A bitter feud between Bell Pottinger chief executive James Henderson and the public relations consultancy’s co-founder and former chairman Lord Tim Bell is at the heart of the firm’s involvement in the Gupta political scandal rocking South Africa.
Bell Pottinger is
expected to be expelled from the Public Relations and Communications Association
(PRCA) for its role advising South Africa’s Gupta family on an ‘economic
emancipation’ campaign that attacked white power and stirred up racial tensions
in the nation. It has already lodged an appeal.
Henderson issued an 'unequivocal apology' in July for Bell Pottinger’s role in the campaign for the Guptas’ company Oakbay Investments.
However, it has now emerged that the crisis is linked indelibly to a desperate battle between Henderson and Lord Bell, the co-founder of Bell Pottinger in 1987.
CorpComms Magazine can reveal that:
When Bell led the successful pitch to win the Oakbay work in January 2016, his £1 million-a-year position as Bell Pottinger chairman was under pressure amid claims that he was not generating enough revenues.
Henderson never met the Guptas or communicated with them by email and insists that he had nothing to do with the £100,000-a-month Oakbay contract.
Henderson insisted on an ‘embarrassment clause’ in Bell Pottinger’s March 2016 contract with Oakbay that would protect the PR firm if its association with the Guptas caused any loss of clients. It is not know whether Bell Pottinger is claiming against the Guptas on this clause.
The Bell Pottinger chief executive believes Lord Bell has been pursuing a vendetta against his former company and its current management since he was ousted in August 2016.
Victoria Geoghegan, who was sacked as managing director by Bell Pottinger in May for her role on the Oakbay account, denies misconduct and intends to bring a case for unfair dismissal.
Bell continues to be paid by Bell Pottinger under the terms of his August 2016 departure from the firm.
The Oakbay work began informally in January 2016, but was formalised in a contract in March 2016 and continued until it was terminated by Henderson in April this year. However, senior sources with detailed knowledge of the firm believe that Bell Pottinger’s conduct on the account has to be understood in the light of the battle for control raging at the firm.
‘This whole saga has been about the two of them,’ says one. ‘Things changed when word got out in early summer 2016 that Lord Bell was leaving. The final big South African win hadn’t saved his job. This hurt Lord Bell deeply. Several times, people heard Lord Bell seethe: This is my company. It’s my name above the door. But unfortunately for him Henderson was the chief executive and the largest shareholder.’
Another comments: 'At the heart of all this is Henderson and Bell and their incredible animosity towards one another.
'The business was never big enough for both of them. That was always evident to anyone inside in the business. 'There was always open warfare between Bell and Henderson.
'James is a control
freak who wants to manage everything himself and Tim, while he gives people
more rope, always wants the last word on everything.’
The Guptas are accused of assembling enormous influence on the government of South African president Jacob Zuma and of ‘capturing’ key elements of the South African state.
Bell Pottinger’s involvement has seen it lose clients including South African investment bank Investec, luxury goods empire Richemont and the South Africa Tourism Board. More clients could defect after the PRCA’s decision is announced. Only one firm has previously been evicted in the organisation’s history.
Henderson has commissioned a report by law firm Herbert Smith Freehills into Bell Pottinger’s actions on the Oakbay account and has promised to release its findings.
He is said to be planning for Bell Pottinger to slim down and focus on a smaller core of activity. The famous ‘Bell’ name is expected to disappear from the firm. The company may also be sold and there is the possibility of a South African government investigation and even potential criminal charges.
However, some in the
industry do not expect Henderson to survive as chief executive. 'I think
Henderson should go,' says one senior figure. ‘I don't think
there's any way he can survive this. There's too much damage done to the
business and it needs to turn itself around and be known for the good work that
it does do. More decisive action is needed and I think it needs to involve
Henderson falling on his sword.'
To find out more about the scandal, read