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Kerzner millions in Bell Pottinger up in smoke as tax collectors move in. #GuptaCurse

EDINBURGH — A few weeks back, Bell Pottinger CEO James Henderson thought the #GuptaCurse was a storm in a tea cup. So did his fiancée Heather Kerzner, who injected a massive sum of money into the PR firm as recently as April. But as clients have pulled the plug in the face of evidence of race-baiting and links to corruption money, Bell Pottinger has folded. It is expected to be put into administration soon. First in line to collect debt will be the UK tax authorities, who reportedly can also call on Bell Pottinger partners in their personal capacities for the money they are owed. The Bell Pottinger scandal is set to get a lot uglier yet for the people who worked in this PR beast and were comfortable in an environment in which a blind eye was turned to human decency and ethical business behaviour. – Jackie Cameron

By Thulisizwe Sithole

Heather Kerzner, ex-wife of South African hotel magnate Sol Kerzner, is watching as her investment in Bell Pottinger goes up in smoke.

Heather Kerzner and former husband Sol Kerzner

Kerzner reportedly ploughed a significant chunk of money into Bell Pottinger in April this year, taking about 40% of the company together with her fiancé, Bell Pottinger former CEO James Henderson. The Times estimates that stake as worth £7m.

But Bell Pottinger has crashed and is heading for bankruptcy. Clients have pulled the plug on the firm en masse after Bell Pottinger was exposed for running fake news and smear campaigns in South Africa for the controversial Gupta family.

Bell Pottinger played a role in inciting racial violence in order to shore up support for the Guptas, who have been linked to corruption and state capture. The estimate from the former minister of finance, Pravin Gordhan, is that the Gupta family has raked in a staggering R100bn from state resources.

This weekend, the Daily Mail reported that the disgraced public relations company Bell Pottinger is set to sink into administration within days. The publication has described the collapse of Bell Pottinger as “the most spectacular fall from grace ever to hit the [PR] industry”.

The Daily Mail said the collapse of the company – which was plunged into crisis after being accused of inciting racial hatred during a campaign in South Africa – will affect 270 employees.

The romance between Henderson and Kerzner appears strained, too. The Daily Mail said James Henderson, “said this weekend he has ‘lost everything’, as his winter wedding plans were put on hold indefinitely”. There is speculation in the UK media that the couple are giving each other “space” following explosive developments at Bell Pottinger.

Tying the knot? In business and in love. Heather Kerzner is pictured with former Bell Pottinger CEO James Henderson.

The publication said Kerzner is the biggest shareholder, but the stake she bought for several millions in the spring is likely to be virtually worthless. “Founder Tim Bell will lose around £1million of the severance pay he negotiated when he left the firm last year.”

The big sting in the tail, meanwhile, comes in the revelation that there is a nasty tax bill owed by Bell Pottinger partners, which in turn means the tax collectors will be at the front of the queue when the liquidators start divvying up what is left of Bell Pottinger.

“About 20 partners who face a collective tax bill of £700,000 that they thought had been settled by the company,” said the Daily Mail.

The Telegraph explained that Revenue & Customs is one of the largest creditors of Bell Pottinger, with more than £1 million outstanding, according to company insiders.

“As a limited liability partnership, Bell Pottinger collected tax from its partners before passing it to HMRC when it became due. If Bell Pottinger falls into administration, individual partners could be personally liable for the tax.

“Lloyds, the firm’s biggest lender, appointed BDO to explore options for the firm this week. The accountancy firm is expected to be appointed administrator today or early next week. Lloyds took on Bell Pottinger, which is reported to have debts of almost £6 million,” said The Telegraph.

“Industry body the Public Relations and Communications Association expelled Bell Pottinger for at least five years, saying its actions were likely to inflame racial discord. Ms Kerzner became Bell Pottinger’s biggest shareholder in April, believing the Oakbay debacle had been resolved. She and Henderson between them own around 40 per cent of the company.

The Financial Times reports that Bell Pottinger partners in the Middle East and Asia are trying to salvage what they can to spin off separate – rebranded – companies.

The news of the collapse of Bell Pottinger has reverberated around the world. The Australian highlighted that the Bell Pottinger scandal that this is a controversial matter for the UK’s public relations industry.

“Overwhelmingly centred in London, Britain’s public relations industry is worth about £13 billion ($21.3bn) a year and employs 83,000 people, making it second only to New York’s in size and lustre.

“The city has helped the growth of financial PR, and the concentration of English-language media organisations in London also makes the capital a good place to work. The demise of one of PR’s most famous brands has shocked the industry, which is now trying to cauterise the wound.

A London taxi passes the offices which house the headquarters of Bell Pottinger LLP in London, U.K., on Tuesday, Sept. 5, 2017. Bell Pottinger LLP’s attempt to sell itself has reportedly collapsed amid an exodus of clients and staff, succumbing to an unprecedented backlash over the London public-relations firm’s involvement in a racially divisive social-media campaign the company ran in South Africa. Photographer: Chris Ratcliffe/Bloomberg

“London’s PR industry is keen to avoid contamination from the scandal. The PRCA’s decision to expel Bell Pottinger was welcomed,” said The Australian.

The Telegraph described Heather Kerzner as a glamorous 48-year-old New Yorker who hobnobs with the rich and famous, including Ronnie Wood, from the Rolling Stones, Sir Philip Green, Boris Johnson, photographer David Bailey, and Prince Edward and his wife Sophie, Duchess of Wessex.

“Henderson would have been well aware the socialite was used to the finer things in life. Her first husband, whom she married aged 24, was a successful American banker.

“In 2000, she married, Solomon Kerzner, a hotel tycoon 34 years her senior and described as the Donald Trump of his native South Africa. Before their divorce in 2011, she had enjoyed the 82-year-old’s private jet and yacht, travelled to his luxury resorts in Mexico, Dubai, Mauritius, the Maldives and lived in the Bahamas, on a Buckinghamshire country estate and later in their Holland Park mansion.”

For the full story on the role of Bell Pottinger in corruption and state capture, read: Dummy’s Guide to Bell Pottinger.
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