Ogilvy, gov't settle charges

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WPP Group's Ogilvy & Mather Worldwide has reached a settlement with the U.S. government on civil charges that it overbilled for work on the White House Office of National Drug Control Policy's ad account.

Ogilvy confirmed the settlement but did not provide details. A spokesman for the U.S. Department of Justice declined to comment. But a separate criminal investigation by the FBI and U.S. Attorney for the Southern District of New York, over whether Ogilvy timesheets were improperly altered, continues.

In a statement, Ogilvy said it had agreed "to a full and final settlement ... on matters relating to technical timekeeping errors" for the drug office. "Ogilvy was a first-time federal contractor, and although we outperformed the contract and underbilled the [drug office] for our work, we recognized our responsibility for our billing mistakes, and cooperated fully with the government to resolve them," the statement said.

moving forward

Ogilvy said it has altered its accounting system to comply with government standards, and the agency defended its integrity, which was questioned by some congressmen during hearings on the matter. "We are pleased now to be able to put these issues behind us and move forward," said the statement.

The issues stem from Ogilvy's billing of the government for its work since it took on the $152 million annual anti-drug ad account in 1999. While Ogilvy's creative was praised, its billing practices came into question. A congressional hearing and a General Accounting Office report charged that Ogilvy employees changed time cards to inflate charges.

range of problems

The accounting problems ranged from Ogilvy not providing proper documentation to the shop billing for costs the government doesn't allow. More than a year ago, the agency acknowledged that it couldn't adequately document $850,000 in bills it had sent the government.

The drug office has withheld $7.6 million in labor fees from Ogilvy. At one point, Ogilvy had more than $100 million outstanding as it held off billing the government for labor, production and media buys while it fixed its accounting system.

Under congressional pressure, the drug office put its account in review. A decision is due early next month. Ogilvy, which created Drug Office ads for the Super Bowl, is participating in the review.

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