Genesis of a PR scandal

In January 2016, Lord Tim Bell, chairman and co-founder of Bell Pottinger, accompanied Victoria Geoghagen, a 33-year-old corporate PR specialist, and Jonathan Lehrle, a partner in the firm’s geopolitical division, to discuss some lucrative business.

Bell made his name in political PR. Best-known for being Lady Thatcher’s favourite PR adviser in the 1980s when he was said to be ‘so charming that dogs would cross the road to be patted by him’, his contacts book contains the names of international political leaders.

He acted for Hernan Buchi, a former minister of Chile’s Pinochet dictatorship, in a presidential election campaign, handled the media attention after the death of poisoned former Russian spy Alexander Litvinenko and successfully lobbied on behalf of the Saudi Arabian government for the Serious Fraud Office’s investigation into alleged bribes in the Al Yamamah arms deal to be discontinued.

He was in South Africa to meet a potential client – Oakbay Investments – who was introduced to Bell Pottinger by Christopher Geoghegan, father of Victoria and an experienced former defence industry executive.

They developed the idea of fomenting greater debate about inequalities due to ‘economic apartheid’ in South Africa, which the Guptas did not feel was getting enough traction in the international press

Oakbay Investments is the holding company for the South African interests of the Gupta family, an Indian-born South African business family whose most notable members are brothers Ajay, Atul and Rajesh and their nephew Varun.

The Gupta’s interests span media, mining and computer equipment. Atul Gupta ranked as the seventh richest person in South Africa in 2016 with an estimated wealth of $773 million. The brothers shuttle between a family compound in Saxonwold, Johannesburg, comprising four mansions, and Mark Thatcher’s former home in Cape Town.

The Guptas have form in South Africa and ‘Guptagate’ was already a phrase before Bell Pottinger started representing them, referring to a 2013 scandal after a picture emerged of the Guptas making a VIP landing at a South African air base on their way to a wedding as a personal gift from South Africa’s President Zuma.

The president, who has seen two of his children work for Gupta companies, denied the allegation in parliament and an in-house investigation pointed the finger at three officials, against whom no action ended up being taken.

Oakbay’s negotiations with Bell Pottinger are said to have been led by Jacob Zuma’s son Duduzane Zuma, with Lord Bell fronting the Bell Pottinger team. Christopher Geoghegan was paid a ‘success fee’ for the introduction.

According to leaked documents, Duduzane said the campaign should be ‘along the lines of economic emancipation of whatever’ with a ‘narrative that grabs the attention of the grass roots population who must identify with it, connect with it and feel united by it’.

Lord Bell knows South Africa well, having undertaken public relations work for former South African president FW De Klerk. Lehrle, meanwhile, was brought up in South Africa and  Geoghagen had experience of working on corporate accounts for African companies.

They developed the idea of fomenting greater debate about inequalities due to ‘economic apartheid’ in South Africa, which the Guptas did not feel was getting enough traction in the international press.

‘Bell Pottinger’s job was not to reinvent the wheel,’ says one source with knowledge of the operation. ‘It was about getting that debate elevated in top international publications. It was termed as ‘increasing awareness of economic apartheid’ and ‘promoting economic emancipation’. As the on-the-ground tension in South Africa was palpable even then, this mandate appealed as the right thing to do.’

Bell Pottinger was not tasked with prescribing solutions to economic apartheid, other than encouraging more competition and consumer choice in the monopolistic and oligopolistic South African economy.

Such a view, insiders point out, was being taken by bodies as diverse and well-meaning as charity Oxfam and the International Monetary Fund. It did not seem dangerous or incendiary. It was subsequently seen, however, as diverting attention from attacks on the Guptas and deepening racial tensions.

At first, the operation of the account largely required corporate PR, endeavouring to publicise the point that, contrary to popular opinion, very little of Oakbay’s revenues came from state contracts.

Oakbay’s motivation was said to be about encouraging more competition and deregulation in the South African economy. ‘The brothers believed that they could out-compete anybody if they had a chance to enter a sector,’ explains one source.

The division of labour within Bell Pottinger was clear. Lord Bell, along with his colleagues Darren Murphy and Lehrle in the geopolitical division, would lead on increasing awareness of economic apartheid and promoting economic emancipation, while Geoghegan and her team worked on the corporate side.

An initial three-month arrangement was formalised into a £100,000-a-year contract in March 2016. However, four months after the original work began, the South African media began running stories about the close links between the Guptas and President Zuma, using the phrase ‘state capture’ to allege that the brothers were exercising undue influence on the mechanisms of state.

In March 2016, South African investment bank Investec resigned its account with Bell Pottinger. The next month Lord Bell told Henderson that Johann Rupert, chairman of luxury goods group Richemont, and a long-standing client, had expressed concerns to him privately about the work.

Soon more details about a seamy side to the ‘economic emancipation’ campaign started to emerge. Bell Pottinger was accused of stirring up anger about ‘white monopoly capital’ in South Africa.

Meanwhile, Henderson’s two-year battle to oust Lord Bell was bearing fruit. Bell left Bell Pottinger in August 2016 to join Sans Frontieres Associates, a geopolitical agency that Lehrle and Murphy were setting up.

As word leaked about Lord Bell’s impending departure ‘everything changed,’ according to one source. The South African media began running stories speculating that Bell Pottinger was about to quit the Oakbay contract.

Soon more details about a seamy side to the ‘economic emancipation’ campaign started to emerge. Bell Pottinger was accused of stirring up anger about ‘white monopoly capital’ in South Africa.

Material including a video interview with Ajay Gupta, one of the Gupta brothers, which had never been publicly circulated, was leaked onto South African media. ‘From that moment, everything started to get super-controversial,’ comments one Bell Pottinger insider. ‘We were being accused of inciting racial tension, white monopoly capital and divisive Twitter campaigns.’

The original ‘Guptagate’ scandal continued to build traction. In November 2016, a damning 355-page report by South Africa’s former public protector Thuli Madonsela was released despite attempts by President Zuma and two South African ministers to suppress its release.

It claimed that the Guptas offered one politician the nation’s finance minister’s post, attempting to sweeten the arrangements with $44 million of cash when he refused.

The report also states that the Guptas tried to offer another politician the job of minister of public enterprise, in charge of state-owned companies.

It’s the report that confirms South Africa’s worst fears about corruption: that the state has been captured

And it shed light on Bell Pottinger’s involvement. The firm, it was alleged, had attempted to stir up racial anger against the ‘white monopoly capital’ that still controls most of South Africa’s wealth and power to draw attention away from the claims of political interference and ‘state capture’ that were being made about the Gupta family’s activities. The allegedly ‘hateful and divisive campaign to divide South Africa along the lines of race’ included creating fake Twitter accounts to target prominent white business people.

Bell Pottinger correspondence also began to appear in the South African media after a leak of 100,000 emails dubbed ‘GuptaLeaks’. One appeared to show that Bell Pottinger suggested that Oakbay doctored its Wikipedia page to show itself in a better light. ‘It’s the report that confirms South Africa’s worst fears about corruption: that the state has been captured,’ wrote the Quartz Africa website in November 2016.

Bell Pottinger could not escape from the line of fire. Johann Rupert, the Richemont chairman renowned for being media-shy, stunned an annual general meeting in November 2016 by announcing that Bell Pottinger was behind a campaign that was making personal attacks on him and was the creator of the incendiary phrase ‘white monopoly capital’ – something that Bell Pottinger insiders deny.

Richemont and the South African Tourist Board followed Investec in resigning their Bell Pottinger accounts in protest. In April this year, Bell Pottinger announced that it was to cease working with Oakbay and the Guptas, stating that the firm had become a ‘political football’ after a further wave of leaked emails and allegations. In its 30th year of existence, Bell Pottinger was in serious trouble.