WPP PLC updates
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US regulators have accused WPP, the world’s largest advertising group, of paying bribes to Indian government officials and participating in further “illicit schemes” in other emerging markets.
The Securities and Exchange Commission said on Friday that the London-listed company had agreed to pay $19m to resolve charges it breached the US Foreign Corrupt Practices Act.
The FTSE 100 company “failed to promptly or adequately respond to repeated warning signs of corruption or control failures” at some overseas subsidiaries, the SEC said. WPP neither admitted nor denied the findings.
In India, a WPP subsidiary paid as much as $1m in bribes to officials to obtain and retain government business, boosting net profit by $5m between 2015 and 2017, the SEC said.
In China, a subsidiary also made “unjustified payments” in connection with a tax audit, the SEC said. It also alleged that an arm of WPP in Brazil had made “improper payments” in connection with government contracts between 2016 and 2018.
A subsidiary in Peru, according to the SEC, funnelled funds in 2013 through other WPP entities “to disguise the source of funding for a political campaign” in the country.
The SEC said that WPP had followed an “aggressive” growth strategy under which it acquired majority interests in local advertising agencies in high-risk markets.
It said the UK-based group, led until 2018 by founder Sir Martin Sorrell, had failed to ensure that these subsidiaries followed adequate accounting controls and compliance policies. Instead, it allowed founders and the chief executive of the acquired businesses “to exercise wide autonomy and outsized influence”.
WPP said the SEC findings related “to control issues as well as the acquisition and integration of companies in high-risk markets until 2018. As the commission’s order recognises, WPP’s new leadership has put in place robust new compliance measures and controls, fundamentally changed its approach to acquisitions, co-operated fully with the commission and terminated those involved in misconduct.”