Arun Sudhaman 04 Sep 2017 // 8:51PM GMT
LONDON — The UK trade association for PR firms (PRCA) has expelled Bell Pottinger from its ranks following an investigation into the PR firm's work for South Africa's controversial Gupta family.
As forecast by the Holmes Report last week, the PRCA opted for the harshest possible sanction, after Bell Pottinger appealed the initial unanimous decision of the organization's Professional Practices Committee. That decision upheld the complaint from South Africa's Democratic Alliance opposition party, which accused the UK PR firm of stoking racial tensions in South Africa on behalf of Oakbay Investments — the conglomerate controlled by the Guptas, who are closely linked to President Zuma.
"Bell Pottinger has brought the PR and communications industry into disrepute with its actions, and it has received the harshest possible sanctions," said PRCA director general Francis Ingham. "The PRCA has never before passed down such a damning indictment of an agency’s behaviour. This outcome reflects the huge importance that the PRCA places on the protection of ethical standards in the business of PR and communications."
The PRCA Board of Management met yesterday to consider Bell Pottinger's appeal before making its final ruling in around 30 minutes, Ingham told the Holmes Report. "The Board was unanimous in concluding that BP would be expelled with immediate effect," he said. "The mood of the board was anger and indignation and also disbelief that this work had been carried out."
The PR firm was found to have breached the PRCA Professional Charter and Public Affairs and Lobbying Code of Conduct. Ingham pointed out that it was "vitally important" for the industry to send this message. "This is the kind of behaviour the PRCA won’t put up with," he explained. "It might have happened sometime in the past but the vast majority of our industry today is ethical and professional. They will have been appalled by Bell Pottinger's behaviour — I think the industry will applaud this decision."
The PRCA expulsion is the latest twist in a saga that has gained momentum in recent weeks, accounting for the scalp of CEO James Henderson and including yesterday's review of the firm's work by law firm Herbert Smith Freehills.
In the process, Bell Pottinger has found itself dominating media headlines across the world, with the PR industry facing the kind of attention it has sought to distance itself from. "It does concern me, but the narrative changes now," said Ingham. "We prove, as the industry’s professional body, we take ethics very seriously indeed and we’re willing to act."
Expulsion from a trade association like the PRCA, of course, carries no actual sanction regarding Bell Pottinger's continued business operations. However, Ingham believes the decision will affect the firm's reputation. "Most reasonably minded people reading this story — if they were looking for a PR agency, will look elsewhere. What we’re really debating is quite how negative it will be for them."
Accordingly, the South African campaign has ended up representing the sternest test yet for Bell Pottinger, the UK firm that made its name by handling sensitive geopolitical work, including controversial regimes in Belarus, Bahrain and Sri Lanka. It has also devolved into a public battle between Henderson and founder Lord Bell, who quit the firm last year.
Henderson is understood to own 37% of Bell Pottinger with his fiance Heather Kerzner. It is further belived that Bell Pottinger directors are considering all options regarding the future of the business, which has been debilitated by the ongoing scandal — with Henderson admitting to the BBC that the work has cost it relationships with key customers, including Richemont, Investec and Tourism South Africa.
After completing an MBO from Chime in 2012, Bell Pottinger restructured its business as a partnership. Chime is still understood to retain a 25% stake in the firm, while other shareholders reportedly include chairman Mark Smith, co-founder Piers Pottinger and partner David Beck.