Q3 Results on Hold as IPG Accounting Black Hole Widens

14 November 2002

Interpublic Group, the globe’s second largest agency holding company (after WPP), revealed Wednesday it had disinterred yet more improperly accounted expenses within the European operations of its McCann-Erickson Worldwide unit, bringing the total to £181.3 million (€180.32m; £114.47m).

The black hole has widened dramatically since August’s estimate of $68.5m – and again following assurances in October that it was “not expected to exceed $120 million”. IPG insists that yesterday’s figure is the “final amount”.

Nonetheless, the beleaguered group again delayed publication of its third quarter accounts, due Wednesday. The filing with the SEC is now scheduled for next Tuesday.

Interpublic cfo Sean Orr said two unnamed law firms, plus auditor PricewaterhouseCoopers and Deloitte & Touche, have been involved in the post-mortem which not only focused on McCann-Erickson but all parts of Interpublic.

Added chairman/ceo John J Dooner, incumbent since early 2001: “I would like to express my disappointment and frustration that this restatement issue has haunted Interpublic since we discovered it three months ago. Many investors have expressed their anger, which is understandable. And on behalf of Interpublic, I would like to express our regret to our shareholders for the turmoil caused by this episode.”

Meantime, the search has intensified for a chief operating office to act as lieutenant to Dooner.

On the New York Stock Exchange IPG shares closed Tuesday at $12.94 and on Wednesday at $12.42 – a fall of 4.01%. This compares with the stock’s 52-week high on April 1 of $34.98.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff