The world’s largest advertising group, WPP plc, agreed Friday to pay the SEC $19.2 million in penalties and disgorgement to resolve FCPA offenses in India, China, Brazil, and Peru.
In an internal administrative order, the SEC charged the London and New York-dual-headquartered advertising group with violating the FCPA’s anti-bribery, books and records, and internal accounting controls.
As part of the SEC settlement, WPP agreed to disgorge $11.2 million and pay a civil penalty of $8 million.
The SEC said bribery took place at a WPP majority-owned subsidiary in India that used intermediaries to bribe Indian officials.
According to the SEC, the bribes totaled over a million dollars and led to WPP earning more than $5 million in profit from the scheme between 2015 and 2017.
During that period, around half of WPP India’s revenue was attributable to the Indian States of Telangana and Andhra Pradesh’s Departments of Information and Public Relations, which were responsible for retaining media agencies to conduct advertising and public relations campaigns for state governments, the SEC said.
According to the order, the subsidiary in India continued to pay bribes even though WPP had received seven anonymous complaints about the conduct. In August 2017, WPP asked its legal team to investigate the reported conduct.
In China in 2018, WPP’s subsidiary avoided paying $3.2 million in taxes by making $107,000 in payments to a vendor identified by tax officials, and providing $2,000 worth of gifts and entertainment to tax officials.
“Despite the presence of red flags that, if properly investigated, could have led to the prevention or detection of China Subsidiary’s improper payments, WPP did not uncover the scheme until early 2019 while conducting an unrelated review,” the SEC said.
In Brazil, WPP’s subsidiary made improper payments in 2016 to vendors to secure government contracts, despite policies that prohibited the activity. WPP Brazil falsified its books and records to reflect that the vendors performed real services, such as marketing or IT. WPP Brazil made $891,000 in profit from the scheme.
In Peru, WPP’s subsidiary acted as a “conduit” for bribery. WPP Peru disguised a bribe from a construction company to the mayor of Lima’s political campaigns in exchange for work by “funneling the construction company’s payments to Peru Subsidiary through WPP subsidiaries in Colombia and Chile,” the SEC said.
According to the SEC, WPP subsidiaries in Colombia and Chile falsely recorded that they received money in return for services performed for the construction company. The Peru subsidiary maintained no records indicating that the construction company paid for a portion of the mayor Lima’s political campaigns.
The SEC said WPP cooperated by sharing results of its internal investigation and making foreign-based current and former employees available for interviews at the SEC’s office in Fort Worth, Texas. The firm terminated “senior executives and other employees involved in the misconduct” and added 36 new positions to its global compliance and related functions, the SEC said.
WPP employs around 107,000 people around the world.