Bell Pottinger ‘faces collapse’ as investor, clients race for exit

Public relations firm Bell Pottinger is fighting for survival, as clients and its biggest investor flee in wake of scandal.

An exterior view shows the facade of a building that houses the headquarters of public relations firm Bell Pottinger in London. (AP Photo/Matt Dunham)

Bell Pottinger was fighting for its survival overnight after its biggest outside shareholder renounced its holding, British clients started to defect in large numbers and senior staff began to seek new jobs.

The WPP-owned Chime Communications, which is chaired by Lord Coe, announced that it no longer held an interest in the public relations consultancy.

It is understood to have given its 27 per cent Bell Pottinger stake to Bell Pottinger for nothing in a scramble to distance itself from the firm.

British clients were similarly rushing to dump the firm yesterday, with HSBC, St James’s Place, the wealth manager, DS Smith, the packaging group, and Carillion, the construction group, all in the process of severing ties.

Unite, the student accommodation provider, Berwin Leighton Paisner, the law firm, and Non-Standard Finance, a subprime lender, have also given Bell Pottinger notice, while CYBC, owner of the Clydesdale and Yorkshire banks, sacked it in July.

Other clients were remaining loyal or refusing to say. Waitrose declined to comment, while Secure Trust said that it had no plans to change but was “keeping matters under review.”

Some of Bell Pottinger’s staff are seeking new berths, with John Sunnucks, chairman of the financial and corporate division, leaving last night.

The firm has been poleaxed by a scandal in South Africa, where it was accused of inciting racial hatred in a PR campaign for the wealthy Gupta family. James Henderson quit as its chief executive at the weekend and it was expelled from its trade association, the Public Relations and Communications Association, yesterday.

The zero value ascribed to the firm by the stake giveaway by Chime suggests that senior figures in the business could be facing huge losses. It was valued at £20 million in 2012 when the management team bought 75 per cent of the company from Chime.

Mr Henderson and his fiancee Heather Kerzner own 37 per cent of the firm. About 60 executive partners also own equity in the business.

“It all looks a bit terminal to me,” one former client said. “It’s hard to see how they can survive this.”

The atmosphere in Bell Pottinger’s headquarters in central London was said to be grim yesterday. “All of us have to look to ourselves now,” one insider said.

In 2015, the last year for which accounts have been published, the firm made profits before partner distributions of £11.03m on turnover of £33.2m. Recent filings show two directors, Stuart Leach and Nicholas Lambert, standing down last week.

The firm is hoping to appoint a successor to Mr Henderson within days. Hugh Taggart, who heads its Engage branding division, is seen as a favourite for the job. BDO, the accounting firm, has been hired to explore options, including selling out to a rival firm. A name change is another possibility.

“It’s been a difficult few days,” a spokesman said, “but by the end of this week we’ll have a new management structure in place. Absolutely we can survive.

“We’re one of the biggest privately owned PR firms in the UK and do a wide range of work.” Only four out of 250 staff were involved in the Gupta case, he added.

The Times