Business

PR race row saga should remind businesses to put ethics before profit

How the FT reported the Bell Pottinger incident

IT passed pretty much unnoticed in the news here, but last week the public relations industry hit the business headlines in a huge;y negative way.

PR people generally want their clients to be the subject of any story, not themselves. But that's not how it worked out for one of the best-known names in global PR, Bell Pottinger.

The PR trade body in the UK, the Public Relations & Communications Association or PRCA (I am chairman of its local branch) took its firmest possible action by expelling Bell Pottinger for a minimum of five years. This followed a festering scandal about Bell Pottinger's work in South Africa which led the country's main opposition political party, the Democratic Alliance, lodging a formal complaint against Bell Pottinger with the PRCA.

In its work to protect one of South Africa most powerful business conglomerates, owned and controlled by the massively wealthy Gupta brothers, Bell Pottinger had devised a campaign that would foment racial tensions in South Africa. The idea seems to have been to distract attention away from the Guptas and their close links to South African President, Jacob Zuma, by attacking wealthy white individuals and businesses.

‘Economic emancipation' was the theme behind the campaign and a social media hashtag #whiteminoritycapital was used. In a country that has done so much to repair and rebuild after the apartheid regime and where wounds are still open, this was a morally corrupt and ethically wrong campaign.

Bell Pottinger had been trying to clean up its own mess for months. In April, the agency stopped working with the client after 13 months, saying it had become a "political football" and citing abusive comments on Twitter.

Chief executive James Henderson, who later resigned, said that allegations it had worked to stoke racial tensions in the country were "completely untrue". In a statement in July, he said that Victoria Geoghegan, the partner who led on the account who has become a figure of hate for many in South Africa, had been sacked and three other staff were suspended.

It also emerged that Bell Pottinger had hired an international law firm, Herbert Smith Freehills LLP, to carry out an independent investigation of the work and said it would publish its report "and take appropriate action".

"However, we have already been shown interim evidence which has dismayed us. Much of what has been alleged about our work is, we believe, not true – but enough of it is to be of deep concern," the July statement from Henderson said

“As soon as we were made aware that we had been misled and that work was being done which goes against the very core of our ethical policies, we acted immediately," Henderson said.

He added: “we wish to issue a full, unequivocal, and absolute apology to anyone impacted. These activities should never have been undertaken. We are deeply sorry that this happened”.

So, the CEO and senior management claim to have been unaware, they sack and suspend the staff responsible, commission an independent report from a highly credible international law firm and issue an unequivocal apology. Sounds like the type of actions they would recommend to a client in a similarly difficult situation.

But it wasn't enough. Fast forward a couple of months and the report from Herbert Smith Freehills (which was not published in full as originally promised) is extremely damning and the PRCA issues its judgment on the matter.

The PRCA's investigation upheld the Democratic Alliance's initial complaint and the PRCA board ruled unanimously that Bell Pottinger had breached both the Professional Charter and the Public Affairs and Lobbying Code.

Last Tuesday, the PRCA announced that Bell Pottinger's membership had been terminated with the company being told that it would not be eligible to reapply for corporate membership of the PRCA for a minimum period of five years.

Francis Ingham, director general of the PRCA, said: “Bell Pottinger has brought the PR and communications industry into disrepute with its actions, and it has received the harshest possible sanction. The PRCA has never before passed down such a damning indictment of an agency's behaviour.

“This outcome reflects the huge importance that the PRCA places on the protection of ethical standards in the business of PR and communications”, he said.

Unlike the medical or legal professions, the PR industry doesn't have a way of barring companies or individuals from practicing but Bell Pottinger as a company is not expected to last the week. So, while all the PRCA could do was cancel a membership, the effect of its judgement is likely to have terminal consequences for the firm.

In the world of PR, this scandal will have extremely serious repercussions but there is a wider business point here too. Bad ethical decision-making can lead to reputation and business extinction. And it all can happen very quickly. What is perhaps most surprising is the fact that the business world regularly seems to forget this and we get disasters like the Bell Pottinger one and for instance, the Volkswagen ‘Dieselgate' emissions tampering scandal last year.

This week, it's likely that most of the Bell Pottinger staff will lose their jobs and the company will be either broken up or wound up completely. It's a hard but necessary lesson for a company which completely lost sight of a moral code and any sense of ethical behaviour.

And it's also a timely reminder for anybody in business to think about ethics before profit. Not all business is good business.

:: Paul McErlean (paul@mcepublicrelations.com) is managing director of MCE Public Relations

:: Next week: Claire Aiken

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