Bell Pottinger meets the Guptas

Ironically enough, the PR industry could do with some positive PR engagement of its own at the moment, as it seeks to improve its image following the Bell Pottinger scandal.

It is unlikely to persuade the general public that it is a force for the good but it could do with calming the extent of public antipathy towards it. In terms of its reputation, no publicity for a time may be regarded as good publicity, although in the long term the reputational damage caused by the actions of the British firm highlights the power of PR to potential clients.

Bell Pottinger was found to have incited racial hatred in South Africa during a campaign it undertook for the Gupta family. There can be few readers of New African who are unaware of the controversy surrounding the Guptas. The Gupta family is alleged to have exerted a high degree of influence over the government and state-owned companies through its relationship with President Jacob Zuma.

It has been widely alleged that this extended to influencing the selection of government ministers and securing contracts from parastatals for firms connected to the Guptas. The ensuing scandal has dominated an already scandal-prone South African presidency over the past two years and the Guptas’ position in South African business and politics seems to have been dealt a fatal blow by all the revelations that have emerged.

‘White monopoly capital’

At the heart of the campaign was the phrase “white monopoly capital”, used in an attempt to whip up anger against South Africa’s wealthy white minority. This was designed to negate criticism of the Guptas by suggesting that revelations about their activities were in themselves designed to distract attention from racial divisions in the country. Such a strategy would have been dangerous in any country but was particularly divisive in a nation still struggling to come to terms with the legacy of apartheid and correct the deep social and economic imbalances and divisions that it created.

There seemed no way back for Bell Pottinger when it was expelled from the UK’s Public Relations and Communications Association, after it was deemed to have broken the regulator’s code of ethics with its campaign.

The scandal saw clients, shareholders and even its offices in other parts of the world jump ship. One element of the Bell Pottinger campaign against the Guptas had involved paying people to tweet about the Rupert family, the founders of luxury retailers Richemont, to deflect attention from the Guptas.

Astonishingly, Richemont was another of Bell Pottinger’s South African clients; less surprisingly, it was among the first to cancel its contract with the agency. Other South African clients, including financial services firm Investec, followed suit and the contagion soon spread beyond the country’s borders. One of the world’s biggest banks, the UK’s HSBC, quickly ended its relationship with the company and others piled out.

One of Bell Pottinger’s main shareholders, Chime Communications, simply handed its 27% stake back, certain that any sale was impossible. That is just about as concrete a sign as you can get of a company’s demise. Bell Pottinger had been wholly owned by Chime until a management buyout in 2012. Its Asian operations disassociated themselves from the company and rebranded as Klareco Communications. Its offices in the Gulf are seeking to follow suit.

British accountants BDO were appointed to try to salvage the company by finding a buyer but it had basically imploded, so there was little BDO could do. Bell Pottinger entered administration on 12 September. It seems that any potential suitors were put off by the scale of the bad publicity. Even for an industry where public image is everything, turning this image around was just too steep a challenge.

In a statement, BDO revealed: “The administrators are now working with the remaining partners and employees to seek an orderly transfer of Bell Pottinger’s clients to other firms in order to protect and realise value for creditors.”

Most of its London-based employees have already lost their jobs. The case should provide a salutary lesson to other PR agencies. Although the growing dissemination of information can provide them with more effective tools for their campaigns, it also means that reputational damage in one country can now follow you around the world.