PR supremo Lord Bell's Chime Communications yesterday issued a surprise profit warning after an unexpected slide in revenues at its Bell Pottinger subsidiary in the period following The Independent's exposé of its lobbying activities.
The company, whose shares fell6 per cent on the news, said business had fallen off sharply since the start of the year – shortly after The Independent revealed how Bell Pottinger executives had boasted of their use of "the dark arts".
Some Chime shareholders, including Sir Martin Sorrell, who owns 20 per cent through his WPP business, expressed their unhappiness with a series of protest votes at yesterday's annual meeting.
It comes as Lord Bell is controversially planning a management buyout of part of the Bell Pottinger spinning operation which Sir Martin bitterly opposes.
More than a third of shareholders either voted against or abstained on the re-elections of Lord Bell, fellow PR man Piers Pottinger and nearly all the other directors. Over 45 per cent failed to back one non-executive director, the tax lawyer Catherine Biner Bradley. It is understood that WPP abstained on those votes.
However, WPP's decision to flex its muscle appears to have ratcheted up tension with some other Chime shareholders, as 28 per cent voted against the re-election of WPP's director on the board, Paul Richardson.
Despite the protest vote, Lord Bell, chairman of Chime, claimed there was "no drama" and pointed out that all the votes had been passed. He also dismissed suggestions that the PR firm had been affected by The Independent's coverage and added that he was making "significant progress" with his plans to carry out the buyout of Bell Pottinger.
But Sir Martin told The Independent: "We note with interest the 'sudden' decline in PR revenues in the UK."
He added pointedly that his own company is "not seeing a decline in revenues" for either the first quarter or in its forecast for the year. The WPP boss has previously said that Chime should change the management rather than sell it, if it has problems.
Chime said its plans for the buyout are on track and it is planning an extraordinary general meeting in mid-June. "The terms have been agreed and are based on 2011 profits," said Chime, which needs 50.1 per cent of shareholders to approve the sale. Chime will retain a 25 per cent stake if Bell Pottinger is spun off.
Bell Pottinger recently lost a US government contract and has come under increasing fire for its client list, which has included the Egyptian Ministry of Information, the governments of Sri Lanka and Belarus, and the ex-News International chief executive Rebekah Brooks.