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Bell Pottinger Collapse is a Lesson in Risk and Accountability

British PR firm Bell Pottinger went into administration this week shortly after having its membership from the Public Relations and Communications Association (PRCA) terminated. Many mistakes were made, but there are some lessons in risk management and accountability to be taken from this scandal that shook the business and political world.

The scandal began when the PR firm accepted an £100,000 a month contract from Oakbay Capital, the company owned by the controversial Gupta family who have been accused of benefiting financially from the South African president Jacob Zuma. The firm came under fire for allegedly stirring up racial tension in South Africa to deflect heat from the wealthy Guptas. The firm terminated this contract in April claiming it had become the victim of a smear campaign involving ‘false and damaging accusations’.

However, the review conducted by law firm Herbert Smith Freehills (HSF) was damning. James Henderson, Bell Pottinger’s Chief Executive answered questions from the PRCA’s disciplinary committee about the firm’s “hateful and divisive campaign to divide South Africa along the lines of race” for which he issued an apology in July – a u-turn from the firm’s stance that the accusations were false. Henderson resigned the day before the company lost its PRCA membership.

The PRCA expulsion was unprecedented but necessary. It set an example that unethical behaviour and ignoring professional standards cannot and will not be tolerated. After all, it was only after all the dirty laundry was aired that its chief executive issued an apology. In the days that followed, a number of the firm’s high-profile clients promptly fired it. Moreover, its Asian counterpart has rebranded, the firm’s middle-eastern arm is also severing ties and its second largest shareholder handed back its unsellable 27% stake to the company and wrote off its investment. No one wanted to be associated with the disgraced firm and it has now gone into administration, making hundreds of employees redundant.

The Gupta account was just another in a long list of controversial clients that Bell Pottinger had. Others included Oscar Pistorius (after he was charged with murder) The Pentagon (after its 2003 invasion of Iraq) Augusto Pinochet, the Chilean dictator, the Assad family of Syria, and Alexander Lukashenko, the Belarusian dictator.

Risk Management

Senior management at Bell Pottinger failed to spot the ethical breaches the company was making despite a number of opportunities to do so. In the HSF report it states: “members of BP’s senior management should have known that the campaign was at risk of causing offence” and they “should have closely scrutinised the creation of content for the campaign.” Adequate risk management is something you can do to avoid mistakes happening in the first place. Processes should regularly be tested and reviewed to ensure they are watertight and any identified risks within a process should be adequately mitigated. You can:

  • Identify high risk clients so they can be managed more closely
  • Review new client work and regularly review ongoing work
  • Reaffirm your organisation’s values
  • Create an ethics committee and give all staff ethics training
  • Encourage communication and ensure staff feel they are able to challenge work they feel uncomfortable doing

For Bell Pottinger, the HSF report states that “members of senior management with day-to-day supervisory responsibility failed to put in place policies and procedures to minimise the risks associated with this account, including any formal process for the ongoing monitoring of the account and the work being done.”

Accountability

Bell Pottinger dug its own grave and then buried itself. There was no coming back at all after denying the initial allegations of inciting racial tensions, but there are lessons to be learned in accountability, which could help your organisation save face should you make a mistake.

Accountability is important for any business in maintaining its reputation. What’s important is recognising when you are at fault and taking steps so that the mistake doesn’t happen again. Owning your mistake might actually benefit your business in the long-term, because it shows credibility and honesty. It shows that your company can be trusted to admit when it’s at fault, in the end we all have to move on, hopefully having learnt the tough lessons that comes with making a mistake. If you are quick to admit responsibility, it shows that you want to make things right, which people will appreciate.

It’s vital that there is transparency and communication throughout your organisation. When Henderson issued his apology, he claimed he had no involvement in the Gupta account and no knowledge in the work being done. He said he never communicated with the Guptas and delegated everything. If he had known, perhaps the account would have been closed sooner and damage limitation could have taken place. Perhaps the contract would never have been signed in the first place. The point is, clear communication is key right through to board level.

Accountability should all be an integral part of your company culture, so that if mistakes do  happen, people can own up immediately and damage to your reputation can be nipped in the bud, before it unravels completely as it did with Bell Pottinger.

Bell Pottinger knew the risks of its dodgy PR spin, which included propaganda videos and fake Twitter accounts, but continued anyway. The lucrative fee probably had something to do with it, but when you make a mistake as egregious as they did, it’s no wonder the firm collapsed. A PR firm is supposed to enhance and protect reputations, but Bell Pottinger destroyed its own for good. If a company can’t do for itself what it’s supposed to do for its clients, then downfall is inevitable.

You can read the Herbert Smith Freehills report on Bell Pottinger here.

Sources:

https://www.theguardian.com/media/2017/sep/05/bell-pottingersouth-africa-pr-firm

https://www.theguardian.com/media/2017/sep/12/bell-pottinger-goes-into-administration

https://www.theguardian.com/business/2017/sep/04/bell-pottinger-expelled-from-pr-trade-body-after-south-africa-racism-row

https://www.theguardian.com/media/2017/aug/24/bell-pottinger-south-africa-claims-pr

http://www.newsweek.com/bell-pottinger-pentagon-al-qaeda-south-africa-assad-664180

https://www.theguardian.com/media/2017/sep/05/reputation-laundering-is-lucrative-business-for-london-pr-firms