Pubdate: Wed, 07 Jan 2004
Source: Financial Times (UK)
Copyright: The Financial Times Limited 2004
Contact:  http://www.ft.com/
Details: http://www.mapinc.org/media/154
Author: Alison Beard
Cited: Office of National Drug Control Policy ( www.whitehousedrugpolicy.gov )
Bookmark: http://www.mapinc.org/campaign.htm (ONDCP Media Campaign)

CHARGES OVER OGILVY DRUG ADS:

Two Executives Accused Of Conspiring To Fake Documents To Overcharge 
Government For Media Campaign

NEW YORK -- The finance director of Ogilvy & Mather, the WPP Group 
advertising agency, and a former executive were indicted yesterday on 
charges that they schemed to overcharge the US government for an anti-drug 
media campaign.

Thomas Early, a senior partner at Ogilvy, and Shona Seifert, who left the 
agency to become president of Omnicom Group's TBWA/ Chiat/Day, are accused 
of instructing employees to revise time sheets from May 1999 through April 
2000 and then submitting the false documents to the White House's Office of 
National Drug Control Policy.

The indictment brings to a head a long-running controversy over Ogilvy's 
work for the ONDCP, which began in 1998 with a one-year contract to kick 
off a campaign expected to be worth Dollars 684m over five years. 
Government officials questioned the agency's billing practices as early as 
2000, prompting the White House to withhold payments.

In 2001, General Accounting Office investigators concluded that Ogilvy had 
overbilled the ONDCP by Dollars 7.6m and referred the case to the Justice 
Department. Ogilvy - which created the high-profile 2002 Superbowl 
television spot linking drug use to terrorism - continued to win renewals 
on the contract despite opposition from US legislators.

But the agency did admit to record-keeping "missteps" and, in 2002, paid a 
Dollars 1.8m settlement to resolve civil charges.

Ogilvy said yesterday it that was proud of its work for the ONDCP and the 
steps it had taken to improve its billing procedures. It added that if the 
charges against Mr Early and Ms Seifert are found to be true "their 
behaviour was inconsistent with the high standards the company promotes and 
maintains".

Ms Seifert, who has been at TBWA since 2002, issued a statement denying any 
wrongdoing. Mr Early's lawyers could not be reached for comment.

David Kelley, US Attorney for the Southern District of New York, has 
charged both executives with one count of conspiracy and 10 counts of false 
claims. If convicted, they face up to five years in prison and a Dollars 
250,000 fine on each of the 11 counts.

The court could also decide to make the monetary penalty equal to twice the 
gross gain or loss resulting from the crime. The case, due to be presented 
in a Manhattan court today, is likely to be watched closely by the 
advertising industry. Agencies face increasing pressure from clients to 
break down their billable costs and justify their fees.

Ogilvy's initial contract with the ONDCP was a cost-plus-fixed-fee 
agreement that entitled the agency to be reimbursed for expenses incurred 
by employees working on the account.

Mr Kelley alleges that Mr Early and Ms Seifert orchestrated their 
overcharging "scheme" after realising that labour billings were running 
significantly lower than they had expected.
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MAP posted-by: Larry Stevens