Cordiant limited itself to a brief statement confirming the investigation without naming any individuals. However, Mr. Saatchi promptly accused Cordiant's new public relations adviser of leaking the news and attacking him personally. Mr. Saatchi also said in a statement he is cooperating with the U.K.'s Department of Trade & Industry's investigation.
"Maurice Saatchi issued a fairly hysterical statement [saying] Cordiant had targeted him and set up a media campaign, and named me as the source of the leak," said Alex Sandberg, chairman of College Hill, a PR firm hired by Cordiant Chief Executive Bob Seelert. "That's absolute rubbish. Cordiant's statement didn't name anyone."
In his widely reported statement, Mr. Saatchi said Cordiant "may have breached" the peace agreement the two sides reached in May. Under the legally binding agreement, each side dropped legal action against the other, and Mr. Saatchi agreed not to go after any more Cordiant clients or staff this year.
The government is believed to be looking at all stock transactions of what was Saatchi & Saatchi Co. during a period of about eight weeks. One of the biggest was the Jan. 3 sale by Mr. Saatchi and his brother Charles of 900,000 shares each for an estimated $2.2 million.
A DTI spokesman refused to comment on the investigation. Other sources confirmed that in June the DTI appointed Mark Ballamy, a partner at Price Waterhouse, and David Richards, a lawyer, to conduct the investigation.
The board of what was then Saatchi & Saatchi Co. (renamed Cordiant in March) on Dec. 16 stripped Mr. Saatchi of his chairman's title and offered him the lesser job of Saatchi & Saatchi Advertising Worldwide chairman. On Jan. 3, he rejected the offer and left the holding company. Senior Saatchi executives Bill Muirhead, David Kershaw and Jeremy Sinclair followed him out the door Jan. 9, and two days later Mr. Saatchi opened his new agency, now called M&C Saatchi. Virtually all of the new agency's first $200 million in billings came from former Saatchi clients.
Proving who knew what and when is likely to be difficult. As early as Dec. 18, Mr. Sinclair met with Messrs. Kershaw and Muirhead to discuss leaving and setting up a new agency if Mr. Saatchi didn't stay. In an affidavit, Mr. Saatchi said he talked to the men during the Christmas holidays about forming a new agency; at a court hearing, it emerged the Saatchi brothers signed an agreement with the trio on Jan. 8.
Mr. Saatchi's side has also asked for an investigation into Cordiant's slow reporting of price-sensitive information to the London Stock Exchange. For example, Mr. Sinclair was prevented from selling his 50,000 shares until the day after he and the others quit because Cordiant delayed informing the London Stock Exchange of the resignations for more than four hours. Some 7 million Cordiant shares traded the day he and the others quit, as their resignation letters had been faxed to journalists and soon became public knowledge.
Legal experts familiar with the U.K.'s insider dealing laws said even if Mr. Saatchi knew when the three men would quit and others did not, he has a very good defense. The fact that he had been publicly warring with the company and faxed journalists a bitter resignation letter condemning the company before selling his stock would count in his favor, they said.
One defense in a U.K. insider dealing case is that the seller would have sold the stock anyway and that making a profit was not the primary motivation, said Donald Stewart, an attorney here.
"My own gut instinct is that because Maurice has effectively gone public on the whole thing all the way along, the DTI won't be keen to set a precedent by prosecuting people for trading when they've made it perfectly clear they're doing it because they want to sever all links with the company," said another attorney.
There also was speculation last week in London that the scandal-ridden Conservative Party, considered likely to eventually leave Saatchi & Saatchi Advertising and go to M&C Saatchi, might find it embarrassing to move its account during the investigation. However, the Conservative Party still owes Saatchi & Saatchi $1 million from the 1992 election campaign and can't leave the agency until paying the bill.