LONDON (BLOOMBERG, REUTERS) - Bell Pottinger has put itself up for sale after being expelled from the UK's public-relations industry body and losing clients over a racially divisive social-media campaign in South Africa.
The London-based PR firm, founded by Margaret Thatcher's media consultant, has hired financial adviser BDO "to look at all options regarding the future of the business," it said in a statement late on Tuesday (Sept 5). Chairman John Sunnucks has left the firm, the company said on Wednesday, while the Financial Times reported on Thursday that the head of its financial PR division John Sunnucks has quit.
Finding a buyer may present a challenge to Bell Pottinger as existing investors distance themselves amid controversy over its work for the Gupta family in South Africa. Chime Communications two weeks ago returned its 27 per cent stake without compensation, a person familiar with the matter said. Clients HSBC Holdings and construction firm Carillion Plc are among the latest companies to stop working with Bell Pottinger, and at least one other partner has left, another person said.
Co-founder Timothy Bell told BBC's Newsnight program on Monday that the agency is unlikely to survive.
"It's probably nearing the end," said Bell, who formed the firm in the 1980s and left last year. "You can try and rescue it but it won't be very successful."
Bell Pottinger employs more than 240 people in offices dotting the globe, in locations including Bahrain, Kuala Lumpur and Yangon, Myanmar. They serve clients ranging from multinational businesses to governments and high-profile individuals, according to its website. The company had £33.3 million (S$58.6 million) in revenue in 2015, and net income of £3.3 million, according to data compiled by Bloomberg.
The agency has attracted attention in the past for taking on controversial clients like former Chilean dictator Augusto Pinochet's foundation. According to a 2016 report by the Bureau of Investigative Journalism, a US-funded anti-Al-Qaeda propaganda campaign that Bell Pottinger carried out in Iraq included fake insurgent videos used to track those who accessed them.
The latest crisis gathered pace this week after an investigation found Bell Pottinger ran a potentially divisive social-media campaign on behalf of the Guptas, who are friends with South African President Jacob Zuma and in business with his son. The firm was thrown out of the Public Relations and Communications Association in an unprecedented rebuke by the UK public-relations industry body.
Bell Pottinger has said it accepted there were "lessons to be learned" and that it would abide by the PRCA code of ethical conduct on a voluntary basis. Many employees didn't work on the account for the Guptas' Oakbay Investments Pty Ltd and would consider applying for individual membership, the company said.
Bell Pottinger was found to have broken four clauses of the PRCA's code of conduct and professional charter while working for the Guptas. The rules state that members shouldn't cause racial offense with their work and "deal fairly and honestly" with the public at all times.
Cie Financiere Richemont, the luxury-goods company controlled by Johann Rupert, South Africa's richest man, ended a contract with Bell Pottinger last year. Rupert, who has a net worth of US$8 billion, told the annual meeting of his investment company Remgro Ltd that he had been a target of the company's social media campaign, Johannesburg-based Business Day reported on Dec 2.
Investec Plc, which owns a bank and an asset manager in South Africa and the UK, also dropped Bell Pottinger last year. Spain's Banco de Sabadell, while still a client, is reviewing its relationship, according to a person familiar with the matter.
Chime's decision to abandon its stake, valued at about £5 million, followed a 2016 effort to explore options for the holding, the Guardian reported earlier. Providence Equity Partners owns 75 per cent of Chime with WPP, led by chief executive officer Martin Sorrell, holding the remainder.
"Chime is clearly walking away from a bad situation," said Paul Sweeney, a Bloomberg Intelligence analyst. "It appears that Chime's co-owners, Providence Equity Partners and WPP Group, sense the reputation risk is not worth the relative small cost to write down their investment."