Bell Pottinger scandal taints a whole industry

The words ‘Bell Pottinger’ have attained a new position in the public psyche as something utterly unethical, says analyst

The offices which house the headquarters of Bell Pottinger LLP stand in London, U.K., on Tuesday, Sept. 5, 2017. Bell Pottinger LLP's attempt to sell itself has reportedly collapsed amid an exodus of clients and staff, succumbing to an unprecedented backlash over the London public-relations firm's involvement in a racially divisive social-media campaign the company ran in South Africa. Photographer: Chris Ratcliffe/Bloomberg
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So, Bell Pottinger, one of best-known PR companies in the world, is no more, forced into administration by a vanishing client list and a relentless campaign to exact vengeance for its South African misdemeanours.

Its Middle East business, based in Abu Dhabi and Dubai, is distancing itself as fast as it can from the corpse of the London-based parent, spinning itself off as a separate business with a new name in the hope it can salvage something from the wreckage. Its east Asian subsidiary has already gone, rebranding as Klareco Communications, after the Esperanto word for clarity.

Back in London the rest of the PR industry has watched the firm implode with a mixture of glee and amazement. Nothing like it has ever happened before in the sector; a profitable and once well-regarded business brought down by a single - foreign - client that no one outside South Africa had even heard of. Within hours, former rivals were picking over the bones, approaching its clients and snapping up some of the younger staff who were not harmed by the toxicity that now surrounds the name. By this weekend there will be nothing left, all gone in a puff of smoke, taking with it the £20 million (Dh97.4m) of equity pumped in when its management bought it out of Chime Communications (part of WPP) only two years ago. “In just a few days, the words ‘Bell Pottinger’ have attained a new position in the public psyche as something utterly unethical,” said Francis Ingram, the rather self-satisfied director-general of the PR and Communications Association, which has just expelled it from its membership. “Rightly so.”

In fact it has had that position for well over a year in South Africa, the source of its demise, where the name is a dirty word and the media, political and business worlds have been talking of little else. Yet, the seriousness of the company’s problems has only recently dawned upon its own staff, including its extraordinarily gullible chief executive James Henderson.

For those who haven’t followed the detail, let me provide a brief, potted industry, or at least my own version of it. The cause of the firm’s collapse is its client, the Gupta brothers, immigrant Indians who arrived in South Africa in the mid-1990s, befriended the president Jacob Zuma, hired his son and built themselves a fortune through the systematic “capture” of the government that has been very accommodating with favourable deals, mining licences and state contracts.


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Bell Pottinger Middle East in discussions to sever ties with London

Bell Pottinger's Asian arm rebrands as Klareco Communications

Bell Pottinger expelled from PR association over South Africa controversy


The former finance minister, Pravin Gordhan, one of the few incorruptible souls in the Zuma administration before he was fired, calculates that the Guptas have “stolen” - and he has used that word in public - more than 100 billion rand, or Dh28.41bn, from the state in the past few years. The presumption is that a generous part of that has gone to Mr Zuma and his ANC cronies.

But their pillaging grew so blatant that the Gupta name became synonymous with greed and corruption, so toxic that it poisoned anyone who had anything to do with it. They are resourceful chaps, however, and with the power of the state behind them, decided to hit back - they hired Bell Pottinger, which has long had a business in South Africa, dating back to the 1994 election when it advised advised the president FW de Klerk. Lord Bell, a co-founder of the company (the other half, Piers Pottinger, lives in Singapore and has played no part in this sorry tale), was flown down to Johannesburg and asked to come up with a plan to rescue the Guptas' reputation for which they were prepared to pay handsomely.

Before it could get going, however, the mercurial Lord Bell fell out with James Henderson, Bell Pottinger’s young and ambitious chief executive, and departed to form his own new company, leaving behind this new client. Bell Pottinger, sans Lord Bell, went to work - for a fee of £100,000 a month - and came up with a cunning scheme: turn the anti-Gupta campaign on its head and blame it all on “white monopoly capital”, or big South African business, which, with the aid of sinister “outside forces”, was said to plotting to bring down the Zuma government for its own racial and financial reasons. Their first target was said to be the Guptas.

The plan worked brilliantly, far better than anyone could possibly have forecast, and white businessmen found themselves subjected to racial taunts, demonstrations and threatened with a policy of “radical economic transformation”, which basically means nationalisation without compensation. In a country where racialism lies perilously close to the surface, the anti-white business mood turned very ugly indeed.

It began to go wrong for Bell Pottinger when its role was revealed and its “white capitalist” clients, including Richemont and Investec, angrily took their business away. Leaked emails revealed the true depth of the Guptas’ power over the Zuma administration, and Bell Pottinger’s role at the centre of it all. The same vengeful “white monopoly capitalists” it had victimised took the fight worldwide, making sure every client understood the fully, nasty nature of its tactics.

Bell Pottinger was gone with weeks, taking the reputation of the whole industry with it.