British public relations firm Bell Pottinger, accused of stirring racial tension in South Africa, faces administration to save it from collapse, a company source said Friday.
"We may well be in administration by Monday," the source told AFP, in reference to the process whereby a troubled firm calls upon independent expert financial help in a bid to remain operational.
In a chaotic week, major clients including banking giant HSBC and telecommunications group TalkTalk have axed ties with Bell Pottinger after it was accused of orchestrating a racially-charged campaign on behalf of the controversial Gupta family in South Africa.
Other fleeing customers include construction company Carillion, financial services firm Investec and luxury goods maker Richemont, according to media reports.
Britain's Public Relations and Communications Association (PRCA) trade body expelled Bell Pottinger on Tuesday over a campaign deemed "likely to inflame racial discord".
Earlier this week, the Middle East offshoot of Bell Pottinger sought to distance itself from the controversy in a statement to Arabian Business on Tuesday, insisting it had rejected the opportunity to work on the Oakbay account.
A spokesman for the Middle East office of Bell Pottinger said: “Let’s be very clear about this. At no point did Bell Pottinger Middle East ever work for the Gupta family or on the Oakbay account.
“This particular client was managed out of London. In fact, the opportunity to assist on the Oakbay account was flatly rejected by Bell Pottinger Middle East.”
The spokesman added: “Our business in the region remains strong and we continue to deliver exceptional work on behalf of our clients.”
'White monopoly capital'
"White monopoly capital" was one of the slogans Bell Pottinger used on behalf of Oakbay Capital, an investment holding company run by the Indian Gupta family.
The Twitter hashtag #whitemonopolycapital is used by supporters of South Africa's ruling Zuma family, which has controversial ties to the Guptas, to discredit opponents.
The British PR giant deliberately created a narrative of "economic apartheid" to defend the Guptas, according to an independent report, which was conducted by law firm Herbert Smith Freehills and published on Monday.
By Thursday, Bell Pottinger chairman Mark Smith told a staff meeting at the PR firm's headquarters in Holborn, central London, that it was likely to go into administration.
Accountancy firm BDO has been hired to look at options including a possible sale.
Various media reported that Bell Pottinger's Asian division will separate from its parent group and rebrand under the name Klareco Communications.
The group's second biggest shareholder, advertising firm Chime, has meanwhile written off its investment and handed back its 27-percent stake.
Nevertheless, Bell Pottinger is still "considering all the options", according to an official spokesman.
The group has pledged to introduce a more formal review of client work to help "identify high-risk clients and high-risk mandates", as well as redeveloping its corporate policies, including for social media, and establishing a new ethics committee.
'Fall from grace'
Bell Pottinger was created in 1987 by Tim Bell, one of Margaret Thatcher's foremost PR advisers, and is well known in the UK for its links to the world of politics and business.
British peers were informed on Thursday that the government has no power to remove the firm from its register of lobbyists.
Speaking in the House of Lords, Conservative Party frontbencher Lord Young said that while the company had acted "unprofessionally and unethically" in South Africa, the only way it could be struck off was if it ceased its public relations business.
He also said that the scandal has had "a very damaging impact" on the Britain's reputation in South Africa.
AFP's source said Friday that they were still "hopeful" about the company's situation, adding that the international response to the scandal in their view had been "out of proportion".For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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