Former WPP Chief Denies Misbehaving -- WSJ
23 June 2018 - 5:02PM
Dow Jones News
By Nick Kostov
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 23, 2018).
CANNES, France -- WPP PLC founder Martin Sorrell denied Friday
that he visited a prostitute and paid with company money, as he
fielded questions about his reasons for resigning as chief
executive of the world's largest advertising company.
"It's not true," Mr. Sorrell said of the allegation.
Speaking on stage at the Cannes Lions advertising festival with
Ken Auletta of the New Yorker, Mr. Sorrell was asked about a report
in The Wall Street Journal that the company's board had
investigated whether he used company money for a prostitute.
After three decades at WPP, Mr. Sorrell stepped down after the
Journal initially reported in early April that the company's board
was looking into an allegation of improper personal behavior and
whether he had misused company assets, and that the board had
retained a law firm for a probe. Mr. Sorrell said at the time that
he rejected the allegation "unreservedly."
WPP has said the matter didn't involve sums that were material
to the company. The Journal reported earlier this month that the
board's investigation addressed whether Mr. Sorrell used company
money for a prostitute.
A spokesman for Mr. Sorrell said last week that the former CEO
"strenuously denied" the allegation and would be making no further
comment. He added that Mr. Sorrell had signed a nondisclosure
agreement that precluded him from discussing the circumstances
surrounding his departure.
The board-instigated probe has ended but it is unclear what was
determined.
Asked by Mr. Auletta why he left the company, Mr. Sorrell
responded: "I felt that the situation had become untenable and it
was in the best interest of the share owners, the clients, the
people inside the company."
"When you have leaks of that nature, at the highest levels of a
company, it's a very difficult situation to maintain, and
relationships come under a lot of pressure in situations like
that," Mr. Sorrell added.
Mr. Sorrell said the confidentiality agreement he signed with
WPP made it "unfair" and "inappropriate" to comment further on the
board's investigation.
Asked whether it was possible for one of the parties to a
confidentiality agreement to be released from it, he said:
"Absolutely. And to your point: There may come up a time when
that's an appropriate thing to do."
Mr. Sorrell said he expects big advertising holding companies to
"prosper" despite wrestling with major challenges to their business
models that range from companies cutting back on how much they pay
agencies, to marketers bringing more ad work in-house. It is
"inevitable" that holding companies will need to internally
consolidate their agencies, he said.
Mr. Sorrell, who didn't have a noncompete clause in his contract
with WPP, announced in May plans to create a rival advertising firm
called S4 Capital. Institutional shareholders have made nonbinding
commitments to contribute more than GBP150 million, or about $200
million, to the new firm for acquisitions, according to a
stock-market filing.
On Friday, Mr. Sorrell described his new investment vehicle as a
"peanut" compared with WPP but added that "some people have peanut
allergies."
Asked in a press conference whether scrutiny over his departure
would affect fundraising for S4 Capital, he replied: "We will see
in time."
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
June 23, 2018 02:47 ET (06:47 GMT)
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