The Asia unit of Bell Pottinger, the scandal-tainted public relations agency, will separate from its London-based parent and change its name to Klareco Communications.
The company was formalising a “complete separation from Bell Pottinger” after a report released this month found that the group’s South Africa office had created campaign material that was “potentially racially divisive” and aimed at stirring racial tension in the country.
The company in Asia will relaunch under new ownership in the coming days, according to an emailed letter to clients seen by the Financial Times. The letter also confirmed the UK business was expected to go into administration as early as next week.
The letter to clients said that the name Klareco came from the word for clarity in Esperanto.
Piers Pottinger will remain as chairman of the company in Asia.
The company will retain most of its clients in Asia, although one or two are reviewing the situation, said Sam Turvey, managing director of the newly formed Klareco in Hong Kong.
As of Friday, members of the company were still using Bell Pottinger email addresses but had changed the email signature to “Klareco Communications”. The Asia business was not immediately available to comment on Friday.
The letter sought to assure clients that “the Asia business is entirely ringfenced and solvent. Our teams are intact, we continue to serve our clients, and it is mostly business as usual”.
An independent report by Herbert Smith Freehills found that work done by Bell Pottinger on behalf of South Africa’s powerful Gupta family was “in breach of relevant ethical principles”.
Co-founded in the late 1980s by Margaret Thatcher’s favourite advertising executive, Lord Tim Bell, the group has been accused of whipping up racial tensions in its messaging for Oakbay, a company controlled by the Guptas.
The Gupta family has been criticised for its strong links to South Africa’s political elite, in particular the country’s president Jacob Zuma.
Since the release of the report, Bell Pottinger’s chief executive James Henderson has resigned and the British PR industry’s trade body expelled the company for at least five years.
Bell Pottinger hired the accountancy firm BDO to advise on a potential sale of the public relations business but staff at its London headquarters were told this week that the firm was likely to go into administration as early as Monday.
The Public Relations and Communications Association also concluded in a report that the messaging for the Guptas targeted wealthy white individuals and corporations in South Africa and was likely to inflame racial tensions.
Since the report was published on Monday, a host of big-name clients and companies have sought to distance themselves from Bell Pottinger, with HSBC, TalkTalk and Ascential joining luxury brands group Richemont and Investec in publicly abandoning the firm.
In Asia, Bell Pottinger has worked with companies such as Ontario Teachers’ Pension Plan, law firm Pinsent Masons and the Labuan International Business and Financial Centre based in the Malaysian offshore financial hub.
The group has offices in Hong Kong, Kuala Lumpur, Singapore and Yangon, according to its website.
“This has been a difficult time for everyone — especially as so many good, talented and honest people have been caught up in it,” said Mr Turvey. “But I am pleased our offices in Asia now have control of their own destiny.”