Celebrities make millions lending their names to enterprises they rarely visit in industries they know little about. When problems arise, their success in damage control can determine the lasting value of their celebrity, the prime commodity they have to sell.
Characteristically, Mrs. Gifford's approach is to take the lemon that has been lobbed at her and try to make lemonade. Her first instinct was to discontinue her clothing line, but at the urging of Gov. George E. Pataki of New York and United States Labor Secretary Robert B. Reich, she instead lent her name to the fight against sweatshops.
"My first reaction was I don't need this," she said. "But they told me that I had a unique opportunity to make a difference by using what happened to me to stop the horrible practices of some of these manufacturers."
Though Mrs. Gifford is engaging the moral issues involved in sweatshop labor, few people beyond the politicians are applauding her crusade. And what are moralists to make of the fact that workers from the Honduran factory have criticized Mrs. Gifford because Wal-Mart canceled its contract and put them out of work?
Meanwhile, her pleas to other celebrities to join a rally in Washington this summer against illegal labor practices have fallen on deaf ears. "They're saying, 'It says in my contract that this can't happen to me,' " Mrs. Gifford said. "Well, it says the same thing in my contract, too, and that didn't protect me."
She did not name names. But it is clear that other celebrities judge Mrs. Gifford's strategy of confronting the sweatshop issue head-on as ill considered. Jaclyn Smith, the television actress, has denied that any of her clothing products, which are sold in Kmart stores, are made in sweatshops.
And Michael Jordan, the Chicago Bulls basketball star, brushes off charges by labor activists that Nike's line of Air Jordan athletic shoes are made under appalling conditions in Indonesian factories.
"I don't know the complete situation," Mr. Jordan told The Associated Press. "Why should I? I'm trying to do my job. Hopefully, Nike will do the right thing."
Mr. Jordan's point, it seemed, was that the public has no business asking celebrity endorsers the questions Mrs. Gifford has been facing lately, questions with disconcerting echoes of, say, the Senate Watergate hearings: What did she know? And when did she know it?
Mr. Kernaghan is determined to ask the questions, though -- and loudly. Operating on a $250,000 budget financed in part by labor unions, he has mounted a one-man crusade against third world sweatshops.
Shortly after he effectively charged Mrs. Gifford with exploiting children in the pursuit of profit, news broke of a factory in New York's garment district where workers making blouses for the Kathie Lee Gifford line had not been paid. Mrs. Gifford dissolved into tears on her talk show, while her husband, Frank, the former football player and broadcaster, hurried to the factory, Seo Fashions, and doled out three $100 bills to each of the workers.
At the same time, Robert W. Adler, president and chief executive of Halmode Apparel Inc., the Kellwood Company unit that holds the license to use her name on clothing, was poring over Wal-Mart's contract for the blouses. Under the terms of its agreement with Mrs. Gifford and Halmode, Wal-Mart must specify which companies are making clothes that will bear her name.
"The contract for those blouses said the goods were supposed to be manufactured by a company in New York called Bonewco, which would subcontract some of the work to a manufacturer in Alabama," Mr. Adler said.
What it did not say was that the Alabama company then "sub-subcontracted" part of the order to New Jersey-based Universal Apparel, which in turn sub-sub-subcontracted to Seo -- both typical transactions in the garment business.
"Nobody expected the huge demand there was for my line," Mrs. Gifford said. "Sales tripled Wal-Mart's expectations, and suddenly it was like 'Uh-oh, we need to get 50,000 more blouses and fast.' I think that's part of how this came about. Maybe we just grew too fast."
Not that she was complaining. Last year, she made roughly $5 million from her deal with Wal-Mart, 25 times more than her earnings in licensing fees from a previous endorsement. And $1 million of that went to children's charities, including one of her pet causes, a shelter called Cassidy's Place for infants born with H.I.V.
"It was just kismet," she says. "I would have consistent funding that would allow me to cut back tremendously on my travel and spend more time with my kids."
But kismet is not Camelot, nor was Wal-Mart. When Mrs. Gifford signed the deal, Wal-Mart already had a reputation for paying scant attention to the intricacies of product development.
The problems arose publicly in 1992 when, despite its pledge to buy most of its products from American manufacturers, the company came under fire for selling products made by children in unsafe factories abroad. A report on "Dateline NBC" depicted youngsters in Bangladesh sewing Wal-Mart labels into clothing, followed by footage of a reporter and camera crew being shoved out of an interview with Wal-Mart's chief executive, David D. Glass. And before the "Dateline NBC" report, Chinese human-rights activists had accused Wal-Mart of selling products made in Chinese prisons.
Mrs. Gifford said she only recently learned of the NBC report, and she rejected criticism that anyone involved in selling $10 blouses should know that the only way to make money on them is by shaving production costs to the bone.
"My first endorsement was for Kraft when I was 17, and I didn't think I had to go check out the cows," she said. "Later I worked as a spokesperson for Coca-Cola. Was I supposed to insist on knowing the secret formula? Nobody does it that way, and if they tell you they do, I think they're fudging."
Indeed, given the prevalence of subcontracting in the garment industry, monitoring work and pay standards in the thousands of factories around the globe that make clothing for American stores would be an all-but-impossible task.
American companies imported about $6.7 billion of apparel in 1995, according to the Census Bureau, much of it from developing countries in Latin America and the Pacific Rim.
Additionally, standards differ from country to country. The American minimum wage would be considered a princely sum in Malaysia, for example. In fact, some experts say Western campaigns against low-wage factories overseas mostly benefit the American labor movement and do more harm than good in poor countries by draining off scarce jobs and choking off investment.
Mrs. Gifford noted that it is legal for 14-year-olds to work in Honduras, where the minimum wage is 31 cents an hour. And a World Bank report released this month concluded that more than one-fifth of the world's population lives on less than $1 a day. "I can and will fight to change things here, but I can't change laws in other countries," she said.
Traditionally, manufacturers and retailers, not celebrities, have been the target of labor activists.
The Gap, Lands' End and several other major retailers became more vigilant about conditions in the factories that produce apparel for them after the Labor Department began a campaign three years ago to weed out sweatshops in the United States and discourage child labor abroad. The department has scheduled hearings tomorrow on the child-labor issue.
Among the labels Mr. Kernaghan picked up at the Honduran factory were J. Crew, Eddie Bauer and Warner's. But the name he emphasized in his Congressional testimony was Kathie Lee, whose celebrity guaranteed instant public recognition. Mr. Adler, whose company produces the Kathy Lee line, said that it has had occasional problems with the Labor Department over the years but had always settled them "and gone on without a word in the press -- no television, no nothing." But, he adds, "This is Kathie Lee, and suddenly everyone turns out to take a shot."
Next month, Mrs. Gifford will star in a "fashion summit" in Washington, and she figures that much of the time that she had hoped to spend with her children Cody and Cassidy will be eaten up by meetings with labor activists and politicians.
"I was looking forward to this wonderful, empty summer with my kids and Frank," she said. "Now, I'm going to be in D.C. at hearings."