Settlement ups Ogilvy odds of keeping drug-office biz

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Ogilvy & Mather Worldwide's $1.8 million settlement with the White House anti-drug office will improve the agency's long-shot odds of retaining the drug-office account now in review. The White House Office of National Drug Control Policy is slated to award its $152 million account early next month; Ogilvy remains in the competition.

On Feb. 4, the Justice Department said Ogilvy agreed to pay $689,744 in cash immediately, then submit new certified bills for its work for the National Office of Drug Control Policy in 1999 and 2000, with a deduction of $1,150,256.

The settlement costs the shop some immediate cash, but clears the way for the WPP Group agency to get some long-overdue bills paid.

"This settlement illustrates the United States' determination to recover funds inappropriately billed on government contracts," said Robert D. McCallum Jr., assistant attorney general for the civil division of the Justice Department. Ogilvy in a statement Feb. 1 said it settled "to put these issues behind us and move forward."

The $1.8 million is more than double the $850,000 in government billings Ogilvy had previously acknowledged it couldn't properly document, but the government has been refusing to pay $7.8 million in bills from Ogilvy's initial 1999 billings.

The settlement (AA, Feb. 4) stems from questions about the ad agency's initial billings after taking over the account in 1999 and alterations made to time sheets after a supervisor complained the account wasn't generating enough business. While it ends the civil probe of Ogilvy, a criminal probe of the time sheet changes is continuing.

In the settlement, the government charged Ogilvy "knowingly" submitted false claims for labor hours in both 1999 and 2000. Ogilvy neither admitted nor denied that but agreed to settle, according to the pact, "to avoid the delay, uncertainty, inconvenience and expense of protracted litigation."

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