US SEC Fines WPP India for Bribing Government Officials

WPP has neither admitted nor denied the allegations but has accepted the fine of 19.2 million dollars.

SEC has fined WPP India for bribing Indian officials.

(Photo Courtesy: US SEC website)

The US Security and Exchange Commission has fined World's largest advertising group WPP's India subsidiary for indulging in corrupt practices and bribing Indian government officials in return for advertising contracts.

The group has violated the anti-bribery, books and records, and internal accounting control provisions of the Foreign Corrupt Practices Act, Indica News reported.

WPP has neither denied nor admitted to these claims. However, it has agreed to pay the fine amount of 19.2 million dollars.

The SEC alleged that WPP along with it's subsidiary in India and by acquiring a Hyderabad based company in 2011, indulged in creating an off-the-books trail of money transfers for the Public Relations Department (DIPR) of the states of Telangana and Andhra Pradesh. While the SEC has not mentioned the name of the agency, WPP-owned JWT acquired Hyderabad based Mindset in 2015, The Economic Times reported, adding that the subsidiary was paid by WPP to execute a campaign to celebrate the anniversary of the formation of Telangana while in reality no such campaign existed.

The Commission’s findings relate 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, cooperated fully with the Commission, and terminated those involved in misconduct,” said WPP spokesperson in an emailed response to Storyboard.

The WPP, as mentioned by the SEC, has also failed to adhere to the norms in its subsidiaries in other countries as well.

"SEC said that WPP failed to devise and maintain a sufficient system of internal accounting controls necessary to detect and prevent the bribe payments at this Indian subsidiary or properly account for the true nature of payments and income at all four subsidiaries in Peru, China, India, and Brazil markets," Indica News reported.

While in China and Brazil, WPP subsidiaries made improper, and unjustified payments to it's vendors, in Peru, its subsidiary, according to The Economic Times report, "funnelled funds through other WPP entities to disguise the source of funding for a political campaign."

(With inputs from Economic Times and Indica News)