Vidya Ram

Bell Pottinger’s: Not just a PR disaster

Vidya Ram | Updated on January 10, 2018 Published on September 15, 2017

Fall of a giant Bell Pottinger’s London headquarters REUTERS

Charges that the firm ran a racist campaign in South Africa, at the behest of an Indian business entity, have come as a shocker

Earlier this week, one of the UK’s largest and most prestigious public relations firms, Bell Pottinger’s, went into ‘administration’ after being thrown out of the UK trade body. This was following allegations that the company had run a secret campaign that created racial tension in South Africa, for its clients, the controversial Gupta family. The PR firm has then seen a swift exodus of clients — and an investor.

In fact, it was far from the PR firm’s first controversy. Set up just under 20 years ago by a former advisor to former Prime Minister Margaret Thatcher, Bell has had clients from Oscar Pistorius, Paralympian and convicted murderer, to the family of Syrian President Bashar al-Assad, and the Pinochet Foundation (linked to the Chilean dictator). An undercover investigation published by The Independent in 2011 recorded senior figures at the firm boasting of the direct connections they had to the British PM, to journalists they believed to be representatives of the government of Uzbekistan.

Still, the firm continued to attract top clients from HSBC to Swiss luxury goods company Richemont, and top talent: among its recent joiners was James Chapman, an influential former advisor to senior figures within the government. Its controversies only seemed to heighten its prestige and success until it came crashing down this week, as the UK business appointed administrators and its Middle Eastern and Asian divisions were separated from the business.

African concerns

Bell Pottinger’s unceremonious demise was a victory for South Africa’s Democratic Alliance, and other campaign groups which had been pushing for action against the firm following revelations that it had worked for Oakbay Capital, a business controlled by the wealthy Guptas. Ajay, Rajesh, and Atul Gupta, three brothers, had moved from India to South Africa in the 1990s, flourishing in the post-apartheid era, building up interests ranging from energy to mining.

However, the process was fraught with controversy as they became emblematic of domestic concerns about the influence that wealthy business leaders could wield over political institutions, and what has come to be known as “state capture.” Detailed investigative work by South African mediabuilt up a picture of the huge sway they carried, particularly with President Jacob Zuma, several of whose family members (including son Duduzane) worked for Gupta businesses.

According to a report by a group of academics including from the University of Johannesburg a “silent coup” had removed the ANC from its place as the primary force for “transformation in society... the Zuma-centred power elite has built and consolidated this symbiotic relationship between the constitutional state and the shadow state in order to execute the silent coup… at the nexus of this symbiosis are a handful of the same individuals and companies connected in one way or another to the Gupta Zuma family network.” The Guptas and Zuma of course deny the allegations against them.

Tim Bell, the Bell Pottinger’s founder met with the Guptas last year, though in a recent television interview insisted he advised the company against taking the contract. Former CEO James Henderson, who resigned earlier this month over the scandal, has also distanced himself from knowledge of the work being carried out.

Dirty campaign

The company, which took Oakbay Capital on as a client for 100,000 pounds a month, now stands accused of running a “hateful and divisive” campaign whipping up racial tensions in the country by deploying the concept of “white monopoly capital” and economic apartheid- through social media and other channels, to attack critics of the government and deflect attention away from the growing public outrage over the Guptas’ influence.

The controversy has swiftly began to hit others involved with the Guptas, including KPMG, which had worked for companies owned by the Gupta family, and which is currently undertaking a review of allegations, including over the firm’s willingness to go along with the Guptas’ alleged treatment of expenses for a controversial wedding in 2013 as business expenses. “KPMG could be the next Bell Pottinger’s,” warned civil society organisation Save South Africa which is pushing for the auditors’ South African clients to review their business dealings with the firm.

A third company, consultancy McKinsey, is set to become the latest firm to be caught up in the controversy as Reuters reported it was due to face parliamentary hearings over its willingness to ignore warnings from its local employees over means used to gain state contracts.

Bell Pottinger’s collapse came despite efforts by the firm to contain the scandal: ending its dealings with the Guptas, issuing an apology and firing or suspending employees.

While its demise may be a heartening moment to some that even in the often murky world of PR and reputation laundering some blunders - such as stirring up racial tensions — can just be a step too far, anger remains high in South Africa. “I still do not believe you have any idea of the damage you caused,” tweeted one South African journalist following a recent interview of Bell, in which he sought to deflect responsibility away from himself.

Bell is not alone

Will it be a turning point? Undoubtedly there will be questions for the PR world. The industry body the PRCA, when it threw out Bell Pottinger’s, insisted it had never had to pass such a damning indictment of an agency, but few could deny that the industry globally frequently runs into morally questionable conundrums, particularly with the evolution of social media and concerns around fake news and the role of software such as Twitterbots in influencing the tone of debates.

Of course its not just a question for the PR world: in Britain media houses stand accused of stoking hatred against migrants and Muslims, with a fast growing campaign to push companies to stop advertising in these publications.

In South Africa wading into the treacherous area of post-apartheid tensions had proved little bar to companies, including a group of foreign mining firms that in 2006 sought to challenge black economic empowerment legislation using a Bilateral Investment Treaty (the case was dropped and South Africa has since sought to drop BITs, as have other developing countries).

Still, the case should be seen as a potentially empowering one, that signifies how with enough doggedness, firms can be held to account for their actions.

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Published on September 15, 2017
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