BDO seeks legal action against Bell Pottinger Partners to recover funds

08 May 2019 2 min. read
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Following revelations around the illegal activities conducted during the racial scandal in 2017, global accounting and advisory firm BDO is set to bring legal action against several executives at collapsed public relations firm Bell Pottinger. The executives in question are from the Partner level. 

Involvement with the infamous Gupta group – which has led to severe loss of business amongst a number of global professional services firms – resulted in the bankruptcy of Bell Pottinger, a London-based public relations and reputation management firm that was established in 1987.

The firm filed for bankruptcy in 2017, at which point in time global professional services firm BDO was appointed to seek a potential purchase option in the market. Nevertheless, Bell Pottinger had no takers, and three senior BDO executives were brought on board to conduct administration for the firm.

William Tait, Malcolm Cohen and Colin Haig have been conducting administration ever since, and the primary task has been to amass £14 million that Bell Pottinger owes to various creditors. To obtain the funds, the three executives have been looking to 40 Bell Pottinger Partners.

BDO seeks legal action against Bell Pottinger Partners to recover funds

The legal action being sought against Bell Pottinger Partners is on the grounds of promoting racial tension in the country through a protracted smear campaign conducted between 2016 and 2017. The campaign led to the ousting of the firm from the Public Relations and Communications Association in South Africa, and ultimately caused its collapse.

“Certain members [of Bell Pottinger] failed in their duty to act in good faith and in accordance with applicable standards of corporate governance. The relationship between the actions of these members and the financial failure of the limited liability partnership appears strongly correlated” said BDO in a statement.

The racially motivated campaign is said to be in violation of the Partners’ contracts and thus merits legal action. In addition, administrators are considering possible legal action against Founder of Bell Pottinger Lord Bell, on the grounds that comments he made on live TV were in violation of an exit agreement.

Having absorbed Grant Thornton’s South Africa operations over the last two years, BDO is now among the major competitors in the country’s accounting and advisory space, particularly as a number of the Big Four are currently involved in scandals of their own.