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WPP-owned media agency GroupM has sacked a senior Shanghai-based executive after Chinese police detained the high-ranking employee on suspicion of bribery last week.
WPP, the world’s biggest advertising group, on Monday said it was “terminating the executive’s employment with the company, and GroupM is suspending trade with any external organisation we understand to be part of the police inquiries”.
The dismissal of the GroupM executive follows an announcement by the Shanghai Public Security Bureau’s economic crime investigation department on Saturday that it had “cracked” a commercial bribery case involving an advertising company.
The statement by Chinese law enforcement did not name the company but said an executive currently serving at the ad agency and two former employees had been detained. Last Friday, the Financial Times reported police had raided GroupM’s Shanghai offices.
WPP on Monday said it was “co-operating with the authorities and conducting our own investigation with an independent third party”, noting it could not comment further on an “active police investigation”.
“We are absolutely committed to behaving in accordance with the law and our own code of conduct, and will take all necessary action to ensure this is the case within our business,” the ad group said.
GroupM, WPP’s media planning and buying arms, accounts for roughly a third of the London-listed ad group’s £14bn of annual revenue, employing 42,000 staff globally and deploying $60bn worth of advertising investment.
China, WPP’s fourth-largest market, is an increasingly important region for ad groups. In the three months to June 30, revenues from the country grew by 4.8 per cent across the company, helping to offset a fall in US revenues, as ad spending bounced back after Beijing’s strict Covid-19 lockdowns “albeit at a slower pace than anticipated”.
The investigation involving GroupM current and former executives comes amid increasing pressure from the Chinese government on foreign companies, as diplomatic tensions between Washington and Beijing escalate.
Earlier this year, Chinese authorities visited the Shanghai offices of management consulting firm Bain & Company, removing computers and phones as part of a probe. Five Beijing-based employees of US due diligence firm Mintz Group were also detained earlier this year.
The repeated moves against private companies in China and an opaque judicial system have raised concerns in the foreign business community. Several surveys by foreign chambers of commerce indicated business confidence was very low.
As part of the GroupM raid last week, Chinese police also spoke to other local executives including Patrick Xu, GroupM’s chief executive for China since 2017 and WPP’s China manager, said people briefed on the situation.
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