Any enterprise dealing with tens of millions, typically billions, of different individuals’s cash on ultra-tight margins is open to fraud, certainly it could be tempted to attempt itself.
The previous boss of WPP’s media operation (GroupM) in China has been sentenced to life imprisonment, accused of masterminding a $176m rip-off. Two others have additionally acquired stiff sentences. The Chinese language judicial system is hardly famed for its transparency however WPP has been cautious to distance itself from the three workers. Its enterprise in China, hardly a shock, has been hammered.
That isn’t the one cloud on the horizon although. Over in NYC there’s what’s being termed a $100m ‘whistleblower’ lawsuit from Richard Foster, one-time head of GroupM’s Movement Content material Group (no matter that was) alleging that WPP fired him for elevating issues that WPP’s buying and selling division used shopper spending energy to safe money rebates and volume-based reductions from media homeowners, illegally retaining earnings somewhat than passing them again to shoppers. Ring a bell?
Additionally in NYC, there’s a category motion by offended shareholders claiming the corporate did not appraise them absolutely of the collapse in earnings final summer time which, in the end, led to the departure of CEO Mark Learn. Making overly-optimistic noises will be expensive.
Lastly (and there could in fact be extra) WPP is concerned in a long-running dispute in Kenya with the founder and former CEO of WPP Scangroup Bharat Thakrar alleging that WPP, amongst different issues, has been utilizing Scangroup cash to prop up the holding firm, to the detriment of Scangroup. It’s redolent of different far-flung WPP disputes together with its companies in Australia.
Now WPP could cope with all these points and emerge smelling of roses however they certainly have an effect on its potential to commerce its manner out of present issues. They should be particularly galling for all these individuals at Ogilvy and VML who’ve simply notched up a stellar Cannes Lions, seemingly doing a fantastic job for his or her shoppers regardless of all of the noise (and worse) round them.
WPP’s greatest drawback – in a aggressive discipline – is debt, round £3bn in opposition to a complete firm worth of £2.64bn. New CEO Cindy Rose’s first job is to reverse these positions. However it’s exhausting to see what else she will promote to do it. It’s already bought out of analysis (Kantar) and PR (FGS International) with out making a lot of a dent within the debt. That in itself is one thing of a puzzle.
Then there’s what we would politely known as proprietary media buying and selling (or broking), the smokey exercise behind most of the above points, together with China the place media offers appear to have been carved up in a Shanghai poker sport. Virtually definitely extra such circumstances will emerge, partly as a result of no-one appears to know whether or not it’s authorized or not. The US courts could assist us out.
This Cannes Lions must be a turning level for WPP. However there’s nonetheless a number of previous baggage lurking within the undergrowth.
