Typically, however, it is used when the party around which the smoke is circulating is either disliked or has a poor reputation - or both.
So any new suggestion that the Labour Party was embroiled in fundraising activities that fell short of the rules was widely and enthusiastically accepted as proof of guilt. Having watched a whole series of such incidents unfold, we were all less than surprised and generally prepared to rule the party guilty. The idea that Gordon Brown might be involved or aware of the scandal was also accepted with general glee.
The parents of missing Madeleine McCann, on the other hand, have been broadly spared the fire and smoke condemnation. Despite twists and turns that made them suspects in the disappearance of their daughter, the public has, by and large, persisted in believing them innocent. There are many reasons for this - an innate British refusal to trust the competence of foreign police, the background of the parents and our own hope that the child is alive. Crucially, most people were prepared to overlook that first, potentially catastrophic reputation damager: the fact that they left their children alone while they went out. That could have been the deciding factor, the event that gave credence to later suspicions of their involvement.
The McCanns did not have a public reputation to draw upon, but they had the assumed reputation inherent to their professions, their immediate and intelligent use of the media and their efforts to find their child. They behaved with dignity and, far from building defensive walls around their decision to dine out and leave their sleeping children alone, were open about the situation.
In the Labour Party's case, the odds were stacked against it from the start because it promised 'no sleaze' and then failed to deliver - it already had a bad reputation on the fundraising issue, and we don't tend to like politicians much anyway.
Over and above that, the party simply didn't handle the situation well. When you're bang to rights, it's better to come out with an honest and genuine apology and let people judge you not for your mistake, but for how you handle it.
The Labour Party is likely to pay a high price for its errors and its reputation, at least as far as donations are concerned, will not recover.
Honesty, transparency, accountability - it's not rocket science, just good reputation management.
- Mirella von Lindenfels is founder of Communications Inc.