Rogues, Despots and Spin Doctors: The Collapse of a P.R. Firm

LONDON — If an autopsy could have been performed on Bell Pottinger, Britain’s most audacious public relations firm, the cause of death may have been summarized as “acute embarrassment.”

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Rogues, Despots and Spin Doctors: The Collapse of a P.R. Firm
, New York Times

LONDON — If an autopsy could have been performed on Bell Pottinger, Britain’s most audacious public relations firm, the cause of death may have been summarized as “acute embarrassment.”

This is ironic because Bell Pottinger always seemed defiantly beyond shame. During its 30 years in the upper echelons of Britain’s spin doctoring game, it sought to polish the image of dictators (Alexander Lukashenko of Belarus), repressive regimes (Bahrain and Egypt, to name two) and celebrities accused of despicable crimes (the Olympic runner Oscar Pistorius after he was charged with murder).

But in early 2016, Bell Pottinger signed a client that ultimately buried it in disgrace. The company worked for the Guptas, three brothers from India who built a sprawling, multibillion-dollar corporate empire in South Africa. Ajay, Tony and Atul Gupta had earned fantastic sums leveraging their friendship with President Jacob G. Zuma. By bullying officials and bending regulations to their will, they secured contracts in fields as varied as armaments, mining and railways. They offered ministerial jobs to politicians of their choosing. The Guptas and Zuma were so intertwined that critics had taken to referring to the “Zupta regime.”

As the power of the Guptas and their holding company, Oakbay Investments, gained attention, the family wanted the public relations equivalent of a stun grenade — a distraction that would draw attention from them and onto their many enemies.

So Bell Pottinger was retained, and given an assignment that initially sounded benign enough: grass-roots political activism intended to help poor blacks.

By the following year, Bell Pottinger was embroiled in a national maelstrom. In TV reports, editorials and public rallies, it stood accused of setting off racial tensions through a furtive campaign built on Twitter bots, hate-filled websites and speeches. All were pushing a highly toxic narrative, namely that whites in South Africa had seized resources and wealth while they deprived blacks of education and jobs. The message was popularized with an incendiary phrase, “white monopoly capital.”

How Bell Pottinger went bankrupt is a tale of corporate skulduggery that seems lifted from “House of Cards,” the PR edition. During the Gupta disaster, a vicious boardroom struggle unfolded, one that pitted a co-founder, Tim Bell, against James Henderson, who ran the firm in the years before it went under. Their conflict centered on the perennials of business potboilers, namely power and money.

The story is also an inside look at the tormented state of politics in South Africa. Allegations of Gupta-related corruption surfaced gradually over the years, as officials and the media described how this once unknown family was ransacking South Africa and its institutions. Zuma has since been swept up by investigations into the brothers amid an outcry that he let them hijack the government in a textbook example of “state capture.” With the economy sputtering, Zuma’s own party has called for his ouster.

The scandal has engulfed the nation. Zuma is a member of the ANC, the party of Nelson Mandela and post-apartheid comity. His alliance with the Guptas, and their exploitation of racial animosity, has underscored just how far the party has wandered from its roots after winning its first election in 1994.

Though the only corporate fatality, Bell Pottinger is just one of the companies tainted by the Guptas. A small coterie of multinationals is now under investigation by South African officials, including local units of three companies: McKinsey, KPMG and the software giant SAP.

The Guptas’ most devastating legacy is the harm they did to the cause of economic reform. With so many blacks in South Africa mired in poverty, the topic is urgent, but discussion about it has been debased by its association with a notorious and self-serving PR campaign.

In the midst of that campaign, racial tensions rose to levels that had not been felt since apartheid. “White monopoly capital,” a phrase that for years had been confined to left-wing academic circles, was suddenly unavoidable. A political group with reported links to the Guptas warned of a coming civil war.

When Bell Pottinger’s role became public, protesters rallied against the company, both in South Africa and outside the firm’s London office. A subsequent investigation by the Public Relations and Communications Association, a trade group in Britain, ended with the ejection of Bell Pottinger.

“In my years of running the PRCA, I have never seen anything worse, never seen anything equal to it,” Francis Ingham, director general of the trade association, said in an interview. “The work was on a completely new scale of awfulness. Bell Pottinger may have set back race relations in South Africa by as much as 10 years.”

Within days of the firm’s removal from the trade association, clients were fleeing. By the end of September, all 250 employees were laid off and Bell Pottinger was finished.

— A Unique Client List

London is now home to a cluster of PR firms catering to foreign governments, raising worries that the city has become “the global capital of reputation laundering,” as The Evening Standard put it a few years ago. Bell Pottinger established the template of this lucrative niche.

It was largely the brainchild of Tim Bell, who had earned his reputation, along with a knighthood, helping Margaret Thatcher win three elections. He came to fame with the “Labour isn’t working” ads that helped the Conservative Party gain control of Britain’s Parliament in the 1979 general election. Colleagues actually coined the phrase, and he talked Thatcher into adopting it.

“There were many conversations in which she shouted at me and told me I was an idiot,” he recalled. “I just had to stand my ground and say, ‘I know what I’m doing.'”

Now 77, Bell appears to have stepped directly out of an Evelyn Waugh novel with everything but a smoking jacket. Gray haired with an owlish pair of black glasses, he speaks with jaunty indifference and ingratiating candor, a combination that always made the tsk-tskers who disapproved of his client list sound unworldly and naive.

“Morality is a job for priests,” he deadpanned in a recent interview, between puffs of an ever-present cigarette. “Not PR men.”

With the company co-founder, Piers Pottinger, Bell conceived a “go anywhere, do anything” ethos, as they called it. When the pair started working together in the mid-1980s, Bell was sought after by political leaders and corporations who wanted some of the communications magic he had provided to Thatcher. Bell Pottinger quickly had hundreds of clients, a few of them infamous. Bell attributes his ability to work with virtually anyone to innate optimism.

“I see the good in people,” he said.

This included Chile’s former dictator Augusto Pinochet. Pinochet was placed under house arrest in Britain in 1998 as part of an effort to deport him to Spain, where he had been indicted on a charge of torturing Spanish citizens.

After two years of legal and political wrangling, Bell and his allies prevailed when Pinochet was authorized to freely return to Chile.

Bell Pottinger was hardly the only British outfit working for rogues and despots, as well as publicly traded companies, nor was it the largest or most profitable. But it had a buccaneering spirit that made it the firm of choice for a variety of missions.

During the war in Iraq, Bell Pottinger had a contract with the Pentagon to produce propaganda for the U.S. military. This included scripts in Arabic for a soap opera that aired in the country, Bell said.

When the company’s client list did not generate news, its methods did. In 2011, it was caught boasting about its skills in the dark arts of search engine manipulation to people it thought were potential clients.

In fact, they were undercover members of the Bureau of Investigative Journalism, a nonprofit organization that works with a variety of media. Posing as executives from the made-up Azimov Group, these “representatives” said the company had ties to the Uzbekistan regime, which has been criticized for repression and for using forced child labor during its cotton harvest.

The Azimov executives said they worried about blowback.

Fret not, said Tim Collins, a Bell Pottinger managing director, per transcripts published by The Independent, a British newspaper. After the company applied its tech wizardry, “You get to the point where even if they type in ‘Uzbek child labor’ or ‘Uzbek human rights violation,’ some of the first results that come up are sites talking about what you guys are doing to address and improve that, not just the critical voices saying how terrible this all is.”

Bell never challenged the transcripts, but he denounced the sting at the time as an “unethical, underhand deception to manufacture a story where none exists.”

— Beginning of the End

Bell Pottinger’s slide into oblivion began with a visit to the Guptas in January 2016. Bell, who had worked in South Africa for years, said he had no idea what the brothers wanted, but he and several colleagues flew to Johannesburg to find out.

“We went to this bloody great mansion, which seemed to be their headquarters,” Bell recalled. “Great big room, huge sofas all over the place. Servants. Appalling, all of it.”

The family already had a fortune, Tony Gupta told the small entourage. Now, he and his brothers wanted to help poor blacks. To that end, they wanted a PR campaign that pushed the idea of economic emancipation.

“So we went back to London and wrote a strategy,” Bell said. “Town hall meetings, marching in the street, that kind of thing. Draw attention to the economic imbalance, then tell people they should protest and demand change.”

The company drafted a two-page proposal, a copy of which was reviewed by The New York Times. Among its recommendations was “a non-party political narrative around the existence of economic apartheid” that Bell Pottinger would package “into speeches, news releases, website content, videos/broadcast content, slogans and other material required.”

Soon, the Guptas said that their company needed communications help, too. Most South Africans, the Guptas maintained, had an inflated notion of how much of the family’s revenue came from government contracts, which harmed their interests, several Bell Pottinger employees recalled.

The corporate campaign was the first sign that altruism had little to do with the 100,000 pounds ($141,100 at current rates) a month that Bell Pottinger would earn during what was initially a three-month project. The second was the anger of the company’s other South Africa clients when they learned of the arrangement. The billionaire Johann Rupert was aghast to suddenly find himself one of the most prominent examples of “white monopoly capital.” He texted Bell and asked how his PR firm could also be working for a family that was bashing him. Bell, by his own account, quickly lost enthusiasm for the Gupta project.

“It was altogether smelly,” he said of the racial element of the work. But he quickly added that ethics were not the issue. If enough South African clients quit Bell Pottinger, he reasoned, the losses would outweigh the Gupta’s checks. “I was saying it’s not a commercially sensible thing to do.”

But by the end of March, only one client — the banking and asset management company Investec — had severed ties with the PR firm. After that, Bell Pottinger tried to find middle ground by signing a new contract with the Guptas, this time with a codicil literally called an anti-embarrassment clause. It allowed the firm to terminate the account “without notice” if the brothers brought discredit to the business.

Bell said he soon resolved to quit the company because he felt undermined and undervalued by Henderson. “He made my life a misery from start to finish,” said Bell, speaking one recent afternoon in the living room of his home near London’s Sloane Square. After negotiating a 3.5 million pound exit package, Bell resigned in August of 2016. For his part, Henderson, 53, declined in a recent interview to indulge in the put-downs that come so easily to his antagonist. Seated at a conference table in temporary offices in Mayfair, where he is starting a new PR firm, he said Bell Pottinger’s dissolution was too recent to discuss.

“I have huge empathy for all those impacted,” he said, “and believe now is not the appropriate time to go into details.”

— Inflaming Tensions

The PR campaign in South Africa, which started in 2016, was intended to raise the temperature of race relations. And it worked.

More than 100 fake Twitter accounts were created, all of them retweeting content from other Twitter accounts with names like @economycapture, according to media reports. Popular hashtags included #WhiteMonopolyCapital and #RespectGuptas. The campaign involved some 220,000 tweets.

There were also attack website with names like WMC Leaks and WMC Scams. Another part of this ecosystem were mainstream media outlets owned by the Guptas, like ANN7, a 24-hour news channel, and The New Age, a daily newspaper.

As the campaign spread, leaders at groups like the ANC Youth League gave inflammatory speeches, decrying the “stranglehold” that rich whites had on the economy. Leaked emails would later show that the groups received media training, and in some cases funds, from the Guptas’ Oakbay.

An atmosphere of menace slowly pervaded the country. In July 2016, the police minister announced the creation of a task force to investigate the murder of more than a dozen political figures. In the runup to municipal elections that year, Zuma described the Democratic Alliance, the ANC’s main rival, as a “white party,” adding that it could not “run this country no matter how they cover up by getting a few black stooges.”

New and radical groups like Black First Land First sprang up, holding public rallies to fulminate against whites. At one, in May 2016, a pastor named Xola Skosana told the crowd, “We have been wounded beyond measure. Let us find the pillars and bring the house down. Black people must be avenged.”

For the first time in years, whites felt a rising sense of personal danger. Nicholas Wolpe, a white South African whose father was a pioneer of the anti-apartheid movement, remembers a palpable anxiety. “There was a shift toward intolerance,” he said. “Gradually, the debate about white monopoly capital was everywhere, and the people talking about it were loud and belligerent. It struck a nerve.”

In a related and surreptitious campaign, the Guptas were being recast as warmhearted people eager to help the downtrodden. A website connected to Black First Land First ran editorials defending the brothers, suggesting in one that they should be “praised for saving jobs.”

“Me and others felt that there was something strange going on under the surface of this onslaught,” said Pieter-Louis Myburgh, author of “The Republic of Gupta.” “Long before Bell Pottinger’s role became known, we smelled a rat.” The campaign coincided with a period in which the Guptas badly needed a makeover. The brothers had moved to South Africa from Uttar Pradesh in India in 1993 at the behest of their father, who thought the end of apartheid was a terrific business opportunity. The Guptas befriended a variety of ANC luminaries, including Zuma.

Relationships with politicians were soon producing results, Myburgh said. In 2016, South Africa’s Sunday Times listed Atul Gupta as the seventh richest man in the country, with a net worth equivalent to more than $700 million.

The brothers had operated in relative obscurity until 2013, when a jet filled with some 200 guests attending the four-day wedding of a Gupta niece was given permission by a highly placed official to land at an air force base that ordinarily barred commercial traffic. The public was incensed.

From there, the publicity would only get worse. Politicians described being summoned to the Gupta compound and offered ministerial jobs and, on occasion, multimillion-dollar bribes.

In March 2016, a one-time ANC member of Parliament named Vytjie Mentor wrote on Facebook, and later in a sworn affidavit, that the Guptas said she could become minister of public enterprises, though only if she helped cancel the India route flown by South African Airways. (The Guptas had links to a rival.) When she declined, Zuma ambled into the room and told her, in Zulu, “It’s OK, girl. Take care of yourself,” according to the affidavit.

Bell Pottinger’s work for the Guptas was not widely known until November 2016, when a video interview of Ajay Gupta, arranged by the company, leaked to the media. The content of the interview was largely banal. It was proof, though, that one of Britain’s most famous PR firms was helping the brothers.

The leak alarmed Henderson because the video resided exclusively on the company’s servers. Henderson hired Pelican Worldwide, a corporate intelligence firm, to determine whether someone had hacked Bell Pottinger’s system. When no signs of hacking were found, suspicion inside the company fell on Jonathan Lehrle and Darren Murphy, two executives who would depart in December 2016 and start a new PR firm with Bell.

Both men deny involvement.

— Mismanaging Its Own Crisis

Bell Pottinger’s links to the Guptas went full-on radioactive in March, when a mysterious 21-page report was posted on the website of the South African Communist Party. Written anonymously and without any cited sources, the report laid out the history of Bell Pottinger’s work for the Guptas, tagging the firm as the brains behind Twitter hashtags, such as #HandsofftheGuptas, and an array of bogus social media accounts.

Henderson issued a news release asserting the report contained statements that were “wholly untrue.”

He had a point.

Although Bell Pottinger was widely blamed for the social media campaign, a forensic analysis performed by the African Network of Centers for Investigative Reporting concluded that it was created and overseen by employees and affiliates of the Guptas. In a report called “Manufacturing Divides,” the network found that much of the campaign was run out of a Gupta-financed “war room” at a marketing firm in India.

Instead, the role of Bell Pottinger was to keep a close eye on social media related to the Guptas and their enemies. A cache of some 200,000 internal documents, christened the GuptaLeaks, that wound up in the media this past summer, includes a Bell Pottinger presentation titled “Gupta Family online landscape briefing document.” It tracks mentions of the Guptas and a list of hashtags and keywords, some pro-Gupta, some anti-Gupta. “Sentiment is more positive in conversations online compared to yesterday,” the report states.

Likewise, there is scant evidence that Bell Pottinger promoted “white monopoly capital,” the phrase that helped doom it. A law firm report commissioned by the company later concluded that employees of the firm had used the phrase “on occasion.” That is more often than is defensible, though it hardly explains the term’s sudden vogue.

The 21-page document had credibility, however, because it contained details that only insiders could have known, some of which were utterly gratuitous. Like the cost to rent the Italian villa for the wedding of Victoria Geoghegan, the Bell Pottinger executive who led the South African team.

A few days after the report went public, an anti-Zuma demonstration in South Africa included anti-Bell Pottinger placards. One showed a photograph of Geoghegan with blood dripping from her lips and the words “Gupta’s Girl” over her head. A demonstration in front of Bell Pottinger’s London office soon followed.

In April, Bell Pottinger canceled its deal with the Guptas, citing “increasingly strong social media attacks on our staff and our business.” It did not help.

Nor did Henderson’s “unequivocal and absolute apology” in July, or his resignation in September the day before Britain’s PR trade group tossed out Bell Pottinger. The company suffered 8 million pounds worth of client losses in 48 hours and layoffs began soon after.

Other companies linked, both directly and indirectly, with the Guptas are just beginning to deal with fallout of their own. The South African Companies and Intellectual Property Commission is pursuing criminal complaints that emerged from an investigation into state contracts and the Gupta-Zuma nexus, which have ensnared KPMG, SAP and McKinsey. A spokeswoman for KPMG said in a statement that apologies have been made “to those affected,” adding that nine senior partners at the company had departed. SAP issued a statement in October apologizing “wholeheartedly” and noting that three staff members had been placed on leave. McKinsey has denied involvement in acts of bribery or corruption and issued a statement saying, “We are sorry for the distress this matter has caused the people of South Africa.”

For its part, Bell Pottinger never shook allegations that it ran that vitriolic social media campaign, nor that it was responsible for injecting “white monopoly capital” into the national dialogue.

Clearly, Bell Pottinger was not an innocent bystander, and for a crisis management firm, it did a terrible job of managing this crisis. At least a dozen chances were missed to avert calamity.

“As chief executive at the time, I take culpability for not closing down the account in the early stages,” Henderson said in an interview. “Whilst I was not involved at any time in any way in the account, I should have taken action earlier.”

Its errors notwithstanding, the company ended up being blamed for an even greater number of misdeeds than it actually committed, and it is worth asking how that happened.

Former employees contend that they were the target of — what else? — a furtive PR campaign. Inside Bell Pottinger, it was widely believed that Bell wanted to damage the company just enough to weaken Henderson and compel a change of leadership.

“Rubbish,” said Bell, who stated that he had nothing to do with the 21-page report. At the same time, he readily acknowledges that he started plans to take control of Bell Pottinger as soon as he left it. He hoped to line up investors and buy up enough shares to force out Henderson. He said he abandoned the plan after deciding that the firm was beyond saving.

— ‘Damage Done’

The Gupta-Bell Pottinger campaign backfired on just about everyone, especially the Guptas. In an August statement, the brothers said they intended to sell all of their South African holdings by the end of 2017.

Zuma could soon be removed by his party over issues of corruption and the stagnant economy. His term was supposed to end in 2019, but Cyril Ramaphosa, the man who became head of the ANC in December, has called for Zuma to step down. A judicial inquiry was recently announced to investigate “state capture” and the president’s relationship to the Guptas.

A spokesman for the Guptas did not return emails. Zuma has repeatedly denied all accusations of corruption.

Henderson lost everything when the firm filed for bankruptcy, starting with his reputation. He became known as the guy in charge of a public relations company that perished in a public relations fiasco. The British media reported that he lost his entire life’s savings when Bell Pottinger evaporated and, for a time, he also seemed to have lost his fiancee. The American socialite Heather Kerzner had invested a sizable chunk of her personal wealth in Bell Pottinger four months before it went under. The wedding was originally scheduled for November. Henderson said the couple hoped to marry.

“That’s our intention,” he said.

But arguably the greatest casualty of the Gupta-Bell Pottinger campaign is the very cause it nominally championed, helping impoverished blacks. Like most propaganda, the ideas promoted by the Guptas contained kernels of truth. The economic advancement of blacks postapartheid has indeed been painfully slow.

The topic is now exponentially more fraught, given its association with the Guptas, who tried to use it as a way to enrich themselves and expand their power. For a young democracy that is grappling with a history of institutionalized racism and trying to spread wealth more evenly throughout the country, the results have been tragic.

“The damage done by this campaign is not over,” said Sipho Pityana, a businessman who headed the Department of Labour under the Mandela administration. “It shapes the discourse about inequality in South Africa to this day.”

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