Kenya: Advertising Giant WPP to Pay Sh2 Billion Fine in U.S.

Kenya: Advertising Giant WPP to Pay Sh2 Billion Fine in U.S.

Advertising giant WPP PLC, which operates in Kenya, will pay $19 million (Sh2 billion) to resolve US government allegations that it failed to adequately guard against corruption risks in India, China, Brazil and Peru, securities regulators announced Friday.

The American Securities and Exchange Commission (SEC) said an Indian subsidiary of WPP paid as much as $1 million (Sh110 million) in bribes to Indian officials through intermediaries to obtain and retain State business, resulting in about $5.7 million (Sh627 million) in additional profits between 2015 and 2017.

WPP’s Kenyan unit operates as WPP Scangroup. The Kenyan unit was not implicated in the SEC probe and was not named by the US regulator. The US regulator said the alleged wrongdoing violated the Foreign Corrupt Practices Act, a law that bars US-listed companies from paying money or anything of value to overseas officials to win business. WPP agreed to settle the SEC’s probe without admitting or denying the claims.

In China, a subsidiary in the midst of a tax audit avoided paying more than $3 million (Sh330 million) in taxes to a Chinese tax authority by giving $2,000 (Sh220,000) worth of gifts and entertainment to tax officials and making more than $100,000 (Sh11 million) in payments to a vendor recommended by tax officials ahead of the audit’s completion, the SEC said.

An employee of the WPP China subsidiary falsified documentation to justify the vendor payments, regulators said.

Political campaign

The SEC also found that a WPP subsidiary in Brazil made improper payments to vendors in connection to securing government contracts, while a WPP subsidiary in Peru agreed to be a conduit for a construction company’s bribes to the mayor of Lima’s political campaign.

The US regulator said the compliance gaps surfaced as WPP implemented an aggressive growth strategy that involved buying smaller advertising firms in high-risk markets.

The acquired firms’ founders would often stay on as chief executives and have broad autonomy, the agency said.

Like other big ad conglomerates, WPP — the world’s biggest by revenue –grew largely through buying up agencies around the world.

WPP was quoted saying it had terminated employees accused of wrongdoing and cooperated with the SEC’s investigation."WPP’s new leadership has put in place robust new compliance measures and controls," the company was quoted saying in a statement.

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