Bell Pottinger officially collapses into administration

Ikaba Koyi Sharecast | 13 Sep, 2017 14:01 - Updated: 15:48 | | |

Air pollution level 5 London 30 April 2014, by David Holt

Bell Pottinger officially fell into administration on Tuesday following a racially charged public relations campaign in South Africa, marking an ignominious end to one of the most high-profile PR firms in the UK.

The public relations outfit was put on the auction block the week before but was unable to find a buyer, after news of its actions led to an exodus of clients.

Among those who cut ties with the company in the wake of the scandal were Waitrose, Richemont, Investec, HSBC, TalkTalk and Clydesdale Bank.

Such was the public outcry that on 5 September its second biggest shareholder, Chime, which was owned by US firm Providence and Sir Martin Sorrell's WPP, handed back its 27% stake for free - in a radical move to distance itself from the embattled agency.

That followed the UK's PR trade body's decision the day before to expel Bell Pottinger from its ranks, despite chief James Henderson's previous decision to stand down from his post.

Adding to the company's financial woes, following that chain of events Pottinger's Middle East and Asian units announced plans to separate from the UK parent company.

Left unable to secure new clients, the firm was forced to hoist the surrender flag.

The scandal had unfolded after South Africa's main opposition party, the Democratic Alliance, lodged a formal complaint with the Public Relations and Communications Association alleging Bell Pottinger was being paid £100,000 a month by its client Oakbay Capital, the holding company of the wealthy Gupta family, to run a social media and PR campaign in the country with the aim of stirring up anger against what was dubbed as "white monopoly capital" and "economic apartheid".

By some accounts, the Gupta's aim was to distract from claims which had been levelled against themselves for their alleged close links to South African president Jacob Zuma.

The London-based parent firm was thought to be roughly £5m into the red when it went under – in part related to payouts to former management, including its co-founder Tim Bell who left last summer – with likely no prospect of recouping those amounts.

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