BAD PUBLICITY

Bell Pottinger has collapsed after a race-baiting PR campaign in South Africa

Quartz africa
Quartz africa

Not all publicity is good publicity—multinational public relations firm Bell Pottinger learned that the hard way.

The multinational communications firm entered administration on Sept. 12 after accountants from BDO could see no way out after clients, shareholders and it’s own international divisions bailed. The process puts the UK division of the company in a form of credit protection while what remains of the firm is picked apart.

“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 realize value for creditors,” said BDO.

Bell Pottinger was unable to salvage its own reputation after the Public Relations and Communications Association expelled it from the industry regulator last week. The company was found to have breached public relations ethical codes when it instigated a fake news campaign in South Africa, accused of inciting racial hatred.

Bell Pottiner reportedly put itself up for sale last week, but could not find a buyer. About 270 people are about to lose their jobs as the company, expected to go into administration this week, goes under. Bell Pottiner hired accountancy firm BDO to figure out the few options they had left.

The company has hemorrhaged clients since details emerged of its contract with the Gupta family, the wealthy immigrant Indian family with close links to embattled president Jacob Zuma. The PR strategy that destroyed the company included spreading the phrase “white monopoly capital” to exploit the race-based economic legacy of apartheid.

First to leave were Investec, an asset management firm founded in South Africa, and Richemont, the luxury goods group owned by South African Johann Rupert. Europe’s largest bank HSBC also severed ties with the firm, as did London-listed Tanzanian mining company Acacia. UK broadband operator Talk Talk has not renewed its contract with Bell Pottinger, while supermarket chain Waitrose’s relationship with Bell Pottinger reportedly hangs in the balance.

There isn’t much left of Bell Pottinger either. Chime Communications, which retained a 27% stake in the company, reportedly gave up trying to sell its shares and has simply returned them, free of charge. The company’s Asia unit dismantled itself (paywall) from the disgraced firm last week, announcing plans to rebrand itself as Klareco Communications. This week, the company’s Middle Eastern arm followed suit, deserting the London-based parent company.

Bell Pottinger’s relationship with the Gupta family has also cost some of their staff members personally. CEO James Henderson stepped down hours before the industry body ruling. His planned wedding to Heather Kerzner, former wife of South African resort tycoon Sol Kerzner, has been put on hold. Heather Kerzner had bought a 15% stake in Bell Pottinger, and with Henderson’s share, the couple owned about 40%, which is now probably worthless.

This story has been updated.

Sign up for the Quartz Africa Weekly Brief — the most important and interesting news from across the continent, in your inbox.

home our picks popular latest obsessions search