Sunshine as Disinfectant: Court Frowns on Secrecy Over Advertising Kickback Allegations

(MoneyWatch)  A five-judge appeals court panel in New York state has ruled in favor of unsealing a set of documents that purport to describe kickbacks at WPP (WPP)'s Grey Global Group, bringing us closer to solving the 11-year-old mystery of why Roger Edwards*, Grey London's chairman, and CFO Roy Wilson both left the agency in quick succession in 1999, after one of them made "a disclosure to managers which they found embarrassing."

The lesson here is an old chestnut: it's never the crime, it's always the coverup. Whatever the controversy was at Grey, it's almost certainly irrelevant to the agency's business right now. Yet because Grey has so persistently litigated to keep the documents a secret, we're still talking about them a decade later. Executives who want to avoid being tangled in controversies that won't end should bear in mind Justice Lewis Brandeis's famous dictum: Sunshine is the best disinfectant. If something bad happens at your company the quickest way out is to get it all into the open quickly and then watch it recede into ancient history.

The reason for Wilson's departure was hushed up in a legal settlement the next year. Edwards has never publicly explained why he quit as Grey's top client man after a 17-year run. Before Grey was acquired by WPP, Edwards was once tipped to succeed Grey legend Ed Meyer at the helm of the agency.

The documents allegedly describe billing improprieties at Grey's London and New York offices, and include transcripts of meetings attended by someone "with a tape recorder in his pants pocket." Grey has always maintained that the documents don't describe over-billing, and that the lawsuit in which they were filed was a frivolous attempt at revenge by an embittered employee (Mitch Mosallem, Grey's former print chief in New York, who was fired by the agency. Therefore, Grey believes, the documents should never see the light of day. Initially, Grey won rulings in a lower court dismissing the case and keeping the documents sealed.

However, Yale Law School's Media Freedom and Access Practicum took an interest in the case and brought an appeal, argued by David Schulz of Levine Sullivan Koch & Schulz, on the basis that the news media has a right to inspect documents filed as part of lawsuits. (Disclosure: I was the journalist who initially requested the documents be unsealed.)

The ruling doesn't tell us much more about what allegedly went on at Grey, but the judges assert that it was a matter of public interest and not Grey's private business:

The public's interest in this case, both at the time the sealing motion was made and even now, is substantial. Mosallem is a former executive of a major worldwide advertising agency who was convicted of federal crimes involving corporate corruption. In this action, he alleges that senior executives in the agency engaged in a coverup of corrupt corporate practices at Grey, which is a matter of public concern.

... The fact that many of the documents are over a decade old does not eviscerate the public's interest in them. The press's interest in the documents is a continuing one, as evidenced by the repeated attempts to gain access to them and the pursuit of this appeal.

Grey may attempt to keep the issue alive a little longer by appealing to New York's supreme court, but the agency faces an uphill battle: the appellate ruling was unanimous.

*No relation. Related:

• The Secret Mad Men Tapes: Judges Urged to Keep Ad Agency's Billing Documents Under Seal
• Grey Wins Bid to Keep London Documents Secret
• Client Hell! BNET's Guide to the Advertising Underworld

Image by Flickr user Steven Depolo, CC.