General Motors has dropped Teneo as its public relations adviser, deepening the crisis engulfing the firm after allegations that chief executive Declan Kelly inappropriately touched women at a fundraising event.

Teneo is scrambling to reassure its multinational clients, high-profile advisers and 1,200 staff after the Financial Times revealed on Thursday that Kelly had been ousted from the board of non-profit group Global Citizen and ceded some of his responsibilities at Teneo after the incident, which took place on May 2.

On Friday afternoon, however, GM cut ties. “Following a series of discussions, General Motors has decided to no longer engage with Teneo,” the carmaker told the FT.

GM is the first client to reveal it has stopped working with Teneo over the allegations, heightening concerns over the fallout for a group where Kelly has been disproportionately important in attracting leading executives as clients. Teneo had won the GM account relatively recently, and Kelly had been advising Mary Barra, its chief executive.

Global Citizen had organised the celebrity-packed event where, according to three people with knowledge of the matter, Kelly inappropriately touched a number of women without their consent. It removed Kelly from its board the following day and has since cut ties with Teneo, according to two people familiar with the matter.

Until the FT story, the information about Kelly’s actions and his subsequent agreement temporarily to cede some of his duties, had not been shared widely inside Teneo and blindsided all but its most senior employees.

The revelation has also put pressure on private equity group CVC, which in 2019 bought a majority stake in the business for $350m. The deal valued Teneo at more than $700m.

Christopher Stadler, who leads CVC’s business in North America and manages the firm’s investment in Teneo, is also the chair of Global Citizen.

According to people briefed on the matter, Stadler was at the Global Citizen event where the alleged misconduct by Kelly took place. Stadler and CVC declined to comment.

Global Citizen told the FT on Thursday: “On May 3rd, Global Citizen was notified of the incidents and, on May 3rd, Declan Kelly was removed from the board.”

Stadler himself has previously faced allegations of touching women inappropriately. In a 2016 gender discrimination lawsuit from a former CVC employee, he was said to have “grabbed”, “embraced” and “fondled” female employees. CVC denied the allegations and the case was later settled.

Teneo, which bills itself as the leading global CEO advisory firm, has grown into an influential and well-connected strategy and communications business since it was co-founded in 2011 by Kelly and Doug Band, a former aide to US president Bill Clinton.

The firm’s roster of clients includes lucrative retainers with Fortune 500 companies including Dow Chemical, General Electric, Coca-Cola and Delta Air Lines. Much of its work for them focuses on reputational issues, and it has tapped into a wider trend of companies wishing to portray themselves as responsible social actors.

Other clients contacted by the Financial Times either declined to comment or did not respond to requests for comment.

Kelly, who had styled himself as a CEO whisperer able to help the world’s largest companies through their reputational crises, apologised to his senior leadership on a conference call on Thursday. He also sent a note to employees saying he took responsibility for his actions.

The note echoed comments from a spokesperson for Kelly, who told the FT on Thursday that he was “inebriated” at the event and was now “committed to sobriety” and “undertaking ongoing counselling from healthcare professionals”.

On Friday, Teneo held a call to brief its UK-based senior advisers — a list that includes former home secretary Amber Rudd and former leader of the UK’s Conservative party William Hague — who had not previously been informed about the alleged misconduct. One person who attended said: “There was a call but it was just asking questions and no one had any answers.”

In the US, the group’s advisers include political figures such as Paul Ryan, the former speaker of the House of Representatives, as well as Andrew Liveris, the one-time Dow Chemical chief executive, Ursula Burns, the former head of Xerox, and Ginni Rometty, the former IBM chief executive.