Category: Business News

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Sean Boulanger

A growing number of tech companies are raising funds by issuing their own digital currencies for investors to buy. But the practice is completely unregulated. Is another financial scandal just around the corner?

Sean Boulanger, a senior community manager at a Cape Town digital agency, doesn’t consider himself a serious investor.

But he came across US tech company Civic, run by fellow South African entrepreneur Vinny Lingham. It was planning to raise money in a way Mr Boulanger had never heard of before.

Instead of issuing shares and floating all or part of the company on the stock market – known as an initial public offering or IPO – Civic decided to issue its own tokens, or digital currency, to help fund the identity verification platform it was developing.

Mr Boulanger was impressed with Civic’s product and decided to invest.

“It has allowed me to jump in and invest in a start-up, which is very difficult in this country to do, especially with limited funds,” says Mr Boulanger.

“The risk is high, but so is the reward.”

Civic raised $33m (£26m) via this initial coin offering (ICO), as it’s known.

The cost of the new currency is set by the issuing company and investors hold the “coins” in digital wallets, hoping that their value will rise as the company flourishes.

Several other companies developing blockchain-based applications have raised money this way, including Bancor ($153m) and Tezos ($232m) with more than $1bn being raised in total so far this year.

Companies like ICOs because they are quick, easy, and free from regulatory red tape.

“Preparing an ICO takes only weeks and can be targeted directly at the interested investors and customers rather than going through venture capitalists,” says Michael Marcovici, a director of Cayman Islands-based Digital Developers Fund.

The Fund is currently offering tokens for sale to raise money for its own investments in crypto-currencies.

But the lack of regulatory oversight is alarming many commentators.

The US Securities and Exchange Commission recently warned investors against fake ICOs and “pump and dump” scams, whereby fraudsters spread rumours and false information about potential ICOs in the hope of boosting a company’s share price.

Once the share price rises, the fraudsters sell, or dump, the shares at a profit.

Mr Boulanger says he was wary of the negative publicity surrounding scam ICOs before he invested – token launches taking place even before a viable product has been developed, for example.

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“I found out that it’s really still the Wild West out there,” he says.

But so far, at least, he doesn’t regret it.

He took the plunge with Civic because he trusted Mr Lingham – a proven entrepreneur and fellow South African who acknowledges that there are risks on both sides.

“This is uncharted territory, but we feel confident that it was the right thing to do for the company,” says Mr Lingham, who aimed to make his firm’s token sale as transparent as possible to avoid any future allegations of wrongdoing.

“There are unfortunately also many scams operating in this space,” he warns.

The worry is that ICOs are creating a classic investment bubble – similar to the Tulip mania in the 17th Century – and attracting fraudsters and hackers to this new, unregulated market.

Nearly 10% (about $150m) of the money invested in ICOs this year using Ethereum – the blockchain-based platform – has been stolen, according to a recent report by Chainalysis, a firm specialising in monitoring crypto-currency transactions.

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“There are already stories of fraudsters capitalising on this somewhat irrational exuberance over ICOs,” says Gray Sasser of US law firm Frost Brown Todd, a blockchain specialist.

He believes that regulation is inevitable. Indeed, the SEC recently suggested ICOs should be registered in the same way as conventional investments.

But advocates like Mr Marcovici believe investors should be left to carry out their own due diligence.

“There will be attempts [to regulate the sector] that is for sure, but as a manager of a fund I must say that regulations mainly add cost to the investor and reduce the options of investors drastically,” he says.

“There will be money lost… but this will be an important step for self-regulation of the market.”

Civic’s Mr Lingham has no doubt that regulation will eventually come in.

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“We’re in the early days of a very new industry,” he says. “I’m very happy to see that places like Zug in Switzerland and Singapore are creating regulatory frameworks for token sales to ensure that they can be controlled and benefit society.”

But Mr Sasser fears that it may take a headline-grabbing fraud to force US regulators into action, given the current US administration’s antipathy towards more regulation.

The risk for firms that have pre-sold tokens before launching any underlying software, he warns, is that new regulation could raise compliance costs to such an extent that this wipes out any money already raised.

“It is only a matter of time before a disgruntled investor makes a securities fraud claim against an issuer,” he says.

“Right now, both investors and issuers are playing without a net.”

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Bell Pottinger has been expelled from the UK public relations trade body for its work on a controversial contract in South Africa.

It is the first time that the Public Relations and Communications Association (PRCA) has ejected a PR firm as prominent as Bell Pottinger.

PRCA director-general Francis Ingham said it was “highly questionable” whether the firm would survive.

Bell Pottinger said it “accepts that there are lessons need to be learned”.

The PR firm’s work on a campaign for Oakbay Capital, a South African company owned by the wealthy Gupta family, had “incited racial hatred” and was “absolutely unthinkable”, Mr Ingham said.

He expected more clients to abandon Bell Pottinger following the sanction.

South Africa’s opposition Democratic Alliance complained to the PRCA, accusing Bell Pottinger of a “hateful and divisive campaign to divide South Africa along the lines of race”.

Listen: Bell Pottinger’s role in South African politics

The campaign emphasised the power of white-owned businesses and used the #WhiteMonopolyCapital hashtag.

South African President Jacob Zuma has faced corruption allegations and suspicion over his ties with the Guptas. Mr Zuma and the Guptas have consistently denied all allegations.

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Chief executive James Henderson resigned ahead of the five-year expulsion from the PRCA. His departure was “necessary, but not sufficient”, Mr Ingham said.

“Bell Pottinger has brought the PR and communications industry into disrepute with its actions, and it has received the harshest possible sanctions,” he added.

The firm was found to have breached two clauses of the PRCA’s professional charter and two clauses of its public affairs and lobbying code of conduct.

The law firm Herbert Smith Freehills was commissioned by Bell Pottinger to conduct an internal review following the Oakbay controversy.

Its review, released on Monday, criticised the PR firm’s senior management: “Bell Pottinger senior management should have known that the campaign was at risk of causing offence, including on grounds of race.

“In such circumstances, BP ought to have exercised extreme care and should have closely scrutinised the creation of content for the campaign. This does not appear to have happened.”

Learning lessons

Herbert Smith also found that certain material created by Bell Pottinger for the economic emancipation campaign “was negative or targeted towards wealthy white South African individuals or corporates and/or was potentially racially divisive and/or potentially offensive and was created in breach of relevant ethical principles”.

PR firm failed in ‘race hate’ campaign

Will ‘the Zuptas’ fall in South Africa?

In a statement Bell Pottinger said it “acknowledges the PRCA ruling, accepts that there are lessons to be learned but disputes the basis on which the ruling was made”.

It added: “The overwhelming majority of our partners and employees played no part in the Oakbay Capital account and have not been accused of breaching the PRCA code. Many of them will now consider applying for individual membership.

“With the Herbert Smith Freehills findings made publicly available and the PRCA ruling published, the business can refocus on delivering outstanding work for our clients and looking after our people.”

Bell Pottinger has already lost clients over the affair, including luxury goods company Richemont and investment firm Investec. The further reputational damage could see other clients sever their ties.

On Tuesday, Labour peer Peter Hain was due to table questions in the House of Lords asking if Bell Pottinger’s actions contravened any UK trade policies.

The PR firm, founded by Lord Tim Bell, was closely associated with Margaret Thatcher and the Conservative Party in the 1980s.

Bell Pottinger has gone on to accept contracts from many controversial clients, including former South African president FW de Klerk, when he opposed Nelson Mandela; Asma al-Assad, the wife of Syrian president Bashir al-Assad; arms manufacturer BAE Systems; and the South African athlete Oscar Pistorius after he was charged with murder.

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The FTSE 100 started the week with a stumble amid fears over unrest in Asia, following North Korea’s test of a nuclear bomb at the weekend.

The index ended Monday’s trading down 27.03 points or 0.36% at 7,411.47.

Mining stocks were some of the biggest risers, with Fresnillo up 2.9% and Randgold Resources gaining 2%.

Analysts said the rise was driven by a rush to safe-haven stocks in the wake of the geopolitical tensions, with the price of precious metals up sharply.

The underlying gold price is at its highest level in almost a year.

Traditionally precious metals such as gold and silver are seen as safe investments when there is financial or political turmoil.

Nonetheless, Connor Campbell, financial analyst at spread betting firm Spreadex, noted the FTSE had managed to stay above the 7,400 level it had reached again last week.

“North Korea’s latest nuclear naughtiness has sent another ripple of fear through the markets this Monday – as has the US threat of a ‘massive military response’ and South Korea’s own show of (simulated) force,” he said.

“However, with the increasing regularity of such tests, and the USA’s Labor Day holiday, the edge has been taken off the European losses.”

On the currency markets, the pound was flat against the dollar at $1.2952 and also 0.42% lower against the euro at 1.0875 euros.

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A law firm has criticised Bell Pottinger’s senior management for failing to exercise “extreme care” over a campaign in South Africa.

Herbert Smith Freehills was commissioned by the PR firm after an outcry over allegations that it fuelled racial tensions in South Africa.

South Africa’s opposition Democratic Alliance had accused Bell Pottinger of a “hateful and divisive campaign”.

It was run for Oakbay, a firm owned by the wealthy Gupta family.

The Democratic Alliance accused the PR firm of emphasising the power of white-owned businesses in the Oakbay campaign, which used the #WhiteMonopolyCapital hashtag.

In its review released on Monday, the law firm said: “[Bell Pottinger’s] senior management should have known that the campaign was at risk of causing offence, including on grounds of race.

“In such circumstances, BP ought to have exercised extreme care and should have closely scrutinised the creation of content for the campaign. This does not appear to have happened.”

Herbert Smith also found that certain material created by Bell Pottinger for the economic emancipation campaign “was negative or targeted towards wealthy white South African individuals or corporates and/or was potentially racially divisive and/or potentially offensive and was created in breach of relevant ethical principles”.

James Henderson, chief executive of the PR firm, confirmed his resignation on Monday, saying he “neither initiated nor was involved in the Oakbay work”.

However, he added: “I accept that as CEO, I have ultimate executive responsibility for Bell Pottinger. I feel deeply let down by the colleagues who misled me. However, I think it is important I take proper accountability for what has happened.”

Four Bell Pottinger staff were dismissed or suspended in July.

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The PR firm’s chairman, Mark Smith, said Mr Henderson’s decision to resign was “laudable”.

Phumzile Van Damme, the Democratic Alliance’s shadow communications minister, said his resignation was “not in any way an act of valour”.

Almost two weeks ago, the UK trade body, the Public Relations and Communications Association, found that Bell Pottinger had breached an industry code of conduct and upheld the complaint from the Democratic Alliance. It is due to reveal what sanctions the firm will face on Tuesday.

The Guptas have been accused of using their connections with South Africa’s President, Jacob Zuma, to win contracts and influence political appointments. Mr Zuma and the Guptas strongly deny all allegations.

Bell Pottinger left the Oakbay account in April.

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Analysis: Amol Rajan, media editor

Bell Pottinger is no stranger to controversy, having been led for many years by Lord Tim Bell, the PR svengali who once advised Margaret Thatcher but has since worked with autocrats from General Pinochet to the Saudi government.

However, the PR firm whose job it is to ensure its clients receive favourable coverage now finds itself in the headlines for all the wrong reasons.

Its chief executive, James Henderson, has resigned following a monumental falling out with Lord Bell. The cause? A PR contract worth £100,000 for Oakbay, a South African firm run by the controversial Gupta Brothers.

Over the past quarter of a century, Ajay, Atul and Rajesh Gupta, who hail from India, have built a huge conglomerate with interests in South Africa ranging from mining to media – and stand accused of corruption on a vast scale. They deny all allegations.

Bell Pottinger was accused of spreading talk of “white monopoly capital” in a country where there are sensitivities about economic disparities between the black majority and white minority.

Herbert Smith Freehills, which examined more than 45,000 documents, reported that Bell Pottinger’s management should have known their campaign “was at risk of causing offence, including on grounds of race”.

The law firm added that management had several opportunities to discover the spread of false information, but these were missed; and that Bell Pottinger’s managers “failed to put in place policies and procedures to minimise the risks associated with this account”.

Mr Henderson, who is engaged to South African heiress Heather Kerzner and retains a 40% stake in the firm, is well connected enough to spring back quickly.

But with several clients threatening to terminate contracts with the PR firm, this scandal could yet result in greater scrutiny for the world of international corporate PR.

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Postal workers are being offered £1,000 per week to steal bank cards, a BBC investigation has found.

Online adverts offer huge sums to tempt Royal Mail staff to intercept letters containing cards and PINs.

More than 11,000 people in the UK have been affected by this type of fraud in 2016, where bank cards are stolen in transit, according to UK Finance.

Royal Mail would not disclose how many workers had been convicted but claimed “the theft of mail is very rare”.

It added its security team was investigating the findings by BBC Inside Out West Midlands and it had no evidence of its employees being involved.

West Midlands Police said its economic and fraud teams are not aware of the BBC’s findings and it has not had any reports of this type of fraud.

Identity theft ‘at epidemic levels’

A BBC journalist posed as a postman and responded to an advert offering £1,000 per week to intercept letters.

After a few weeks working to build up the gang’s trust, he was able to persuade a member to meet him.

Our reporter secretly filmed a meeting outside the bus station in Lewisham, south-east London, where the gang member explained what was expected.

“We’re going to tell you, for example, that Ms *****, she’s going to have a letter from NatWest,” he told the undercover journalist.

“Any letters from NatWest for Ms *****, intercept. As simple as that.

“If you open up a new account you’re going to get your card and you’re going to get your PIN, right? Two letters, that’s all it is.

“We do that, you intercept the letters, bring them back to us, you get paid.”

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One gang in Birmingham has been operating for 30 years, according to the unidentified member who said the leader has “been in the game for 30 years”.

“He’s worked with a number of postmen.

“I’ve worked with two. One was in the Midlands – Coventry – and one was on the outskirts of London, Romford area.

“But my guy, he lives in Birmingham and I obviously do the work, he sorts out the other side.”

On their second meeting in a south London park, the undercover journalist confronted his contact.

The gang member offered no answer and ran away when asked why he was trying to recruit postal workers to commit fraud.

Royal Mail would not comment on how many of its workers had been prosecuted for stealing mail since it was privatised in 2013.

However, 1,759 Royal Mail workers were convicted of theft between 2007 and 2011.

Figures from UK Finance show the problem does not seem to be getting any better with the number of cases, and the cost to card issuers, rising each year since 2014.

In 2016, there were 11,377 cases of fraud where a card is stolen in transit, costing card issuers £12.5m.

UK Finance said it works closely with Royal Mail to target these types of gangs. It has its own police unit with prosecution powers.

“We do have our own police unit and they target organised criminality,” Katy Worobec, head of fraud detection at UK Finance said.

“They try and get the people who are actually organising the criminality behind the scene.

“Once you’ve taken that part of the gang out, the thing falls apart.

“We’ve got a very good relationship with Royal Mail to help target these types of gangs and we’ve seen some good successes in the past.”

Royal Mail said: “We take all instances of fraud – alleged or actual – very seriously.

“Our security team is reviewing the programme’s findings as a matter of urgency and will continue our close and ongoing cooperation with the relevant law enforcement agency.

“The overwhelming majority of postmen and women do all they can to protect the mail and deliver it safely. The safety and security of mail is of the utmost importance to Royal Mail.

“We deliver millions of items safely every day and the theft of mail is rare. The business operates a zero tolerance approach to any dishonesty. We prosecute anyone we believe has committed a crime.”

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‘I don’t trust postmen’

Darren Blythe, from Banbury, had his bank card intercepted by postal worker Damon Alvey in 2013.

He sensed something was wrong when the new bank card he requested did not arrive within the estimated time.

“I was waiting and waiting and eventually I rang the bank and that’s when they told me my bank account had been wiped out totally.”

Alvey, from Thame, was jailed for 10 months in 2014 for the fraud which saw about £3,000 taken from Mr Blythe’s account.

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Thames Valley Police

“He left me with just over £2 in my account,” Mr Blythe said.

“It made me really depressed. I was stuck indoors for days and days on end.”

Although his money was refunded by the bank within two weeks, Mr Blythe said he did not “trust postmen any more really”.

*Additional reporting by Riyah Collins

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You can see this story in full on BBC Inside Out West Midlands at 19:30 BST on BBC One on Monday 4 September, or via iPlayer for seven days afterwards.

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Many economists do not expect UK interest rates to rise until 2019 despite inflation remaining above target, according to a BBC snapshot.

They believe that the Bank of England’s Monetary Policy Committee (MPC) will be reluctant to raise rates during Brexit negotiations.

Inflation stood at 2.6% in July – well above the Bank’s official target of 2%.

Half the economists contacted by the BBC think wages growth will outpace inflation in the first half of 2019.

Last week, one MPC member, Michael Saunders, said a “modest rise” in rates was needed to curb high inflation.

The base rate has stood at a record low of 0.25% since August 2016 – the first move since March 2009, when it was reduced to 0.5%.

In June, three MPC members voted for a rate rise – the first time since May 2011 that so many had wanted to tighten policy.

The same month the Bank’s chief economist, Andy Haldane, also made a call for a rate rise this year.

However, Mark Carney, the Bank governor, said in his Mansion House speech in late June that “now is not yet the time” to start raising rates once more.

How do higher interest rates curb inflation?

• Borrowing becomes more expensive, meaning consumers have less to spend, so some prices are less likely to increase
• The cost of some mortgages rises, reducing disposable income
• Higher interest rates also encourage saving, rather than spending

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Stuart Green, of Santander Global Corporate Banking, told the BBC he did not expect a rate hike to happen before 2019.

“We believe that policymakers will be reluctant to tighten monetary policy until greater clarity emerges around the UK’s post-EU trading framework, and our expectation of declining inflation through 2018 should also reduce the pressure for an interest rate rise,” he said.

Others expect it to be even longer, with economists at Morgan Stanley not expecting any movement until March 2019 at the earliest, with Andrew Goodwin at Oxford Economics suggesting it would not happen until the third quarter of that year.

Similarly, Fabrice Montagne, at Barclays, expects rates to stay on hold until “at least 2019”.

But there are those who argue that the Bank will raise rates sooner. Howard Archer, chief economic adviser at the EY ITEM Club, said he had one increase, to 0.5%, pencilled in for late 2018, adding: “I would not be at all surprised if it was delayed until 2019.”

Michael Lee, at Cambridge Econometrics, expects a rise to come in either the second or third quarter of next year as he thinks inflation will stay above the Bank’s 2% target for the next two to three years.

Philip Rush, at Heteronomica, is more specific, settling on May 2018.

The one outlier is George Buckley at Nomura, who expects the MPC to jump in November.

Inflation

The BBC also asked the economists when they expect inflation to peak in the UK. Both Mr Rush and Mr Archer think it will hit 2.9% in October, with the latter predicting it will then start to fall back “as the impact of the sharp drop in sterling following the June 2016 Brexit vote increasingly wanes”.

Several others, such as Mr Green, Mr Lee and Mr Goodwin, expect inflation to hit 3% in the final three months of the year before starting to retreat.

Morgan Stanley is more pessimistic, however, predicting a peak of 3.2% in Spring 2018.

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Sterling

Holiday makers planning trips to the continent in the next few months should prepare themselves for more pain, according to Morgan Stanley.

Its currency strategy team expect sterling to weaken against the euro by a further 10% by March 2018.

Mr Green at Santander also forecasts more weakness for the UK currency over the course of the next year, with an average of $1.25 to the pound and just 96 euro cents in the final quarter of 2018.

Mr Archer thinks the pound will sink to about $1.25 by Christmas, but recover to trade about seven cents higher by the end of 2018.

Heteronomica’s Mr Rush is also a little more optimistic about sterling, expecting it to be stronger within a year.

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Analysis: Andrew Verity, economics correspondent

The last time interest rates went up was 5 July, 2007. They rose by a quarter of a percentage point to 5.75%. The next month the credit crunch struck, and so began a series of cuts, down to 0.5% in March 2009.

These were supposed to be emergency measures. Then came the Brexit vote, and in August 2016 the official rate dropped to a fresh record low of 0.25%. That compares to a typical range of between 5% and 13% for most of the 1990s.

Emergency rates are the new normal. That carries dangers. If we hit another slump, we’ve run out of road; there won’t be much the Bank of England can do to help by cutting interest rates.

While some members of the Bank’s Monetary Policy Committee think we should start restoring interest rates to non-emergency levels this year, that is a minority view, as our snapshot of economists’ forecasts shows.

You could draw a number of conclusions. You might decide interest rates aren’t effective on their own – so the government should rely less on the central bank stimulus and instead use fiscal policy such as cutting taxes or raising spending.

You might take the view that rates should rise to help savers and pension schemes.

Or you might take the view that an early rise could worsen the economic slowdown. You might even believe that we need to find ways to get the official rate below zero (so that I, the lender, pay you, the borrower, to take my money).

Take your pick, but whichever you choose, normality ain’t what it used to be.

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The leaders of Brazil, Russia, India, China and South Africa are meeting amid heightened geopolitical tensions.

The summit of the so-called Brics nations brings together the five fast-growing economies, who are seeking a greater say in world affairs.

Economic ties will top the agenda at the three-day gathering in Xiamen, China which began Sunday.

But North Korea’s nuclear test and a border standoff between China and India could also colour discussions.

So what are the four key things to watch out for at this meeting?

1. ‘Growing the pie’ without ‘touching the cheese’

While US President Donald Trump has pushed a protectionist trade agenda, pulling the US out of the Trans Pacific Partnership and renegotiating the North America Free Trade Agreement, China is striking a very different tone.

Chinese President Xi Jinping told the meeting that there is little to fear from closer trade ties.

“We should push for an open world economy, promote trade liberalisation and facilitation, jointly create a new global value chain, and realise a global economic rebalancing,” President Xi Jinping told Brics business leaders and senior officials in a speech on Sunday.

“The development of emerging markets and developing countries won’t touch anyone’s cheese, but instead will diligently grow the world economic pie,” he said.

But many countries have criticised China’s trade policies, saying they discriminate against foreign businesses.

Even within Brics, trade is heavily tilted in China’s favour, which has led to complaints from fellow members.

China’s vice minister of commerce, Wang Shouwen, also suggested China was interested in establishing a free trade agreement with Mexico.

The Mexican President Enrique Pena Nieto is attending the dialogue at the invitation of the Chinese president.

2. One Belt One Road

The sheer scale of China’s massive international infrastructure project – known as One Belt One Road – means it is often on the agenda at high level economic meetings like this one.

The project aims to expand trade links between Asia, Africa, Europe and beyond through infrastructure investments.

“I am convinced that the Belt and Road initiative will serve as a new platform for all countries to achieve win-win cooperation,” said President Xi.

But the initiative has made India in particular quite uneasy, as it includes projects worth $62bn (£48bn) to be implemented in its neighbour and rival Pakistan.

Also, tensions between China and India remain high after a border standoff, which was resolved just days before the conference.

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3. The New Development Bank

Construction began over the weekend on headquarters in Shanghai for the New Development Bank (NDB), which is the Brics alternative to the World Bank.

The NDB was seen as the first major Brics achievement after the group came together to press for a bigger say in the world’s financial affairs.

The bank aims to address a massive infrastructure funding gap in the member countries, which account for almost half the world’s population.

To date, the NDB has invested in 11 projects, lending $1.5bn in 2016 with an additional $2.5bn in loans set for this year.

Still, the bank is small potatoes when compared with the World Bank, and some have questioned China’s commitment, given it heads up the bigger Asian Infrastructure Investment Bank.

4. The nuclear elephant in the room

The conference had an unwelcome surprise in the form of North Korea’s sixth nuclear test on Sunday.

China’s official Xinhua news agency reported that Chinese President Xi Jinping and Russian President Vladimir Putin met on the sidelines of the Brics meeting, and agreed to “appropriately deal” with North Korea’s nuclear test.

China said it strongly condemned the nuclear test and urged Pyongyang to stop its “wrong” actions.

The US President suggested on Twitter that the US might stop “all trade with any country doing business with North Korea”.

China is an obvious target of his comments, given that it is North Korea’s largest trading partner.

Some critics, however, have suggested that this is very unlikely, as it would do significant damage to the US economy because China is also America’s largest trading partner.

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For one week every summer, up to 70,000 revellers gather in the Nevada desert for one of the world’s most far-out festivals.

Wearing anything from neon-coloured tutus, to nothing at all apart from a slick of face paint, they head for Black Rock City, a “temporary metropolis” in the desert, for the Burning Man event.

The aim is for attendees to help “co-create” a huge arts festival, while surrounded by giant interactive art installations and sculptures, such as a 25ft (8m) tall steel coyote, a 30ft-tall spinning wheel, and a temporary ornate temple.

A huge wooden man is then ceremonially burnt towards the end of the event.

With 10 declared key principles, including “radical self-reliance”, “radical inclusion”, and “radical self-expression”, to some outsiders the festival doesn’t so much sound radical, more like a gathering of hippies.

Add the fact that many participants don goggles to guard against the occasional sandstorm, and the event is often described as “Mad Max meets Woodstock”.

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While this may sound like hell to many people, it is in fact a supremely popular and very fashionable event, with people paying $425 (£330) per ticket.

And famous attendees in recent years include singer Katy Perry, actor Will Smith, Google’s Larry Page, and electric car maverick Elon Musk.

With this year’s Burning Man drawing to a close on 4 September, Marian Goodell, the chief executive of the event’s managing organisation, Burning Man Project, spoke to the BBC about what goes on behind the scenes, and the festival’s history.

Burning Man was founded in 1986 when friends Larry Harvey and Jerry Goodell burned a wooden man on Baker Beach in San Francisco to mark the summer solstice, inevitably drawing a crowd.

This then grew into an annual festival, which in 1990 was held in Nevada’s Black Rock Desert for the first time.

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Ron Lussier / Lenscraft

Today the operation is huge. Run as not-for-profit organisation, Burning Man Project reported annual revenues of $37.5m in 2015, of which $30.4m was ploughed back into running the event.

Ms Goodell first joined the organisation in 1996, a year after she took time out from her job as a project manager for a software development firm to experience her first “burn”.

The 54-year-old remembers her first experience of the festival very well.

“It was a big beautiful desert and I remember thinking it wasn’t very crowded,” she says.

“I was walking along and having magical experiences. There was a real opportunity to be creative and engage.”

Her first job at Burning Man was working on its marketing campaigns.

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John Curley

Looking back she says: “There were six of us working side by side and we just focused on what we were best at.

“One of my biggest passions was communications, and so my focus was giving Burning Man a visibility and a voice.”

By 2013 Ms Goodell had become the organisation’s first chief executive, and now leads a team of about 100 people from its San Francisco headquarters.

Her remit and responsibilities have widened too.

“I speak out in the world, and make public appearances, and work on development and raising money,” she says.

“It’s a challenge explaining to the world that we are more than just an event in the desert for eight days.

“The rest of the time we’re doing leadership work and creating opportunities to connect with each other.”

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In part, she’s alluding to the around 80 Burning Man spin-off events that are now held around the world.

The team helps local groups run gatherings such as AfrikaBurn in South Africa, which attracts about 12,000 people, and Midburn in Israel, which attracts 11,000.

Although run as a not-for-profit business, the Burning Man Project also supports charity work around the world.

One example is its Burners Without Borders initiative, which helps communities to rebuild after natural disasters, or to tackle poverty.

It also works to help staff at charities and social enterprises sharpen their skills by attending Burning Men leadership conferences.

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Ms Goodell’s job isn’t all plain-sailing, however.

Last year the festival hit the headlines for all the wrong reasons when a luxury camping area was vandalised. Items were reportedly stolen, and trailer doors glued shut.

Since then Ms Goodell says that she and her team have spent a lot of time communicating what good citizenship means to festival-goers.

She also has to deal with criticism that the festival has either sold out or has become too elitist.

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“In the 20 years I’ve done this, there’s always someone who thinks someone shouldn’t be there,” says Ms Goodell.

“Before, when it was [originally just] the artists, and then the early underground techie types showed up, they [the artists] said ‘what are you doing here, you gear heads?’.

“Then the hippies started coming, and the rave culture started in the 90s, and people were annoyed about that.”

She says Burning Man has also been accused of selling out for attracting “really average, normal people”.

“What does that even mean?” she quickly adds. “Burning Man is here to effect and change everyone’s life.”

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Reuters

At this year’s festival you’d imagine that Ms Goodall’s schedule would have been full looking after the main event.

Instead she also has been running a camping area of 200 people, filled with friends, and friends of friends.

She says: “Everyone in the camp works and does a shift in the kitchen. I’ll be hanging out and greeting visitors as well.”

Ms Goodall has also attended her first yoga class, and attended weddings.

“There’s a lot of weddings here, quite often people meet and fall in love at Burning Man – it’s super cool.”

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Ruth Oliver, a project manager at events management firm SC Productions, says that Burning Man is popular for a number of reasons.

“It’s a visual festival – there are so many festivals these days, and people are seeking more for their money,” she says.

“With Burning Man you get the opportunity to be immersed in the whole experience. There is also a community feel to it – people are free to express themselves through art and dressing up.

“And it has a crazy Mad Max feel to it as if you are part of something extraordinary, other-worldly.”

Ms Goodall adds that working for Burning Man is a “great experience”.

“I have found something where I can put my enthusiasm and skill-set and ability to work. It’s about creating a transformative event, where people come away with a new sense of themselves.”

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Fast food chain McDonald’s is facing its first strike in the UK as workers at two sites walk out in a dispute over zero-hours contracts and conditions.

Workers at Cambridge and Crayford, south-east London, began the 24-hour action at midnight. A union called it a “brave” move by low-paid staff.

The Bakers, Food and Allied Workers Union said staff want a wage of at least £10 an hour and more secure jobs.

McDonald’s said the action related to internal grievance procedures, not pay.

Ian Hodson, national president of the Bakers, Food and Allied Workers Union (BFAWU), said: “We fully support the historic decision by these brave workers to stand up and fight back against McDonald’s – a company that has let them down one too many times.

“For far too long, workers in fast food restaurants such as McDonald’s have had to deal with poor working conditions, drastic cuts to employee hours, and even bullying in the workplace – viewed by many as a punishment for joining a union.”

The 40 or so McDonald’s staff are not unionised, but the BFAWU agreed to take up their case after being contacted.

The union has taken advice from protesters in the US and New Zealand who have campaigned for better conditions at McDonald’s, Mr Hodson said.

The staff have also won backing from Labour leader Jeremy Corbyn.

“Our party offers support and solidarity to the brave McDonald’s workers, who are making history today,” he said.

“Their demands – an end to zero hours contracts by the end of the year, union recognition and a £10 per hour minimum wage – are just and should be met.”

Three pay rises

McDonald’s, which employs around 85,000 staff in the UK, announced in April that workers would be offered a choice of flexible or fixed contracts with minimum guaranteed hours, saying that 86% have chosen to stay on flexible contracts.

A company spokesman said: “We can confirm that, following a ballot process, the BFAWU has indicated that a small number of our people representing less than 0.01% of our workforce are intending to strike in two of our 1,270 UK restaurants.

“As per the terms of the ballot, the dispute is solely related to our internal grievance procedures and not concerning pay or contracts.

“McDonald’s UK and its franchisees have delivered three pay rises since April 2016, this has increased the average hourly pay rate by 15%.”

Mr Hodson said there would be pickets outside the two McDonald’s restaurants, but could not stop the company arranging alternative staff to run the outlets.

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The chief executive of one of the UK’s best known public relations firms has stood down amid claims it stirred up racial tensions in South Africa.

James Henderson, boss of Bell Pottinger, resigned weeks after the firm was found by a UK body to be in breach of an industry code of conduct.

South Africa’s main opposition party criticised a media campaign the PR firm ran for the wealthy Gupta family.

Mr Henderson said that while he was not involved, he must take responsibility.

South Africa’s Democratic Alliance party accused Bell Pottinger of a “hateful and divisive campaign to divide South Africa along the lines of race”.

It said the PR firm emphasised the power of white-owned businesses in the campaign, which used the #WhiteMonopolyCapital hashtag.

In July, Mr Henderson issued an “unequivocal” apology and four staff were dismissed or suspended.

The firm, which has a global presence and major international clients, has lost some big accounts over the affair, including luxury goods company Richemont and the Investec investment company.

‘Warning signs’

Almost two weeks ago, the UK’s industry trade body, the Public Relations and Communications Association (PRCA), upheld the complaint from the Democratic Alliance.

The PRCA is due to meet on Monday to discuss possible sanctions on Bell Pottinger, including whether to end the firm’s membership.

Expulsion would do further reputational damage, and could lead to more clients severing their relationship with the firm.

A separate report by an independent law firm, commissioned by Bell Pottinger, is due for publication imminently, perhaps as early as Monday.

Mr Henderson told the BBC on Sunday: “Whilst I had no involvement in the account, there were warning signs that I should have heeded. Therefore I must take responsibility.”

He is a major shareholder in the firm, and said he would continue to be supportive of the business and do what he could to help it in the future.

A fuller statement from the company would be issued on Monday, he said.

The PR firm was hired by Oakbay, a company owned by the Gupta family, whose interests stretch from mining to media.

The Guptas have been accused of using their connections with South Africa’s president, Jacob Zuma, to win contracts and influence political appointments. Mr Zuma and the Guptas strongly deny all allegations.

Bell Pottinger left the Oakbay account in April.

Last month, after publication of the PRCA ruling, Mr Henderson said the firm was “looking at all options for the company, including future ownership”. There were reports it has received takeover interest.