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Sorrell warns Lévy against buying Chinese agency Oriental & Rende

February 28, 2012

In an extraordinary new twist to the Oriental & Rende story I posted the other day, WPP chief executive Sir Martin Sorrell has written to his counterpart at Publicis Groupe, Maurice Lévy, warning him of the dangers of acquiring the Chinese specialist car agency.

Last year, I’m told, WPP subsidiary Ogilvy broke off acquisition talks with O&R after it emerged that the agency – whose main client is VW, Mercedes and Hyundai joint-venture partner FAW – was operating both outside Chinese law and accepted ethical practices. The problem seems to involve under-the-table payments, totalling several million dollars a year, which are being paid to the client management in order to retain business.

It is believed that, in his letter, Sorrell appealed to Lévy’s sense of fair play and emphasised the need for a corruption-free level-playing field in the international advertising business.

Corruption, knowingly or unknowingly, committed in foreign markets is now a major corporate headache. Under section 7 of the UK Bribery Act 2010, it is an offence for commercial organisations registered in the UK, or carrying out business there, to fail to prevent bribery taking place. The burden of proof is on the indicted company to demonstrate that it had adequate anti-corruption controls in place at the time of the offence’s commission. Punishment on conviction ranges up to a 10-year prison sentence and unlimited fines. France has similarly tough anti-corruption legislation governing overseas subsidiaries, involving heavy fines and potential imprisonment.

Whether Sorrell’s letter – to which Lévy is believed to have replied – will have any impact on PG’s decision to buy O&R remains to be seen.

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Publicis Groupe moots deal with Chinese auto specialist agency Oriental & Rende

February 25, 2012

You’ve got to admire the mettle of the man. Publicis Groupe chief executive Maurice Lévy may have his hands full with a corruption scandal at Betterway, one of PG’s principal Chinese subsidiaries, but his appetite for acquisitions in that part of the world is undiminished.

It has come to my attention that PG is close to striking a deal with a Beijing agency called Oriental & Rende. Never heard of it? I’m not altogether surprised. It’s a smallish specialised agency with revenue estimated at $10m in 2011. But don’t underestimate its strategic significance. This is a way into the booming “Made in China” car business. O&R does what used to be called through-the-line work (advertising, PR, events etc) for many of the Chinese automobile joint-venture companies. Its biggest client by far is FAW, which is allied to VW, Mercedes and Hyundai.

It is believed that WPP earlier showed interest in acquiring O&R but, for reasons which are not yet apparent, decided to pull out of discussions.


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