Ogilvy & Mather executive Bill Gray, facing a call from the General Accounting Office about whether his agency committed fraud over billing for the White House's anti-drug advertising, issued a statement Oct. 4 denying any wrongdoing. "It is the policy of Ogilvy to ensure that billing for services is both fair and appropriate,'' said Mr. Gray, co-president of the agency's New York office. "We have charged [the anti-drug office] within the industry standard, and if we learn of any accounting problems, we will address them and make any necessary adjustments.'' Mr. Gray also said Ogilvy is pleased that its work for the office has contributed to the decline in teen drug use.
Mr. Gray's statement followed a hearing earlier in the day of a House Government Affairs subcommittee, where U.S. Rep. Robert Barr (R., Ga.) demanded the GAO ask Mr. Gray whether his ad agency engaged in fraud in billing for its campaign for the White House Office of National Drug Control Policy, despite several statements from the anti-drug office that there's no evidence of fraud. The GAO, Congress' investigative arm, agreed to approach the Ogilvy executive on the matter.
The hearing was convened to delve into administration of the anti-drug ad contract. Rep. Barr was upset that although the anti-drug office has encountered unsubstantiated allegations of fraud since at least April and had questions about Ogilvy bills since last year, a full-scale audit of the ad shop's bills has not yet begun. In April, Richard Pleffner, project officer for the anti-drug office, said in a memo that an ex-Ogilvy official alleged that the agency's time sheets for the anti-drug campaign were changed after Mr. Gray complained about a lack of revenue.
Officials of the anti-drug office said that $7.8 million of the $23 million Ogilvy has billed for fees and labor since January 1999 for buying anti-drug ads hasn't been paid because of unresolved questions. In addition, $4 million in media and slightly more than $1.2 million in media production costs haven't been paid. The anti-drug officials suggested the problems weren't fraud but reflected government needs for greater documentation, confusion on what expenses the government will pay and uncertainty over how certain expenses should be treated.
Copyright October 2000, Crain Communications Inc.