WPP acquired majority interests in firms in high-risk markets without ensuring that these subsidiaries implemented WPP’s internal compliance controls, according to a Friday SEC statement. Founders and CEOs of the acquired entities exercised wide autonomy and out-sized influence. For example, a subsidiary in India continued to bribe Indian government officials in return for advertising contracts even though WPP had received seven anonymous complaints about the conduct.
“A company cannot allow a focus on profitability or market share to come at the expense of appropriate controls,” said Charles Cain, head of the SEC enforcement unit that handles violations of the Foreign Corrupt Practices Act.
Without admitting or denying the SEC’s findings, WPP agreed to pay $10.1 million in disgorgement, $1.1 million in prejudgment interest, and an $8 million fine.
“WPP’s new leadership has put in place robust new compliance measures and controls, fundamentally changed its approach to acquisitions, cooperated fully with the Commission and terminated those involved in misconduct,” a WPP spokesperson said in an emailed statement.
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