Seifert on Overbilling Lawsuit: IBM 'Considers the Matter Closed'

Ogilvy North America Chairman Sends Memo to Staff About Employee Complaint

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A labor complaint filed on behalf of an OgilvyNeo employee in New York federal court last week that alleged IBM was overbilled by the WPP agency doesn't appear to have ruffled the feathers of the technology giant, one of Ogilvy's most important clients.

John Seifert
John Seifert

IBM did not return calls to Ad Age yesterday asking about the lawsuit, and Ogilvy yesterday released only a short statement declaring the lawsuit "without merit."

But the situation seems to have attracted enough attention that John Seifert, chairman of Ogilvy North America, felt it necessary to today send a note to the agency's staff noting that "IBM has told us they don't believe they were intentionally overcharged in this situation, and they consider the matter closed."

Here's the memo:

All North America Employees:

Yesterday several sources reported of an employee complaint regarding a billing situation between Neo@Ogilvy, a business unit of Ogilvy & Mather, and IBM.

I want to personally update all of you on this matter.

Neo@Ogilvy provides digital media buying services for many of our clients. In the case of IBM, in September 2009, we learned of some pricing discrepancies that we believed resulted from misunderstanding of contract rates for specialty creative units in various digital media sites.

After careful review of the contracts and a review of historical practices, we and another media partner brought the concern regarding the interpretation of pricing these units to IBM's attention. This led to several agreed actions:

1. We conducted a comprehensive audit of all activity that ran in 2009 and through January 2010. We determined that there were some mistakes in pricing for which IBM should receive credit;

2. We approached all appropriate media partners where credit was due, and each of them issued full credit to IBM;

3. With IBM's help, we have clarified any ambiguity in contract language to avoid possible confusion or misinterpretation of pricing terms going forward.

All of the billing related to these media costs are paid by IBM without agency commission or mark-up of any kind. So, at no point did Neo@Ogilvy or Ogilvy & Mather benefit or profit in any way from these pricing discrepancies. IBM has told us they don't believe they were intentionally overcharged in this situation, and they consider the matter closed.

At a moment like this, an important reminder: in all business dealings, Ogilvy holds itself to the highest standards of business ethics. We have a comprehensive program in place to ensure that we maintain the highest ethical standards. We make this policy clear in our U.S. Employee Handbook. We annually reaffirm this policy to all employees in the company. Most recently, we have mandated that all employees complete the annual WPP ethics online training program.

We rigorously investigate all ethical inquiries, concerns, and allegations. This is not simply about compliance, but about doing the right thing.

If you have any questions about our practices and policies related to business conduct, please reach out to your manager or human resources contact.

Many thanks.
John Seifert

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