CEO: 'Ogilvy Did Not Meet Its Accounting Obligations'

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NEW YORK (AdAge.com) -- In the first public response of its top executives to the latest charges of wrongdoing in its dealing with the White House anti-drug office,
Ogilvy & Mather Worldwide wrote to the editor of Advertising Age that it has "outperformed and under-billed" the government for its anti-drug ad work. Read the Ogilvy letter.

Federal investigators
The WPP Group agency is now the subject of a civil and criminal federal investigation related to the contract it won from the White House Office of National Drug Control Policy in 1999 (Ogilvy gets a $1.7 million annual fee plus labor and expenses). According to congressmen and officials of the General Accounting Office, Ogilvy's anti-drug project billings are being probed by the U.S. attorney for New York and the FBI.

Ogilvy's attorneys and spokesmen and Ogilvy New York President Bill Gray earlier acknowledged the agency's accounting system problems with the drug office contract, but the letter was the first direct comment from Ogilvy's top management to the latest congressional accusations.

'Did not meet ... obligations'
In his letter to Advertising Age, Ogilvy North America CEO Tro Piliguian admitted that "Ogilvy did not meet its accounting obligations under that unique government contract."

"We have taken the decisive steps necessary to prevent these issues in the future," he said.

Mr. Piliguian said the company hired an accounting firm to bring its accounting system into compliance with government requirements, reported instances in which it wasn't in compliance to the Justice Department and other federal agencies, and withdrew any invoice that didn't meet the strictest requirements of billable work.

Touts agency quality
"We pride ourselves on the quality of our work and providing outstanding client service," said the letter. "There is nothing we value more than our reputation for integrity."

The White House Office of National Drug Control Policy, which has praised Ogilvy's work on the advertising side of the account, has to decide shortly whether to grant Ogilvy an option year on its current contract or to put the account into review. As Advertising Age reported July 30, the drug office has started the process of putting that account into review.

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