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WPP Ad Agency to pay US settlement over government contracts
The WPP advertising firm will pay US$19m in fines and give $1.2m to state investigations into its questionable contracting practices in the US, after more than a decade of misusing tens of millions of dollars of company money for bribes, according to the Justice Department.
The settlement, expected to be announced later on Friday, is the largest ever for an American company under federal bribery laws. It makes WPP the biggest corporate offender under the Foreign Corrupt Practices Act, which bars bribes by US companies to foreign officials.
Advertising agencies have come under greater scrutiny in recent years after prosecutors in Britain, France and elsewhere won convictions and settlements on charges of bidding rigged contracts on behalf of foreign governments.
At WPP, the UK arm of the business has been the most scrutinised. Prosecutors said $75m of bribes were funneled to blacklisted countries like China and Malaysia through an operations centre in Panama under the guise of fee payments for public relations work.
“Today’s settlement demonstrates our deep commitment to uphold the highest ethical standards and protect the integrity of our business,” WPP’s chief executive, Martin Sorrell, said in a statement.
The settlement follows the June indictment of Sorrell, WPP’s former CEO, who was charged in London with three counts of fraud and false accounting and faces extradition to the US.
Sorrell, nicknamed “the Squirrel” because of his parsimonious spending habits, left the company in April after more than three decades, and the Justice Department took advantage of a sabbatical he had taken to begin its investigation.
The British media reported that Sorrell was in talks with the Justice Department to reach a settlement, but that the non-prosecution agreement with the firm could be dropped if a plea agreement is reached.
New York prosecutors are also pursuing their own investigation of WPP’s operations here, and prosecutors here issued a subpoena to WPP in 2017 over the timing of payments to a former executive who was charged with bribing journalists at the FT newspaper in the late 1990s.
The scandal over WPP’s practices helped bring about major changes at the company in recent years, with Sorrell stepping down as CEO in April 2017, and the departure of one of Sorrell’s top lieutenants in August of that year.
In recent months, WPP has introduced new rules to prevent bribery in overseas markets. The new rules include financial penalties and limits on subcontracting by its owned agencies, meant to stem transactions linked to kickbacks from contractors.
The settlement is coming on the heels of a less-straightforward settlement, which resulted in just a $5 million fine for another former top executive, Mark Schwartz, who used his private jet to charter for several African officials.
In recent years, large global firms such as IBM, Dell and Texas Instruments have also been hit with charges of improper bribery.
Namibia, which at one point had sought an interim freeze on the US assets of Chevron and other US companies over bribery allegations, cancelled the freeze last month after the firms offered concessions to secure business.
Last year, Laura Tyson, former chair of the White House council of economic advisers under President Barack Obama, said foreign bribery was one of several “major and complex” financial issues that US companies need to tackle to avoid serious damage to the economy.