Deal that undid Bell Pottinger: inside story of the South Africa scandal
Much seemed at stake in January 2016 when a delegation headed by the veteran PR supremo Lord Bell jetted to to pitch for business from the Guptas, the Indian-born family at the centre of the nation’s biggest political scandal since the end of apartheid.
, the public relations agency that Margaret Thatcher’s favourite PR adviser co-founded with Piers Pottinger in 1987, stood to gain lucrative fees of £100,000 a month.
Bell needed a solid business win as collateral in a personal battle raging with Bell Pottinger’s chief executive, James Henderson, who was trying to force out his chairman, arguing that he was not bringing in enough work to justify his £1m-a-year personal salary.
Twenty-one months later, Bell – who denies that he ever led the campaign – has left to found the geopolitical PR agency Sans Frontières Associates, Henderson has resigned and their deal with the Guptas has left the company with the kind of reputational crisis it is supposed to help clients avoid.
This week, Bell Pottinger has been and (PRCA).
The company, which is 37% owned by Henderson and his fiancée, Heather Kerzner, the ex-wife of South African casinos multimillionaire Sol Kerzner, is essentially up for sale. Whether it has any value is debatable: the agency’s second largest shareholder, Chime Communications, , unable to sell it but unwilling to retain any interest in the business.
The “economic emancipation” campaign that Bell Pottinger waged for the Guptas’ company Oakbay Investments succeeded only in stirring racial tensions in the nation.
An investigation by the PR publication CorpComms Magazine revealed what happened after that fateful January 2016 meeting.
The two sides had been put in contact by Christopher Geoghegan, an experienced former defence industry executive whose 33-year-old daughter Victoria worked for Bell Pottinger in corporate communications.
Representing Bell Pottinger were Bell, who once advised the former South African president FW De Klerk, Victoria Geoghegan and Jonathan Lehrle, a partner in Bell Pottinger’s geopolitical division who was brought up in South .
On the other side of the negotiations was Jacob Zuma’s son Duduzane Zuma, a friend of brothers Ajay, Atul and Rajesh Gupta, whose business interests span media, mining and computing equipment.
Atul Gupta alone ranked as the seventh richest person in South Africa in 2016 with an estimated wealth of $773m (£600m).
The Zuma family’s friendship with the Guptas had already spawned the “Guptagate” scandal in 2013 when the brothers were allowed to make a VIP landing at a South African airbase on their way to a wedding as a personal gift from the president.
The president, two of whose children have worked for Gupta companies, had denied the allegation in parliament and an in-house investigation petered out. Still under attack for having too much influence over South African politics, the Guptas wanted Bell Pottinger’s help.
According to leaked documents, Duduzane said the campaign should be “along the lines of economic emancipation of whatever” with a “narrative that grabs the attention of the grassroots population who must identify with it, connect with it and feel united by it”.
Bell Pottinger was to foment greater debate about inequalities due to “economic apartheid” in South Africa – a mandate that increasingly became seen as diverting attention from attacks on the Guptas.
An £100,000-a-month Oakbay contract was signed in January 2016 and extended three months later. Henderson is said to have inserted an “embarrassment clause” allowing Bell Pottinger to exit and claim compensation if its controversial clients damaged its own reputation.
In April 2016, the close links between the Guptas and Zuma began coming under closer scrutiny, with the phrase “state capture” alleging that the brothers were exercising undue influence on the mechanisms of state.
The South African investment bank Investec resigned its account with Bell Pottinger over the company’s work for the Guptas.
Then Bell told Henderson that Johann Rupert, the South African chairman of the Swiss luxury goods group Richemont which owns brands including Cartier and Chloé, had privately expressed concerns about the work Bell Pottinger was doing for the Guptas.
Bell left Bell Pottinger in August 2016, with Lehrle and Darren Murphy, another Bell Pottinger partner, later joining him at Sans Frontières.
As word leaked about Bell’s impending departure, more details about a seamy side to the “economic emancipation” campaign started to emerge.
Bell Pottinger was accused of stirring up anger about “white monopoly capital” in South Africa. Material including a video interview with Ajay Gupta, which had never been publicly circulated, was leaked onto South African media.
Bell Pottinger was accused of inciting racial tension, and operating fake Twitter accounts to mount racially driven campaigns.
The original Guptagate scandal, meanwhile, continued to build traction. In November, 2016, a damning 355-page report by South Africa’s former public protector Thuli Madonsela was released despite attempts by Zuma and two South African ministers to suppress it.
It claimed that the Guptas had offered one politician the job of finance minister, attempting to sweeten the arrangements with $44m of cash when he refused.
The report also stated that the Guptas had tried to offer another politician the job of minister of public enterprise, in charge of state-owned companies.
In addition, it said Bell Pottinger had attempted to stir up racial anger in South Africa, mounting a “hateful and divisive campaign to divide South Africa along the lines of race”.
Bell Pottinger correspondence also began to appear in the South African media after a leak of 100,000 emails known as “GuptaLeaks”.
One appeared to show that Bell Pottinger had suggested that Oakbay doctor its Wikipedia page to show itself in a better light.
In November 2016, Rupert stunned the annual meeting of a Richemont subsidiary by announcing that Bell Pottinger was behind a campaign that was making personal attacks on him and was the creator of the incendiary phrase “white monopoly capital” – something that insiders at the PR company deny.
Richemont and the South African Tourist Board resigned their Bell Pottinger accounts but the PR firm did not quit the Oakbay contract until April this year.
Henderson maintained that allegations that the firm had worked to stoke racial tensions in South Africa were “completely untrue”.
However, another report issued in July brought yet more allegations and a South African opposition politician referred Bell Pottinger to the PRCA and the Chartered Institute of Public Relations.
Henderson responded by firing Victoria Geoghegan and suspending Nick Lambert, another Bell Pottinger partner, and two junior team members for “inappropriate and offensive” activity.
but maintains he was unaware of what his firm was doing for the Guptas, insisting that he took no direct part in thecontract, never met or communicated with the Guptas and delegated all responsibility for the contract to his account team.
Victoria Geoghegan, who was promoted to managing director of Bell Pottinger’s financial and corporate division in December 2016, became the public face of the firm’s Oakbay account after Bell was finally forced out of Bell Pottinger in August 2016.
South African headline writers have not held back. One declared: “From angel to pure evil: how UK PR Victoria Geoghegan got her claws into South Africa.” Another asked “how evil mastermind Victoria Geoghegan sleeps at night”.
Now eight months pregnant, she is understood to be preparing a case for unfair dismissal.
This week’s events will not end this saga. There is the possibility of a South African government investigation and even potential criminal charges.
Bell will continue to be paid by Bell Pottinger until December. But the firm he created, and which was once one of the best known names in the City, is in tatters – and the damage it has wreaked on the fragile politics of South Africa may take years to undo.