Bell Pottinger enters administration following South Africa scandal

Bell Pottinger CEO James Henderson

Embattled PR firm Bell Pottinger has entered into administration following the controversy surrounding its work with the Gupta family in South Africa.

Accountancy firm BDO was appointed last week to explore a potential sale. However it failed to find a buyer and will now handle the administration process.

A number of redundancies have already been made.

“Late last week, the level of those losses, compounded by the inability of the business to win new clients, was such that remaining management were left with no option but to commence the process to place all UK Bell Pottinger entities into administration,” a BDO spokesperson said.

“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.

"We have taken appropriate steps to preserve the rights Bell Pottinger may have in relation to the failure of the business.”

Over the past week, both its Asian and Middle Eastern divisions broke away from the parent company. BDO said the subsidiaries outside the UK have not entered into administration and continue to trade under the control of their management teams.

Bell Pottinger's demise came as the result of work for the Gupta family in South Africa, through its company, Oakbay Capital, which had employed the PR firm on a £100,000 a month retainer to improve the reputation of the billionaire family.

It ran a “racially divisive” campaign that stirred up tensions in the region by claiming there was a ‘white monopoly capital’ that was the real enemy holding backt the country, rather than the Gupta family.

Despite attempts to stem the damage in the wake of the backlash, including the resignation of chief executive James Henderson, the company lost several of its biggest clients and was found guilty of inappropriate conduct by the Public Relations and Communications Association (PRCA) and subsequently expelled from the industry body.

In response to its entry into administration, Francis Ingham, director general of the PRCA, said today (12 September) that the association took “no pleasure in the collapse of Bell Pottinger".

“The majority of those employed by Bell Pottinger bear no responsibility for the company’s actions in South Africa," he said. "They have been caught up in an ethical crisis that is not of their making. We hope that they will find new positions with ethical employers shortly."

Ingham added: “We are clear, however, that expelling Bell Pottinger was the right thing to do. Our committee and board were unanimous in concluding that Bell Pottinger had broken both our Professional Charter and our Public Affairs and Lobbying Code of Conduct. They were clear that the only appropriate sanction was immediate expulsion.

“The vast majority of the PR and communications industry is ethical and professional. By taking decisive action, we have shown that Bell Pottinger’s actions are the exception not the rule; and shown that PRCA self-regulation is decisive and effective.”

Bell Pottinger had not returned The Drum’s request for comment at the time of writing.

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Jennifer Faull

Jen Faull is deputy news editor at The Drum with a remit to cover the latest developments in the retail and FMCG sectors. Based in London, she has interviewed major business figures including top marketers from Mondelez, Unilever, Tesco, and Lidl.

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