneo was supposed to be celebrating its 10th anniversary.
Wall Street to Tipp
The news of Kelly's resignation echoed from Wall Street to Tipperary, where he grew up in modest circumstances in the village of Portroe. His brother, Alan Kelly, is leader of the Labour party and a former cabinet minister.
Kelly’s Irish roots gave him a valuable network when he landed in New York with Financial Dynamics, a corporate consultancy to which he had sold his own PR firm in 2000.
By 2008, he had become the youngest person to receive the American Irish Historical Society's gold medal, usually reserved for those who have made unique contributions to Irish-American society. A year later, then secretary of state Hillary Clinton appointed him the US economic envoy to Northern Ireland.
The connections he and Band had to the Clintons were an even bigger draw in 2011, when they established Teneo, Latin for “I hold” or “I possess”.
The Clinton Global Initiative was in full swing that year, drawing the likes of Queen Rania of Jordan and Barack Obama to its annual meeting in midtown Manhattan alongside the CEOs who networked, struck deals and made high-minded pledges. Kelly and Band set up an office two doors down from Clinton's at the Sheraton Hotel, pitching Teneo's services to the assembled executives.
Band had left the Clinton Foundation in 2010 and Teneo immediately named Clinton a senior adviser, lining up speaking fees that added up to seven figures. But the former president had no share of Teneo's growing profits, which became one of several sources of friction between Band and the Clinton camp, people familiar with all three men say.
Emails revealed via WikiLeaks showed Chelsea Clinton, the former first daughter, was soon complaining about Teneo “hustling” for business at CGI’s not-for-profit events.
Its founders disputed that notion, but the young firm was soon identified as an efficient conduit for chief executives angling for a spot on the CGI stage, where they could discuss favourite topics such as their efforts to operate more sustainably, create jobs and advance women’s prospects.
Band defended himself in a memo to the Clinton Foundation in November 2011, writing: “I have sought to leverage my activities, including my partner role at Teneo, to support and raise funds for the Foundation.”
Clients stepped up
Teneo's clients such as Allstate, Barclays Capital and BHP Billiton had stepped up their giving, he said. And it had "created and secured" paid speeches by the ex-president to UBS, Ericsson and others.
The founders signed up Tony Blair as an adviser, giving them an ability to open doors on both sides of the Atlantic that no rival PR firm could match.
Teneo's first public event featured Blair, Clinton and his successor George W Bush on stage with Andrew Liveris, then chief executive of Dow Chemical, who would become an important source of fees for Teneo and later a special adviser.
The marriage of Band’s political connections and Kelly’s corporate communications experience was so successful that Teneo became known as a lucrative retirement home for former politicians and CEOs wondering what to do after losing power.
In Washington it can call on retired general Ray Odierno and former members of Congress such as George Mitchell and Paul Ryan. Lord William Hague, the former foreign secretary, and Amber Rudd, the one-time home secretary, are on its UK payroll.
With the Clinton relationship – and the Clintons' own power – waning, Teneo pivoted to the Trump administration, hiring former adviser Jason Miller, who later resigned after sending abusive Twitter messages about a politician.
Teneo tapped Kelly's Irish connections, bringing on board rugby star Brian O'Driscoll. . And in Canada, former prime minister Brian Mulroney can contact prospective clients on its behalf.
Among the former CEOs used to pitch Teneo to their peers are Ginni Rometty, who left IBM last year, and Ursula Burns, the former Xerox chief. Another senior adviser is Gabrielle Sulzberger, whose various board roles include being treasurer of Time's Up, a foundation that campaigns against sexual harassment and discrimination.
Between them, they have helped attract clients including Boeing, Coca-Cola, GE, the London Stock Exchange, Starbucks and Tesco. Teneo's basic fee can stretch to $250,000-$1 million per month, even before any premium for handling a crisis or a deal, according to several people familiar with the matter who say this is markedly above what rivals charge.
Saudi Arabia paid Teneo almost $2.5 million over two years for advice on the rollout of “Neom”, a futuristic desert city, according to US lobbying disclosures.
Consultants who competed with Kelly for clients, and chief communications officers who saw the process play out inside their companies, said the pitch was simple. He or his big-name advisers would approach a CEO and tell them that they were getting bad advice from their in-house and external teams.
“I’ve been part of the three-way marriage between him and a CEO and I know he has charm in spades,” one communications chief said of Kelly. “He tends to woo and entrance new CEOs in particular, who are unsure of their position and don’t know whether they can trust their own people.”
Lengths
The lengths to which Kelly and his team could go to in an effort to aid CEOs in high-pressure moments were set out in a Delaware trial that concluded last year.
The case stemmed from Anthem's $54 billion bid for rival health insurer Cigna, which was announced in 2015 but blocked on antitrust grounds in 2017, leaving Anthem facing a possible $1.85 billion termination fee.
As both sides went to court accusing the other of breaching their agreement, it turned out that all was not as it seemed. The Delaware judge, Travis Laster, found that Cigna's management, its law firm and Teneo had conducted a "covert communications campaign" to sabotage the deal after the insurer became upset that its CEO would be sidelined at the merged company.
Laster concluded that Teneo was “skilled in the darker arts of influencing the media and public discourse”.
A Teneo executive, Stephen Cohen, had developed a "leak strategy" where Cigna would officially remain positive on the deal while feeding reporters the opposite message using leaked documents, the court filings said.
Teneo also went hunting for a back issue of Cigar Aficionado magazine whose cover featured Anthem CEO Joseph Swedish smoking. Cigna and Teneo believed that sharing the picture would “hurt his credibility as a healthcare CEO”, Laster wrote.
Kelly was in repeated contact with Cigna's chief David Cordani throughout the assignment, the court record says.
When Anthem later tried to ingratiate itself with the new Trump administration to get the deal approved, Kelly “instructed Cohen to work with contacts at a lobbying firm to ‘kill this immediately’,” according to Cohen’s testimony, quoted in the judge’s ruling.
A shareholder lawsuit has since accused Teneo of “aiding and abetting” a breach of fiduciary duty by Cigna, describing the firm as “black ops style consultants” hired to “derail the deal”. Teneo plans to contest the claims.
In another incident, US oil group Occidental Petroleum took legal action against Teneo for switching sides during a $50 billion-plus takeover battle, the FT revealed in June 2019.
Teneo had been advising Occidental on its efforts to buy rival Anadarko but was accused of dropping its client to work for Chevron after the larger US oil group entered the bidding war.
Occidental, which ultimately fended off Chevron, resolved the matter through private arbitration without revealing the terms of a settlement with Teneo, according to people with knowledge of the incident.
Sharp elbows
Band and Kelly supplied sharp elbows, powerful networks and ample charm, which made them rich. In 2019, Kelly and his wife were able to buy an East Hampton property that cost them $19 million.
But Teneo’s growth was also fuelled by private equity and plenty of debt. In late 2014, BC Partners invested an undisclosed amount. It sold out in 2019 to CVC Capital Partners, which paid $350 million for a majority stake valuing the firm at $700 million.
Yet, even as CVC was negotiating the investment, some partners who were concerned that Teneo could damage the private equity firm’s reputation were handed fresh ammunition.
In 2019, a leaked email showed the then head of Teneo’s UK operation reprimanding staff for behaving like “a bunch of clubbing teens”.
“Over the last few weeks, we have had: Someone get drunk and throw up over the carpet (they’ve apologised, but still); Someone – I can’t put this any less bluntly – poo in the shower; Someone mess their underwear and leave it for the cleaner,” Gordon Tempest-Hay told employees, according to Guido Fawkes, the UK politics blog.
CVC's deal team led by Stadler and Daniel Brand, its US financial services head, did not secure unanimous backing for the investment but ultimately convinced enough partners to press ahead.
The wider PR industry has been booming since Teneo opened its doors, but with CVC’s deep pockets behind them, Kelly and Band could expand faster than their peers through acquisitions.
They snapped up smaller PR firms such as London’s Blue Rubicon and StockWell, and announced an investment this March in WestExec, the geopolitical risk consultancy co-founded by Michèle Flournoy, a former senior Pentagon official.
This year, CVC put in another $100m to help Teneo acquire Deloitte’s UK restructuring business, a $279 million deal that will bring Teneo’s revenues close to $400 million and leave its debt at more than six times its earnings before interest, tax, depreciation and amortisation, according to Moody’s.
But the completed deals reveal only part of Teneo's ambition. According to two people familiar with the matter, it broached a potential deal with US management consultancy Kearney, before being rebuffed. Others say it also approached Hakluyt, the strategic adviser founded by former UK intelligence officers, and has twice pursued an acquisition of Sard Verbinnen, the New York financial communications firm, also to no avail.
Teneo completed the Deloitte deal on June 1st, more than four weeks after Kelly's drunken concert appearance. But it kept the details of his behaviour to such a tight circle that Deloitte staff, like most of the Teneo employees they were about to join, had no idea of what was to come until they read the FT's reporting.
Coattails
Teneo may have launched on the coattails of the Clinton Global Initiative, but those events ended as they faced critical scrutiny during Hillary Clinton’s unsuccessful 2016 presidential campaign. Kelly soon found an even more attractive stage for his clients.
Global Citizen, which aims to enlist ordinary people in efforts to end extreme poverty by 2030, stages high-profile concerts that mix the worlds of music, activism and business.
Brands including Johnson & Johnson and Procter & Gamble signed up to support one event in 2019, for example, at which fans could see Usher or Janelle Monáe for free if they signed petitions, called politicians or took other actions to promote the UN’s global sustainability goals.
If the Clinton Global Initiative was an earnest talking shop, up there with the World Economic Forum’s annual meeting in Davos or the Aspen Ideas Festival, Global Citizen’s concerts were earnest and fun.
The CEOs on Teneo’s roster gained access to the celebrities on Global Citizen’s stages and a chance to show their socially responsible sides to the young, idealistic audiences it drew. Kelly himself gained a prominent platform, generating flattering coverage for his firm. And Global Citizen, in turn, was given access to the resources of the executives in his contacts book.
In an email to one client before last April’s “Together at Home” fundraiser, for example, Teneo suggested that the occasion “provides an opportunity for you and your company to show support for the global Covid-19 response”. Ways to do so, it said, included in-kind donations, advertising support or a $500,000 payment towards the event’s production costs.
On May 2nd, the logos of Cisco, Citigroup, Delta Air Lines and Teneo itself provided the backdrop to the celebrity red carpet for another Global Citizen event in Inglewood, California. "Vax Live" was billed as "a concert to reunite the world", and featured a shirt-sleeved Prince Harry hailing medical workers' sacrifices during the pandemic.
Selena Gomez presented, Jennifer Lopez performed and Joe Biden and Kamala Harris sent video messages. And at an exclusive party offstage, "Kelly became inebriated and behaved inappropriately towards some women and men at the event", as a spokesperson for him put it this week.
‘Messy’
Recollections of behaviour several people around Kelly described as “messy” differ. Some people close to Global Citizen do not recognise Teneo’s reference to Kelly behaving inappropriately towards men. In their recollection, the only men who were offended were upset at seeing him touching women.
At least one employee reported to Global Citizen that Kelly had touched inappropriately a woman who works for the charity, a person familiar with the situation said. One person added that Kelly had touched a celebrity speaker without her consent. The celebrity did not comment when contacted by the FT.
His conduct shocked enough attendees for Global Citizen to act quickly. The charity met the day after the concert and removed Kelly from its board. It launched an internal review into what had happened and hired a law firm to conduct an outside investigation.
Global Citizen did not wait for that probe to conclude to cut its ties to Teneo. It marks a bitter end to a partnership between Kelly and Hugh Evans, the charity's CEO, which the Sunday Times once likened to that between Bob Geldof and Midge Ure, the stars who launched the Live Aid fundraising concerts in 1985.
CVC’s Stadler may have straddled Global Citizen and Teneo but he did not force Kelly out from the PR firm. Stadler, who denied claims in a 2016 lawsuit that he had groped employees at the private equity firm, declined to comment.
Once the FT had published details of Kelly's drunken behaviour last Thursday, however, it soon became clear that the fallout could go well beyond his relationship with Global Citizen. By the next day, General Motors had dropped the firm.
As other clients called Teneo to find out what was going on – and why they were only learning about it from the press – the fear of further losses sent the firm’s crisis communications experts into overdrive.
Kelly had had one terrible night, they told callers, but had apologised to everybody he offended and signed up for treatment to help him commit to sobriety. Teneo could not have told clients sooner, they added, because most of its own people had known nothing until the FT report broke.
Several close colleagues said that they had never seen any indication that their boss had a problem with alcohol. “I didn’t know and I feel I would have known,” said a person close to him.
Eamonn Coghlan, the former Irish senator best known for his Olympic athletics career, told the FT he had not discussed the matter with any of his fellow Teneo advisers. But he had known Kelly for "about 15 to 20 years", and had "never, ever" witnessed or heard of him hurting anyone.
“I’ve seen many athletes and others ‘locked out of their minds’, as we say in Ireland,” said the former world record holder in the indoor mile: “He’s made a bit of a show of himself, but he did not kill anybody. He did not rape anybody. It was a venial sin, rather than a mortal sin.”
Bad occurrence
Burns, the former Xerox CEO, similarly told the New York Times: “This is a friend of mine who definitely had a bad occurrence – and he has to deal with that, and he’s dealing with that as we go forward.” In April, Burns set up a new private equity business with Kelly and two other partners called Integrum.
PR is a people business, raising the risk for any investor that its assets will decide to defect to a competitor or set up their own firms. But, even hours before he quit, Kelly’s closest colleagues hoped that he and his firm could weather the storm.
“Clients have been, almost to the client, extremely supportive. Not because Declan’s a striking, handsome, articulate guy: they’ve been supportive because this firm does good work,” said one senior adviser, who called the media interest “salacious” and “not reasonable”.
Kelly did not resign until Monday evening, as outlets including the New York Post’s gossipy Page Six column bombarded Teneo with questions and allegations.
“We were being told that he’s going to take time off to deal with his [drinking] issue, and then come back on after Labor Day, and then all of that changed in the last 12 hours,” said a senior managing director at Teneo on Tuesday morning.
As Kelly quit, saying he was taking responsibility for “an inadvertent, public and embarrassing mistake” but complaining of “a campaign against the reputation of our firm”, one UK client said simply: “It’s the right outcome.”
A man who had risen by generating positive coverage and playing to CEOs’ anxieties about bad press sinking their careers had been brought down by headlines he could not control. PR professionals, like journalists, are taught that “you never want to be the story”, one rival observed.
The attention Kelly and Band drew meant that Teneo was intimately identified from the start with its two most recognisable leaders. Without them, clients’ willingness to pay the premium fees is at risk, according to insiders at the firm and bankers and lawyers who deal with Teneo regularly.
In his parting statement, Kelly himself predicted: “Teneo will remain the best in the world at what it does, a firm whose success has been driven by three virtues – hard work, decency and compassion.”
But one senior managing director said his exit was “sort of a litmus test as to whether the brand is bigger than the man. We are confident we can pull it off. But if we have three, four, five or six, high-profile client defections in the coming weeks or months, the mood will change dramatically.”
A top Wall Street banker who worked with and against Kelly said that the chances of Teneo thriving without its polarising leader were slim. “He was the firm, in many ways. He was the energy behind it. He was very aggressive. Some didn’t like that. But he was effective and CEOs wanted him, not others.”
Positive gloss
Within hours of Kelly’s exit becoming public, those people he had hired or acquired were publicly trying to put the most positive gloss on the situation. Some told reporters that Kelly no longer brought in anything like the 40 per cent of revenues he accounted for before CVC bought in; others contacted clients with reassuring messages about its “deep bench” of experienced advisers.
But privately Kelly continued to divide even his own staff. Some who spoke to the FT remained sympathetic. But three senior people said there was feverish infighting among insiders angered by his failure to be more upfront.
Kelly had told some top executives in early May that he was ceding some responsibilities to deal with unspecified health problems. Only a handful had known the real reason.
“He had a stable of experts who could have dealt with this in a more effective way; instead he opted for a cover-up,” said one executive.
“It was an unrecoverable mistake to keep his top lieutenants in the dark,” echoed another.
Their mood mixed a sense of betrayal and fear for what might come next, with several senior figures questioning the firm’s future without Kelly and Band.
“Paul is an operations guy, he doesn’t have the Rolodex, it’s just a fact,” said a third insider, speaking like his colleagues on condition of anonymity because this was one matter they were not authorised to discuss with the press.
Even as he advised clients on how best to burnish their reputations, Kelly sometimes seemed his own best client. He has maintained a personal website that describes his honours and charitable work and links to flattering headlines such as: “US Irish businessman vows to eradicate global poverty in $350 billion plan.”
Some of his reputation management skills were still in evidence on Tuesday. Kelly’s own website had changed the tenses on his biography to describe him as Teneo’s former CEO. But there was a hint of a hoped-for second act in the following line, still written in the present tense: “Declan is a trusted adviser to many of the world’s leading CEOs and corporations.”
On Teneo’s site, meanwhile, the biography page that once touted his accomplishments just returned the terse message: “Not found”. – Copyright The Financial Times Limited 2021
