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THIS week has seen the dramatic fall of public relations company Bell Pottinger, after being found guilty of sowing racial discord in South Africa as part of the Gupta-owned Oakbay account.
Heads are rolling/resignations are pouring in (often one and the same thing, depending purely on who gets to the Send button first) and a list of long-standing clients are causing a stampede at the exit.
Falling on his sword
The CEO, James Henderson, resigned on Monday, the same day the company was kicked out of the UK Public Relations and Communications Association. This happened after a complaint was lodged by the Democratic Alliance regarding the allegedly racially divisive and unethical campaign run by the company to polish the image of Oakbay Investments.
The only thing I am in agreement with concerning Bell Pottinger is that they obviously gave the Guptas one look, and decided it would be easier to divert attention rather than try to make them look good. But the way in which they did it was damaging and unethical – and let’s face it, we already have quite enough damage and lack of ethics in SA, we don’t have to import more.
Can you really punish a corporation?
The definition of a corporation is “a large company or group of companies authorised to act as a single entity and recognised as such in law”. Also, it is ‘separate and distinct from its owners’.
One can see where the idea originated – if one person could be held personally liable for losses, nobody would ever want to take that risk. ‘Pty Limited’ indicates a separate company that is privately held – if it goes under, the shareholders cannot take the CEO’s house and clear out his personal bank account as compensation. They can lay claim to company assets, though, but those are usually long gone by then.
Over the centuries, various legal systems have tried to punish corporations that have behaved in a damaging or unethical manner – often with fines. But given the nature of big business, this is usually laughable. Will Shoprite really feel the R1m fine they have been given after being found guilty of reckless lending? They probably make that in 20 minutes on a busy Saturday morning.
Other punishments have included the firing of top executives, and/or minor minions, but not often the people who really made decisions. Call it scapegoating, if you will. Many people try and salvage themselves by saying they were just following orders, or they didn’t make the decisions, it just happened on their beat, and so forth. We have all heard it so many times before. Very seldom does someone acknowledge guilt and fall on their sword.
Besides, firing staff is useless as a punishment – unless they go to prison, or their reputations are sufficiently damaged that they cannot find other employment, they will emerge unscathed a year or two down the line. A corporation is a fluid and slippery thing; it’s difficult to pin it down.
The only real punishment – reputational damage
Then there is deregistration of the company, and finally the business equivalent of excommunication from the church– making it an unpopular or unethical choice for consumers to do business with that particular firm. This is usually much more effective, as it is an ongoing and slow punishment which hits a corporation in the only place where it really has any discernible feelings – its bank account.
And therein lies the rub. Large corporations are bent on making money and profiting their shareholders, usually in whatever way possible. When it comes to hard cash, ethics often fly out of the window. (Such as with medical schemes which invest their reserves in companies such as British American Tobacco, for instance).
But should some irregularity become public, or if a company is found guilty of unethical behaviour, the only true punishment that exists is meted out to them: the destruction of their reputation.
Let’s not get too smug about this. Ethics in business isn’t really a high priority for many large firms: what they fear is reputational damage, and that drives them rather than any pangs of conscience.
Rats leaving the sinking ship
It doesn’t point to the high moral standards of other businesses, when they run like rats from a sinking ship after a damning finding or report. They are merely trying to minimise the damage to their own reputation by association with the offenders.
I would have had more respect for the many departing Bell Pottinger clients if they had decided to cancel their accounts with this PR firm when the rumours started. But the point is they have left now, and in doing so, have punished this company in the only way that really works as a deterrent to others: not to do business with them.
In one fell swoop, such a company’s intellectual assets become virtually worthless, their staff carefully edit this company out of their CVs as they move on, the clients migrate overnight, and the shares go into free fall. Nobody really wants to buy the company any more. In short, it becomes as unsubstantial and elusive as the entity it represents.
It is ironic that a PR company such as Bell Pottinger will probably not be able to rescue its own reputation after this disaster. And nobody will take on the job of doing it for them – not if they care at all about their public image. Call it karma.
But we in SA are still sitting with the fallout, and will, for many years to come. WMC, indeed.
* Susan Erasmus is a freelance writer. Views expressed are her own.
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