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FAW-Volkswagen fires its Mad Men

FAW-Volkswagen Automotive Co Ltd, a joint venture of China’s state carmaker FAW Group Corp and Volkswagen AG, has stopped delaing with 19 public relations firms and advertising agencies in the wake of massive corruption uncovered at the group.

According to internal documents from FAW-Volkswagen, the 19 firms business ethics codes and laws, disrupted the company’s operation, and severely damaged its image.

The Central Commission for Discipline Inspection (CCDI), China’s top anti-graft watchdog, recently concluded a two-month inspection at the FAW Group and its subsidiaries. Inspectors found ethics violations and corruption among the group’s executives, who are expected to receive penalties by April next year, China Business News reported earlier.

CCDI inspectors suggested that FAW punish its suppliers, sales agents, and advertising agencies that bribed company executives.

The inspection has caused the joint venture to tighten scrutiny on its suppliers and scrap all current advertising deals. Some ad agencies have sacked their employees as a result of FAW’s cancellation.

In late August, the joint venture’s former deputy general manager Li Wu and Audi sales division deputy manager Zhou Chun were placed under investigation for “seriously violating the law.”

Sources: China Business News (第一财经日报), Reuters

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Hui Zhi is the Senior Manager for Content with the China Compliance Digest, where a version of this post first appeared.

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