Bell Pottinger, a public relations firm that works for companies and governments around the world, has been thrown out of the industry's British trade body because it ran a campaign that was likely to inflame racial tensions in South Africa.
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The Public Relations and Communications Association imposed the sanctions after complaints about the campaign conducted on behalf of Oakbay Capital, owned by the controversial Gupta family. Critics said Bell Pottinger played on racial tensions to distract attention from scandals surrounding the Guptas, who are under scrutiny for alleged efforts to leverage ties to South African President Jacob Zuma for their own benefit.
"Bell Pottinger has brought the PR and communications industry into disrepute with its actions, and it has received the harshest possible sanctions," Francis Ingham, the association's director-general, said in a statement. "The PRCA has never before passed down such a damning indictment of an agency's behavior."
The association on Monday terminated Bell Pottinger's membership and said the firm couldn't reapply for corporate membership for at least five years. The Democratic Alliance, the biggest opposition party in South Africa, supported the action.
The decision followed an investigation by the law firm Herbert Smith Freehills, which found that Bell Pottinger breached professional ethics when it created an economic emancipation campaign that targeted wealthy white South Africans and corporations and had the potential to be racially divisive and offensive.
The campaign "was by any reasonable standard of judgment likely to inflame racial discord in South Africa and appears to have done exactly that," the association said.
London-based Bell Pottinger was accused of engineering a publicity campaign against "white monopoly capital" in South Africa, a catchphrase that taps into resentments among the black majority that white people still have significant control of the economy more than two decades after the end of apartheid. The campaign, critics say, was designed to deflect anger about the corruption allegations swirling around the Guptas and focus on whites as the scapegoat for South Africa's problems.
Stung by such criticism, Bell Pottinger stopped working for Oakbay Capital earlier this year and commissioned the investigation by Herbert Smith Freehills. In releasing the findings, Bell Pottinger said it would take steps to ensure it meets the "highest ethical and industry standards" in the future.
"Bell Pottinger does not believe that the actions taken in relation to this account are representative of the way it works in general," the company said. "Nevertheless, Bell Pottinger is determined to learn lessons from this review."
The firm's CEO, James Henderson, resigned over the weekend.
While it wasn't unethical for Bell Pottinger to work on the economic emancipation program, senior management failed to carefully scrutinize the content that was created for such a sensitive campaign, according to the report from Herbert Smith Freefields. Management also failed to ensure that the team working on the account had the necessary geopolitical expertise for a project of this nature.
"Certain material that we have seen that was created for the campaign was negative or targeted towards wealthy white South African individuals or corporates and/or was potentially racially divisive and/or potentially offensive and was created in breach of relevant ethical principles," the report said.
Chris Torchia contributed to this report.