Close-Up: Live Issue - Does adland need to clean up its act?(ethics in advertising industry)

The Ogilvy affair does little to improve the industry's image problem with clients.

Last week's guilty verdict in the US trial of the two former Ogilvy & Mather executives Shona Seifert and Thomas Early is in danger of fuelling clients' perceptions that the advertising industry is at best run by financial incompetents, or at worst susceptible to deliberate and premeditated fraud.

The inside story can be found on page 18 of this issue, but the case will resonate well beyond the US. While Ogilvy has distanced itself from the pair and claims to have introduced rigorous new accounting procedures to prevent this happening in the future, the damage to the industry as a whole is done.

After a two-year investigation, Seifert and Early were found guilty of conspiring to defraud the Office of National Drug Control Policy by fabricating timesheets in order to increase the agency's margins.

To add to concerns about the probity of agency financial dealings, the convictions were announced during a Flextech investigation into alleged illicit payments, or sur-commissions, made by its UK sales house, ids, to agencies for increasing their ad budgets to its stations.

The resultant impression of the advertising industry, therefore, is that it does not deserve unreserved trust from clients and is in need of cleaning up its act.

The reason why some agencies or individuals succumb to the temptation of fiddling the books is clear; they operate in a super-served market and have seen their profit margins squeezed by procurement directors.