At one time the UK's biggest PR agency, Bell Pottinger collapsed in 2017 following a political scandal. The business was primarily the creation of Lord Tim Bell, best-known as the principal PR adviser to Margaret Thatcher for much of her political career. For many years it formed the core of publicly quoted marketing services group Chime Communications (see separate profile). However in early 2012, Bell and co-founder Piers Pottinger offered to buy out the business and take it private. Yet after four years as the figurehead for the newly independent agency, Lord Bell stepped down unexpectedly in 2016. He subsequently claimed his departure had been prompted by disagreements over the agency's controversial and racially divisive work for a South African client. Over the following months, this work also prompted the departure of a succession of major clients. The scandal finally reached a head when an independent investigation found against Bell Pottinger, leading to its unprecedented expulsion from the UK's PR industry association. The resulting exodus of remaining clients forced the agency into administration.
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Adbrands Daily Update 26th Aug 2019: Lord Tim Bell, one of the giants of the British PR industry, has died at the age of 77 after what was described by his family as a "prolonged illness". He was an unapologetic chainsmoker almost to the very end of his life. As the original "third brother" within Saatchi & Saatchi during the later late 1970s, Bell became most widely known as the guru who helped to mould Margaret Thatcher's public image and who guided Britain's Conservative Party to electoral success in 1979 and again in 1983. After falling out with the Saatchis he set up his own firm, initially in partnership with Frank Lowe, and continued to serve as Margaret Thatcher's advisor. (Martin Sorrell replaced him as Maurice and Charles' third brother). Bell's new firm eventually became Bell Pottinger and was subsequently the cornerstone for the creation of Chime Communications in 1984. At its peak, Bell Pottinger was the UK's biggest PR agency, but its position was gradually eclipsed by larger US-based groups. At the same time, the firm's move into "dark arts" consultancy, advising foreign political figures who were considerably more controversial than Margaret Thatcher led to a series of negative headlines. Bell was eventually pushed out by Bell Pottinger's new management team. Soon afterwards one of these "dark arts" contracts, with South Africa's Gupta brothers, caused the collapse of Bell Pottinger.
Adbrands Weekly Update 15th Sep 2017: How are the mighty fallen? Bell Pottinger, once the UK's biggest PR agency, called in administrators in the wake of a "dark arts" scandal which caused its expulsion from the UK's industry trade body PRCA and an exodus of clients. This disgrace has been brewing steadily for several months in the wake of a lucrative contract the agency accepted from South Africa's Gupta family. In addition to more straightforward corporate communications and public affairs, Bell Pottinger has also for many years practised what it liked to call "geo-political" consultancy. This involved general advice and covert campaign work for political leaders around the globe, including several controversial or even downright disreputable individuals and regimes. In the case of the Guptas and their close ally, South Africa's president Jacob Zuma, Bell Pottinger's work included a racially divisive campaign using fake social media profiles to accuse the Guptas' business rivals and opposition politicians of being "agents of white monopoly capital" practising "economic apartheid". The work prompted several other Bell Pottinger clients with South African interests, such as Investec and Richemont, to sack the firm.
In July, Bell Pottinger's CEO James Henderson, also its leading individual shareholder, attempted to draw a line under the growing scandal by sacking four senior managers, issuing a fulsome apology, and calling in law firm Herbert Smith Freehills to conduct an independent investigation. However, by this point co-founder Lord Tim Bell, who had already resigned from the group as a result of a fall-out with Henderson, was already calling for the CEO's resignation. By the end of August, rumours had begun to circulate that the HSF's conclusions would be damning, and that Henderson would step down. Published on Sept 3rd, the report agreed that the agency had been "in breach of relevant ethical principles" for stoking racial tension in the country. Henderson's departure was confirmed. A day later, following its own investigation, the Public Relations & Communications Association found Bell Pottinger of guilty of four breaches of its code of ethical and professional conduct and ejected the firm from membership, an unprecedented step for any major agency. After that the dominos began to tumble rapidly. A string of further clients terminated their relationship with Bell Pottinger. Former parent Chime wrote off its remaining 25% stake in the business, handing back the shares to the other shareholders. The firm's Asia Pacific arm, a separate legal entity chaired by group co-founder Piers Pottinger, cut its ties to the group, rebranding as Klareco Communications. The Middle Eastern arm also announced plans to separate from the group. As a result, at the beginning of this week, the UK arm of Bell Pottinger called in administrators in an attempt to salvage any value from the collapsed business. There is little hope that the firm will survive.
Adbrands Weekly Update 13th Jul 2017: PR agency Bell Pottinger dismissed the head of its corporate and financial division and suspended three other managers over work conducted for Oakbay Capital, a South African investment vehicle controlled by the Gupta family, who have close links to President Jacob Zuma. The agency also offered "full, unequivocal and absolute apology to anyone impacted" by that work, especially a widely criticised social media campaign. Among other actions, Bell Pottinger created fake social media profiles to spread negative comments about Zuma's political opponents and rivals of the Gupta family, who were portrayed as "agents of white monopoly capital". Opposition lobbying group Save South Africa accused the campaign of encouraging "racial mistrust, hate and race-baiting, and divided society". It is the latest of a series of scandals that have swirled around Bell Pottinger's so-called "geopolitical" division over the years as a result of its willingness to represent controversial political regimes in developing countries. Following an independent investigation, Bell Pottinger CEO James Henderson said that senior management had been misled by executives working on the account and had not been fully aware of its content, which "having now seen it, we consider to be inappropriate and offensive". Bell Pottinger's founder Lord Bell dismissed Henderson's comments as "rubbish" - "He is the chief executive for God’s sake, it’s his job to know what is going on" he told PR Week - and said he had himself resigned from the company last year because his repeated warnings that the Oakbay contract would be damaging to the firm were ignored by executive directors. Bell Pottinger responded that it disagreed with Bell's "version of events".
Adbrands Weekly Update 1st Sep 2016: In an unexpected development, PR guru Tim Bell - Lord Bell as he is now - has walked away from a business he founded for a second time. Having built up the Chime Communications marketing group around his original core PR agency Bell Pottinger, he bought out the latter agency in 2012 as private business. Now the 76-year-old industry veteran has departed Bell Pottinger as well in order to launch a new firm under the name Sans Frontieres to specialise in geo-political advisory services, the slightly controversial field for which he is best known. His departure could prompt Bell Pottinger's reacquisition by Chime, which had retained a minority shareholding in the business. Chime COO Mark Smith replaces Lord Bell as chairman.
Tim Bell's decision in 2012 to split up the marketing services group he had assembled and still led was unexpected. It was at least in part prompted by an embarrassing incident towards the end of 2011, when the agency attracted unflattering media headlines of its own because a senior manager from its public affairs division was filmed boasting of the firm's ability to influence government decisions. The subsequent media storm was further exacerbated by Chime's position as a public company. Terms for the buyout were eventually agreed for a total consideration of £19.6m in cash and shares, and the deal was completed at the beginning of July 2012.
Following the buyout from Chime, what had previously been separate units, such as financial communications agency Pelham Bell Pottinger and lobbying consultancy Bell Pottinger Public Affairs were merged into the main agency. The Holmes Report placed it #33 worldwide in 2015 with fee income of $66m. However, according to PR Week's rankings, it slipped out of the Top 10 UK PR agencies for the first time in decades, overtaken by the newly merged FleishmanHillard Fishburn. Chime had retained a 25% stake in the spun-off business. The group filed accounts for 2015 showing turnover of £42.4m and net profit of £403k.
The core operations of Bell Pottinger remain more or less unchanged following its demerger. Headquartered in the UK, there were also offices in Brussels, Asia and the Middle East. It offered a full range of PR and communications services, but was best known for political, geopolitical and financial communications. Tim Bell's reputation as a trusted adviser to Margaret Thatcher attracted many of the firm's most important clients, including politicians, foreign governments and large corporations seeking greater political influence. Certainly the firm had a reputation for not being afraid to take on controversial clients, and for particular skills in the "dark arts" of PR, not least the propagandist manipulation of the media.
Among its more notorious clients were the governments of Bahrain and Belarus, the wife of Syrian leader Bashar al-Assad, former News Corp executive Rebekah Brooks (accused but found innocent on charges of phone hacking) and the athlete Oscar Pistorius. In 2016, the agency was revealed to have worked undercover for the US government during the Iraq war to develop propaganda material that was seeded into Arabic TV channels to spread negative impressions of Al Quaeda and build local support for democratic elections.
Lord Bell had been executive chairman of Bell Pottinger, but unexpectedly announced his resignation in Sept 2016 to launch a new agency of his own, specialising in geo-political advisory services. That new business launched as Sans Frontieres. He died three years later, in August 2019.
Bell was replaced as chairman of Bell Pottinger by Chime COO Mark Smith, who moved to an executive role in early 2017 as managing partner. However, the driving force within the business was CEO James Henderson, who with his fiancee Heather Kerzner, acquired a controlling stake in Bell Pottinger in early 2017.
By this time, the agency was already beginning to suffer from the resignation of a series of key clients, especially those with roots in South Africa like Richemont and Investec, as a result of its work for Oakbay Capital, the investment vehicle of local businessmen Ajay, Atul and Rajesh Gupta, who also had close ties to South African President Jacob Zuma. Though notionally hired to promote Oakbay's business interests, Bell Pottinger were also involved in a number of attempts to smear Zuma's political opponents and business rivals of the Gupta family, for example by creating fake social media profiles to accuse them of being "agents of white monopoly capital". Opposition lobbying group Save South Africa accused the campaign of encouraging "racial mistrust, hate and race-baiting, and divided society".
CEO James Henderson finally bowed to the growing pressure to end its work with Oakbay in summer 2017, sacking senior managers on the account as well as the head of the agency's corporate division. He claimed that the board had not been fully aware of the nature of the campaign, which "having now seen it, we consider to be inappropriate and offensive". He brought in law firm Herbert Smith Freehills to conduct an independent investigation.
Their report, published in September 2017, found that the agency had been "in breach of relevant ethical principles" for stoking racial tension in the country. Henderson resigned as CEO, and a day later, following its own investigation, the Public Relations & Communications Association found Bell Pottinger of guilty of four breaches of its code of ethical and professional conduct and ejected the firm from membership, an unprecedented step for any major agency.
After that the dominos began to tumble rapidly. A string of further clients terminated their relationship with Bell Pottinger. Former parent Chime wrote off its remaining 25% stake in the business, handing back the shares to the other shareholders. The firm's Asia Pacific arm cut its ties to the group, rebranding as Klareco Communications. The Middle Eastern arm also announced its wish to separate from the group and was eventually acquired by Hanover Group. Meanwhile, the UK arm of Bell Pottinger called in administrators in an attempt to salvage any value from the collapsed business. In November 2017, the company was put into liquidation.
Last full revision 3rd October 2017
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