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Bell Pottinger collapses in wake of 'racially divisive' campaign in South Africa

The London headquarters of Bell Pottinger. Credit: AP

Bell Pottinger has collapsed into administration after the tarnished PR firm failed to find a buyer in light of claims it ran a "racially divisive" campaign in South Africa.

The company's demise came after a law firm said that the company had been working on a campaign meant to promote a narrative of "economic apartheid" and the need for more "economic emancipation" in South Africa.

Herbert Smith Freehill added that certain campaign materials for Oakbay Investments - a holding company for the Gupta family - were "negative or targeted towards" wealthy white South Africans or their companies, and was "potentially racially divisive" and in "in breach of relevant ethical principles."

News of the collapse comes just days after Bell Pottinger was kicked out of the Public Relations and Communications Association (PRCA) - the UK's PR industry body - after it was found to have breached two clauses of the organisation's professional charter and two clauses of its code of conduct.

The PRCA's professional practices committee found Bell Pottinger's campaign was "likely to inflame racial discord in South Africa and appears to have done exactly that".

In recent days the Public Relations firm was also ditched by its second major shareholder and abandoned by a number of key UK clients.

Administrators have not confirmed how many staff will be made redundant as a result, though recent reports suggested Bell Pottinger had around 250 employees.

Accountancy group and advisory firm BDO confirmed it was notified of Bell Pottinger's pending collapse on September 8 but was officially appointed administrators of the once-leading City PR company on Tuesday.

BDO said: "Following an immediate assessment of the financial position, the administrators have made a number of redundancies.

"The administrators are now working with the remaining partners and employees to seek an orderly transfer of Bell Pottinger's clients to other firms in order to protect and realise value for creditors.

"We have taken appropriate steps to preserve the rights Bell Pottinger may have in relation to the failure of the business."

The administration only affects Bell Pottinger's UK operations, BDO said, adding the PR firm's subsidiaries located outside of the UK will continue to trade under the control of their own management teams.

Bell Pottinger's Asian and Middle Eastern businesses have also moved to rebrand in the hope of severing ties with its UK parent firm.

BDO said: "Bell Pottinger has been heavily financially impacted by the well-publicised issues resulting in losses of clients, partners and staff and culminating in the expulsion from the Public Relations and Communications Association (PRCA).

"Late last week, the level of those losses, compounded by the inability of the business to win new clients, was such that remaining management were left with no option but to commence the process to place all UK Bell Pottinger entities into administration."

Bell Pottinger's chief executive James Henderson resigned just days before the Herbert Smith Freehill report's release.