media trough M&M Global.“
Scale of Dentsu’s irregular transactions revealed – unit launched to monitor malpractice18.01.2017
An internal investigation led by Dentsu chief financial Shoichi Nakamoto has revealed 40 instances of overcharging and further cases of improper transactions amounting to over $1m (¥114.8m).
The investigatory team, comprising external attorneys and third-party advisors, reviewed 214,000 contracts with 2,263 companies, searching for evidence of incorrect reporting of digital postings, non-timely reporting, invoicing inaccuracies and other unsuitable business practices.
In total, 997 cases were unearthed concerning 96 clients, of which 10 were found to have been overcharged ¥3.38m ($494,571) in a total of 40 cases through placing an insufficient quantity of ads than ordered.
In the statement, Dentsu pointed blame at the absence of structure for standardised work, not providing clients with clear definitions of service, the lack of risk management, poor training and assignment of human resources, as well as inadequate coordination between group digital companies.
Seventeen executives stand to be punished involving pay cuts of up to 20% for a finite period with Dentsu clarifying “responsibility for [the malpractice] by taking disciplinary actions against executive officers and have taken appropriate disciplinary actions against other employees in line with in-house rules”.
In order to counteract future malpractice, an independent unit has been launched to monitor digital advertising orders, placements and invoicing, as well as a system to clarify scope of work and application details, providing training to staff to upgrade processes and improve collaboration.
This follows the announcement of Dentsu president and chief executive Tadashi Ishii in December 2016 to acknowledge the improper transactions and suicide of an employee due to overwork.
A new president and chief executive is due to be appointed in January 2017.