×

UPDATE 1-Bell Pottinger's British business folds after South Africa scandal

(Adds background, details)

LONDON, Sept 12 (Reuters) - Bell Pottinger's British arm collapsed on Tuesday after the global public relations agency ran a racially-charged political campaign in South Africa that prompted a client exodus.

After working behind the scenes on some of the most defining moments in recent history, from the election of Margaret Thatcher to the death of Russian spy Alexander Litvinenko, Bell Pottinger crumpled following a scandal of its own making.

Having lost customers, partners and its second-biggest shareholder in recent weeks, the UK company was put into administration by accountants BDO, entering a form of creditor protection after it failed to find a buyer.

"Following an immediate assessment of the financial position, the administrators have made a number of redundancies," BDO said.

"The administrators are now working with the remaining partners and employees to seek an orderly transfer of Bell Pottinger's clients to other firms in order to protect and realise value for creditors."

Bell Pottinger entered a tailspin earlier this month after it was thrown out of an industry body for running a campaign in support of South African President Jacob Zuma, funded by the influential Gupta family, that sought to stir racial tension.

In July this year it apologised after an email published in South African media showed it had sought to stress the continued "existence of economic apartheid".

With the inflammatory slogan "white monopoly capital" running on a Gupta-owned television channel, the country's main opposition party, the Democratic Alliance, complained that Bell Pottinger was seeking to "divide and conquer" the public.

The outcry led to the resignation of Bell Pottinger CEO James Henderson, also its biggest shareholder, while its second-biggest investor wrote off its stake. Clients such as global bank HSBC publicly distanced themselves from the firm.

BDO said none of Bell Pottinger's subsidiaries outside the UK were in administration, and would continue to trade under the control of their separate management teams. (Reporting by Kate Holton; editing by Alexander Smith)