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OMNICOM PR FIRM TO PAY L.A. $4.5 MILLION TO SETTLE CHARGES

Fleishman-Hillard Acknowledges 'Improper and Indefensible' Invoices

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NEW YORK (AdAge.com) -- Trying to snuff out a scandal that has become an embarrassing headache, Omnicom Group’s Fleishman-Hillard said it will pay the city of Los Angeles $4.5 million to settle charges that the PR agency overbilled the city for work for the Department of Water and Power and other city accounts.
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Fleishman had previously quarreled with $4.2 million that City Controller Laura Chick said the agency improperly billed, vowing to fight the matter in court. In the end, however, the agency could end up paying much more than that, as Fleishman also said it would waive approximately $1.3 million in unpaid invoices from the water and power department in 2003 and 2004.

'Improper and indefensible'
In a press release containing a formal apology, the agency acknowledged the size of the settlement, calling it a “substantial payment.” The agency also admitted that “some senior executives of the Los Angeles Office, who are no longer with the firm, caused certain bills to be presented to the City that appear to be improper and indefensible.”

A settlement of the claims -- which still has to be approved by city agencies -- will not mean the end of the scandal. It has already led to the indictment of one Fleishman midlevel executive, and prosecutors have suggested that more formal charges may be in the offing.

The proposed settlement covers work for the water and power department as well as the Harbor Department, Department of Airports and the Convention and Visitors Bureau.

Fleishman-Hillard discontinued all work for Los Angeles in 2004.

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