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Scale of Dentsu overcharging revealed

News, 19 January 2017
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TOKYO: An investigation into evidence of overcharging at Dentsu in Japan has revealed almost 1,000 incidences of impropriety, affecting 96 clients of the agency.

The investigation, which was launched last September, covered transactions for digital advertising services by Dentsu and 17 subsidiaries from 1 November 2012 to 31 July 2016, examining more than 214,000 contracts with 2,263 companies. Incorrect reporting of digital postings, non-timely reporting and invoicing inaccuracies were all under the spotlight.

In total, a total of 997 discrepancies were discovered, all in the Japanese market, Campaign Asia-Pacific reported.

Dentsu discovered 40 cases where the requested number of digital ads were not placed, with ten clients overcharged to the tune of Y 3.38m in total.

Some 950 cases of substandard reporting were also revealed. Of these cases, 537 related to daily reports that weren't in line with advertiser instructions or expectations, or related to incorrect placement details that didn't impact on total digital posting numbers. A further 416 incidences related to invoicing discrepancies. All up, the mistakes amounted to a total of Y 114.82m.

Dentsu, which has also came under fire after the suicide of an employee due to overwork in 2016, has vowed to take disciplinary action against those responsible, including some senior staff. According to Campaign Japan, the punishments are understood to involve pay cuts of up to 20% for a finite period. Dentsu's CEO, Tadashi Ishii, already announced his resignation late last year in response to the overcharging scandal and suicide case.

In a statement, the Japanese agency noted that human resource management issues were partly to blame, admitting that the company "did not adequately assign or train human resources in qualitative or quantitative terms." It also cited a failure to define clear scopes of service with some advertisers, an inadequate system for following up on errors, and that it "did not build and operate an adequate structure for standardizing work, separating duties, and conducting checks."

Moving forward, the company is "confident that these practices will not occur again" with an independent unit set up to provide oversight on orders, placements and invoicing, as well as more training for up to 1000 staff and increasing headcount in several parts of the organization.

Data sourced from Campaign Asia-Pacific, Mumbrella; additional content by Warc staff

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