Bell Pottinger, the London-based public relations firm started by an adviser to former Prime Minister Margaret Thatcher, has been thrown out of the U.K. industry body in an unprecedented ruling after an investigation found its work on behalf of the Gupta family in South Africa had stoked racial tensions.
Bell Pottinger ran a potentially divisive social-media campaign aimed at highlighting economic inequality in South Africa along racial grounds and targeted wealthy white individuals and companies, according to a probe by law firm Herbert Smith Freehills. The company's actions "brought the industry into disrepute," the Public Relations and Communications Association said on Tuesday. "It has received the harshest possible sanctions. The PRCA has never before passed down such a damning indictment of an agency's behavior."
The firm was found to have broken four clauses of the body's code of conduct and professional charter while working for the Guptas, who are friends with President Jacob Zuma and in business with his son. The rules state that members shouldn't cause racial offense with their work and "deal fairly and honestly" with the public at all times.
"This will hurt Bell Pottinger a great deal," Francis Ingham, the PRCA's director general, said by phone. "They are no longer a regulated PR agency. I know already that Bell Pottinger has lost a lot of clients."
Bell Pottinger accepts there are "lessons to be learned" and will abide by the PRCA code of ethical conduct on a voluntary basis, it said in an emailed statement. Many employees didn't work on the account for the Gupta's Oakbay Investments Pty Ltd. and would consider applying for individual membership, the company said.
Cie Financiere Richemont SA, 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 $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, which owns a bank and an asset manager in South Africa and the U.K., also dropped Bell Pottinger last year. Several current clients, including investment manager St. James Place, grocery chain Waitrose Ltd. and recruiting firm Hays declined to comment.
The campaign "was by any reasonable standard of judgment likely to inflame racial discord in South Africa and appears to have done exactly that," the PRCA said. "The committee did not find the suggestion that this theme of the campaign and its consequences were unintentional to be plausible."
The Democratic Alliance, South Africa's biggest opposition party, filed a complaint against Bell Pottinger with the PRCA, which began its investigation in July. The company won't be eligible to reapply for membership of the U.K. body for at least five years.
The episode has triggered a shakeup at Bell Pottinger, which was co-founded in the 1980s by former Saatchi & Saatchi exec Tim Bell, who advised Prime Minister Thatcher on media matters. Chief Executive Officer James Henderson resigned on Monday, saying new leadership was needed to reform the firm. Bell left in August 2016 and founded a new company, Sans Frontieres Associates.
London-based Bell Pottinger 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 U.S.-funded anti-Al-Qaeda propaganda campaign that Bell Pottinger carried out in Iraq included fake insurgent videos used to track those who accessed them.
In South Africa, a report by the country's graft ombudsman last year implied that the Gupta family used their political connections to influence cabinet appointments and the issuing of state contracts. Zuma and the Guptas deny the allegations, which have since intensified due to a series of leaked emails published by local media, including the amaBhungane Centre for Investigative Journalism.