Bell Pottinger has paid the ultimate price for working for South Africa’s Gupta family as the agency, once Britain’s biggest, went into administration. About half its London-based staff, including non-client facing employees, were made redundant at the same time.
Administrators BDO informed Bell Pottinger’s staff of the decision, and then performed a roll call inviting some employees to go to one side of the room. They were then told that they had been made redundant, asked to clear their desks and instructed to hand back all company property otherwise its value would be deducted from any potential salary they may yet receive. The insurance on all company cars expired at midnight that same day.
Insiders claim that remaining staff have been instructed to continue to manage relationships with those clients who have stayed with Bell Pottinger as BDO explores options for ‘selling’ these to another agency.
BDO’s aspiration was described as ‘mis-guided’ as it is inevitable that some clients will move with their account manager once they find new jobs. It is understood that some employees are looking at setting up their own agencies with colleagues, while others have already joined other agencies. PR agencies going into administration is such a rarity – industry veterans struggle to remember another – that nobody is quite sure of the rules regarding gardening leave or poaching colleagues. ‘As far as we know, we can start work with another agency immediately, if desired, without following the normal etiquette that applies when joining a competitor,’ said one.
‘I think the vast majority of Bell Pottinger people will easily walk into other jobs,’ said a former colleague. ‘These are talented people. LinkedIn is filled with former Bell Pottinger employees telling their old colleagues to make contact as they have roles for them.’ He added that, since the administration was announced, the ‘atmosphere is more relaxed. People are open about the fact that they are just popping out for an interview’.
But it is also understood that some partners face the prospect of selling their homes to pay Inland Revenue bills for their tax liabilities. As a limited partnership, Bell Pottinger offered partners the chance to receive their earnings net of tax, so that at the end of the financial year they would have the requisite funds to pay their Inland Revenue bills. In normal circumstances, the company would ringfence these tax liabilities by placing the funds in an escrow account. However, Bell Pottinger does not appeared to have followed this practice. ‘Partners, who already had their tax payments deducted, face the prospect of huge bills from the Inland Revenue with no money to pay them,’ said one insider.