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LONDON—Over the past 24 hours, seven people have checked into hospitals here with telltale symptoms. Rashes, vomiting, high temperature, and cramps: the classic signs of smallpox. Once thought wiped out, the disease is back and threatening a pandemic of epic proportions.

The government faces a dilemma: It needs people to stay home, but if the news breaks, mass panic might ensue as people flee the city, carrying the virus with them.

A shadowy media firm steps in to help orchestrate a sophisticated campaign of mass deception. Rather than alert the public to the smallpox threat, the company sets up a high-tech “ops center” to convince the public that an accident at a chemical plant threatens London. As the fictitious toxic cloud approaches the city, TV news outlets are provided graphic visuals charting the path of the invisible toxins. Londoners stay indoors, glued to the telly, convinced that even a short walk into the streets could be fatal.

This scenario may sound like a rejected plot twist from a mediocre Bond flick, but one company is dead set on making this fantasy come to life.

Strategic Communication Laboratories, a small U.K. firm specializing in “influence operations” made a very public debut this week with a glitzy exhibit occupying prime real estate at Defense Systems & Equipment International, or DSEi, the United Kingdom’s largest showcase for military technology. The main attraction was a full-scale mock-up of its ops center, running simulations ranging from natural disasters to political coups.

Just to the right of the ops center, a dark-suited man with a wireless microphone paces like a carnival barker, narrating the scenarios. Above him a screen flashes among scenes of disaster, while to his right, behind thick glass, workers sit attentively before banks of computer screens, busily scrolling through data. The play actors pause only to look up at a big board that flashes ominously between “hot spots” like North Korea and Congo.

While Londoners fret over fictitious toxins, the government works to contain the smallpox outbreak. The final result, according to SCL’s calculations, is that only thousands perish, rather than the 10 million originally projected. Another success.

Of course, the idea of deluding an entire city seems, well, a bit like propaganda.

“If your definition of propaganda is framing communications to do something that’s going to save lives, that’s fine,” says Mark Broughton, SCL’s public affairs director. “That’s not a word I would use for that.”

Then again, it’s hard to know exactly what else to call it. (Company literature describes SCL’s niche specialties as “psychological warfare,” “public diplomacy,” and “influence operations.”) The smallpox scenario plays out in excruciating detail how reporters would be tapped to receive disinformation, with TV and radio stations dedicated to around-the-clock coverage. Even the eventual disclosure is carefully scripted.

In another doomsday scenario, the company assists a newly democratic country in South Asia as it struggles with corrupt politicians and a rising insurgency that threatens to bubble over into bloody revolution. SCL steps in to assist the benevolent king of “Manpurea” to temporarily seize power.

Oh, wait, that sounds a lot like Nepal, where the monarchy earlier this year ousted a corrupt government to stave off a rising Maoist movement. The problem is, the SCL scenario also sounds a lot like using a private company to help overthrow a democratically elected government. Another problem, at least in Nepal, is that the king now shows few signs of returning to democracy.

The company, which describes itself as the first private-sector provider of psychological operations, has been around since 1993. But its previous work was limited to civil operations, and it now wants to expand to military customers.

If SCL weren’t so earnest, it might actually seem to be mocking itself, or perhaps George Orwell. As the end of the smallpox scenario, dramatic music fades out to a taped message urging people to “embrace” strategic communications, which it describes as “the most powerful weapon in the world.” And the company Web page offers some decidedly creepy asides. “The [ops center] can override all national radio and TV broadcasts in time of crisis,” it says, alluding to work the company has done in an unspecified Asian country.

The government’s use of deception in the service of national security is not new. During World War II, for example, Allied forces conducted a massive misinformation campaign, called Operation Fortitude, designed to hide plans for the Normandy invasion. More recent efforts have met with controversy, however. In 2002, the Pentagon shuttered its brand new Office of Strategic Influence after public outcry over its purported plans to spread deceptive information to the foreign press.

Government deception may even be justified in some cases, according to Michael Schrage, a senior adviser to the security-studies program at the Massachusetts Institute of Technology. “If you tell the population that there’s been a bio-warfare attack, hospital emergency rooms will be overwhelmed with people who sincerely believe they have all the symptoms and require immediate attention,” Schrage says.

The problem, he adds, is that in a democracy, a large-scale ruse would work just once.

The U.S. government has generally sought to limit disinformation; some agencies—such as the CIA—are explicitly prohibited by law from misleading domestic press. And while the CIA is fond of concealment, it takes pride in the belief that truth is necessary for an open government, a sentiment chiseled into the agency’s lobby.

What makes SCL’s strategy so unusual is that it proposes to propagate its campaign domestically, at least some of the time, and rather than influence just opinion, it wants people to take a particular course of action. Is SCL simply hawking a flashier version of propaganda?

The spokesman’s answer: “We save lives.”

Yes, Broughton acknowledges, the ops center is not exactly giving the truth, but he adds, “Is it not worth giving an untruth for 48 hours to save x million people’s lives? Sometimes the means to an end has to be recognized.”

Who buys this stuff? Broughton declined to mention many specific clients, noting that disclosing SCL’s involvement—particularly in countries with a free and open media—could make its campaigns less effective. However, he says that post-apartheid South Africa has employed SCL. So has the United Nations, he says.

The company’s Web site is even vaguer, mentioning international organizations and foreign governments. A Google search produces only a handful of hits, mostly linked to the company’s Web site. The company’s work is based on something that even the spokesman admits you “won’t find on the Web”: the Behavioral Dynamics Institute, a virtual lab led by Professor Phil Taylor of Leeds University.

But the company, which is funded by private investors, is now taking on a higher profile, and visitors flocked to the flashy setup here at the show. “Basically, we’re launching ourselves this week on the defense market and homeland security market at the same time,” Broughton explained.

If SCL has its way, its vision of strategic communications—which involves complex psychological and scientific data—could be used to shape public response to tsunamis, epidemics, or even the next Hurricane Katrina.

Well aware that the company may face controversy, particularly with its push into the defense market, Broughton emphasizes the company’s role in saving lives.

“It sounds altruistic,” he said. “There is some altruism in it, but we also want to earn money.”