Bell Pottinger, one of the City’s leading public relations agencies, has been expelled from the industry’s trade association after an investigation found its secret campaign to stir up racial tensions in South Africa to be the worst breach of ethics in its history.
The Public Relations and Communications Association said Bell Pottinger was unethical and unprofessional, had brought the industry into disrepute and has banned the firm from its membership for at least five years.
The punishment, unprecedented for a firm of Bell Pottinger’s size, was handed down after the PRCA investigated a complaint from South Africa’s main opposition party that the PR firm sought to stir up anger about “white monopoly capital” and the “economic apartheid” in South Africa.
Bell Pottinger was being paid £100,000 a month by client Oakbay Capital, the holding company of the wealthy, powerful and controversial Gupta family, who have been accused of benefiting financially from their close links to the South African president, Jacob Zuma. Both have previously denied such a relationship.
“Bell Pottinger has brought the PR and communications industry into disrepute with its actions and has received the harshest possible sanctions,” said Francis Ingham, director general of the PRCA. “The PRCA has never before passed down such a damning indictment of an agency’s behaviour.”
The PRCA said the Bell Pottinger campaign was “likely to inflame racial discord in South Africa”.
The pressure is set to increase with Peter Hain, the former Labour MP who became a peer in 2015, tabling a string of questions in the House of Lords on Tuesday asking the government whether Bell Pottinger’s actions contravene any UK trade policies.
The severity of the PRCA ruling raises questions over the future of one of the City’s best-known PR firms, which was founded almost 30 years ago by Margaret Thatcher’s favourite spin doctor Lord Bell.
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Bell Pottinger’s 'economic emancipation' campaign used traditional and social media, including a fake blog and Twitter account, to target wealthy white South African individuals and corporations. The agency’s alleged role was to stir up anger about 'white monopoly capital' and 'economic apartheid' to draw attention away from the wealthy Gupta family, who have been accused of benefiting financially from their links to President Jacob Zuma. Bell Pottinger, which created and commissioned content, did not invent 'white monopoly capital' but used the term 'on occasion'. It also used other tactics, such as misleading or undermining journalists questioning the campaign.
Major shareholder Chime, owned by majority shareholder Providence and Sir Martin Sorrell’s WPP, is understood to have offloaded its 25% stake in the firm as the scandal reached boiling point over the summer. The buyer of the stake is unknown. The company’s largest individual shareholder is James Henderson, who resigned as chief executive on Sunday.
Ingham said that while firms do not have to be a member of the PRCA to operate, it is the norm for respectable companies. Expulsion from the group, which has only happened once before, could make it hard for the firm to continue.
“Pretty much every respectable agency is a member,” said Ingham. “It is seen as a requirement to trade, a stamp of ethical behaviour and professional practice.
“Having it taken away will significantly hurt [Bell Pottinger]. It makes a very public statement – we do not believe it to be an ethical and professional PR agency.”
Richemont, the Swiss luxury company headed by South African businessman Johann Rupert and Investec, the South African investment group, have both ended ties with Bell Pottinger.
The PRCA has banned Bell Pottinger for five years regardless of whether the PR company sells up or changes its name – both of which have been rumoured as possibilities – and even then its return to the fold is far from guaranteed.
“It is not a given if they reapply in five years’ time [we] will say yes,” Ingham said. “Membership needs a two-thirds majority of board approval and the board is pretty clear in its anger and indignation about this piece of work.”
The PRCA’s professional practices committee and board voted unanimously to terminate Bell Pottinger’s membership.
Bell Pottinger resigned the Oakbay account in April, at the time saying it was the victim of a smear campaign involving “totally false and damaging accusations”.
However, in July, Henderson made a U-turn, offering an “unequivocable and absolute” apology for an “inappropriate and offensive” social media campaign. He fired the lead partner on the Gupta account and suspended two other employees. The embattled Henderson resigned on Sunday.
“Although I neither initiated nor was involved in the Oakbay work, I accept that as chief executive, I have ultimate executive responsibility for Bell Pottinger,” he said.
Bell Pottinger’s own investigation, conducted by an independent law firm and published ahead of the PRCA report, found the PR group had created a “potentially racially divisive” campaign and that senior management failed to put in place adequate policies to stop such a PR disaster.
The report also found that Bell Pottinger engaged in other unethical practices “including taking steps which might mislead or undermine journalists who were asking questions in relation to the campaign”.
In a statement about the PRCA ruling, Bell Pottinger said it accepted there were “lessons to be learned but disputes the basis on which the ruling was made”.
The firm said it intended to continue in business by abiding with the PRCA code of ethical conduct on a voluntary basis and that many of its staff would now apply to join the industry group as individuals.
“The overwhelming majority of our partners and employees played no part in the Oakbay Capital account and have not been accused of breaching the PRCA code,” it said. “Many of them will now consider applying for individual membership.”
The PR firm has made a number of pledges to toughen up its corporate practices including creating an ethics committee, further training for employees in social media engagement, and to “engender a culture whereby junior employees at Bell Pottinger feel able to challenge work with which they feel uncomfortable”.
Bell Pottinger’s co-founder Tim Bell told BBC’s Newsnight that the incident “almost certainly” meant the end for the firm but declined to take any responsibility for it.
He said: “I don’t take any responsibility. This is 18 months ago. People write abusive stuff 18 months later, journalists write stuff 18 months later, and I’m supposed to react to that? I resigned from the company in August last year. I published my resignation and I said that one of the reasons I was leaving was because of the Gupta account.”
