Former WPP CEO Denies He Visited a Prostitute and Paid Using Company Money -- Update

By Nick Kostov 

CANNES, France -- WPP PLC founder Martin Sorrell denied Friday that he visited a prostitute and paid with company money as he fielded questions about his reasons for resigning as chief executive of the world's largest advertising company.

"It's not true," Mr. Sorrell said.

Speaking on stage at the Cannes Lions advertising festival to Ken Auletta of the New Yorker, Mr. Sorrell was asked about a report in The Wall Street Journal that said the company's board had investigated whether he used company money for a prostitute.

After three decades at WPP, Mr. Sorrell stepped down after the Journal reported in early April that the company's board was looking into an allegation of improper personal behavior and whether he had misused company assets, and that the board had retained a law firm for a probe. Mr. Sorrell said at the time that he rejected the allegation "unreservedly."

WPP has said the allegation didn't involve sums that were material to the company. Earlier this month, the Journal reported that the board's investigation addressed whether Mr. Sorrell used company money for a prostitute.

A spokesman for Mr. Sorrell said last week that the former CEO "strenuously denied" the allegation and would be making no further comment. He added that Mr. Sorrell had signed a nondisclosure agreement that precluded him from discussing the circumstances surrounding his departure.

The board-instigated probe has ended but it is unclear what was determined.

Asked on Friday why he left the company, Mr. Sorrell responded: "I felt that the situation had become untenable and it was in the best interest of the share owners, the clients, the people inside the company."

"When you have leaks of that nature, at the highest levels of a company, it's a very difficult situation to maintain, and relationships come under a lot of pressure in situations like that," Mr. Sorrell added.

Mr. Sorrell said a confidentiality agreement he signed with WPP made it "unfair" and "inappropriate" to comment further on the board-instigated investigation.

Asked whether it was possible for one of the parties to a confidentiality agreement to be released from it, Mr. Sorrell said: "Absolutely. And to your point: There may come up a time when that's an appropriate thing to do."

Mr. Sorrell said he expects big advertising holding companies to "prosper" despite wrestling with major challenges to their business models that range from companies cutting back on how much they pay agencies, to marketers bringing more ad work in-house. It is "inevitable" that holding companies will need to internally consolidate their agencies, he said.

Mr. Sorrell, who didn't have a noncompete clause in his contract with WPP, announced in May plans to create a rival advertising firm called S4 Capital. Institutional shareholders have made nonbinding commitments to contribute more than GBP150 million, or about $200 million, to the new firm for acquisitions, according to a stock-market filing.

On Friday, Mr. Sorrell described his new investment vehicle as a "peanut" compared with WPP but added that "some people have peanut allergies."

Asked whether scrutiny over his departure would affect fundraising for S4 Capital, he replied: "We will see in time."

Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

June 22, 2018 10:57 ET (14:57 GMT)

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