GroupM launches legal action against auditor over ‘misuse’ of confidential Mediacom Australia documents
Media agency holding group GroupM has launched legal action against media auditing company FirmDecisions, accusing it of misusing confidential documents it was accidentally sent by, among others, Mediacom Australia.
The agency is one of a number of GroupM agencies listed in the action filed in the UK’s High Court, with the WPP company accusing FirmDecisions of breaching non-disclosure agreements after it was accidentally sent reports by agency staff.
Court documents obtained by Mumbrella quote a “senior FirmDecisions employee”, back in 2014, saying the media auditor should keep a Mediacom Australia document sent by GroupM’s finance division FinancePlus “up our sleeve” to use at a later date. The company was subsequently forced to make a formal apology to Mediacom Australia.
In its defence filing FirmDecisions claims that in July 2014 a Mediacom employee “mistakenly” sent “a spreadsheet listing monthly billings to each of Mediacom’s clients with a reconciliation against ‘AVD'”, when sending a report about its client FinancePlus.
It said it understood AVD to mean an “annual volume discount”, which appears to be another term for a “value bank”, a controversial practice generally understood to be heavily discounted or free ad space given to media agencies by media owners in return for increased share of advertiser spend.
Shortly after this incident Mediacom Australia was caught up in a TV misreporting scandal involving several high profile clients, with the agency being forced to admit that it not only operated value banks but it had charged four clients for using this advertising inventory rather than passing it on at no additional cost, against GroupM policy.
Both GroupM and FirmDecisions have declined to comment on the legal action, but it comes just weeks before the auditing firm is set to deliver part two of a controversial ANA report into non-transparent practices in the US market. The FirmDecisions report is expected to be released on July 12.
FirmDecisions is a division of Ebiquity, which specialises in forensic auditing, and was recently hired by the US advertiser association ANA to advise on its controversial investigation into transparency. That investigation found that media rebates, credits and value banks are “pervasive” across the United States.
While FirmDecisions did not comment on the case its legal defence, obtained by Mumbrella, quotes an email from Stephen Broderick to Scott Smith, global commercial director of GroupM, on May 5:
“We have 4 or 5 instances this year where your agencies have sent us confidential information for other clients by mistake – we don’t make a meal of it. In once instance this year, your agency sent us the whole list of ‘media differences’… (we) complied with our NDA (non disclosure agreement). We never called any client on that list…”
Court documents in the defence filing went on to list at least half a dozen incidents where GroupM staff sent or showed confidential documents to FirmDecisions in error. These were: MediaCom Australia in July 2014; MediaBillings Australia (a WPP-linked company) in September 2014; Mindshare Turkey in May 2015; Mindshare Sweden in October 2015; Mindshare UK in November 2015; and Mediacom UK in February 2016.
Among the most damaging claims in the court documents is the declaration by GroupM that it had “grave concerns” about an unnamed “senior FirmDecisions employee” as having said “in respect of a GroupM confidential document” that it was: “best to keep it up our sleeve to use when needed. I just don’t want to be seen in breach of the NDA.”
The documents go on to explain that in relation to the incident with FirmDecisions: “The employee did not notify Mediacom Australia of the mistake but for a brief period retained the spreadsheet provided. FirmDecisions’ draft report (on a compliance audit) to its client was made available to Mediacom for comment prior to to distribution, in a form which included a marked up comment suggesting internally that while it was important not to breach the relevant NDA it might be “best to keep it up our sleeve when needed.”
Value banks are an ongoing point of contention in Australia with GroupM currently the only major media agency group to admit to operating them. Dentsu Aegis, Omnicom, IPG Mediabrands and Publicis Media have all consistently refused to comment on the practice, even after the first part of damning ANA transparency report was released.
The imputation in documents in relation to the “up the sleeve” comment appears to be that FirmDecisions staffers might have sought to use the information about the Mediacom value bank to the company’s benefit.
FirmDecisions has denied that it ever did this with the documents going on to say: “After (it) was detected, the relevant employees were reprimanded, Stephen Broderick (Global CEO) of FirmDecisions issued a formal apology to Mediacom Australia Limited (through its solicitors Norton Rose Fulbright) and any electronic or paper copies of the spreadsheet were destroyed.”
Broderick: apologised for staffer’s “up our sleeve” comments.
GroupM and its agencies, Maxus, MEC, Mediacom and Mindshare, are seeking costs and “reserve the right” to seek damages “should evidence come to light which shows they have suffered a loss”.
It is also seeking an injunction to prevent FirmDecisions from “misusing” confidential information and demanding an assurance that all electronic copies of the documents have been deleted.
The ANA report appears to already be having consequences in the US with Business Insider yesterday reporting that in the wake of the report Chase, the US consumer and commercial banking division of JPMorgan, has called in auditors to examine its relationship with Publicis Groupe media agency ZenithOptimedia, the company that buys advertising on its behalf.
Correction: *An earlier version of this story incorrectly stated that FinancePlus is a client of Mediacom. It is in fact the financial services unit of GroupM.
