Media agencies are companies that buy airtime and space for TV commercials and ads; "volume discounts" are rebates offered to agencies by media vendors which ought to be passed back to the clients whose money bought them. Agencies can skim millions from their clients' bills by keeping the rebates and hoping their clients never find out.
Andreas Weiss became CEO of Aegis Media (AGS.L) in Central Europe. He was formerly CEO of Aegis Africa. His appointment comes following a German judge's ruling that Aegis must open its books to Danone (BN.PA), which believes Aegis hid as much as $22 million in volume discounts from it prior to 2007.
Aegis disclosed in 2007 that $53 million (e37.8 million Â£25.8 million) in rebates was at stake. Bizarrely, Aegis seemed to regard the money as a potential asset:
... the amount is not sufficiently certain to be recognised as an asset.That's because Aegis has maintained the delusional position of regarding itself as the victim. In the case, former Aegis president Aleksander Ruzicka (pictured) and five others were found siphoning credits for free media airtime for themselves. He was sentenced to 11 years in prison for his role.
Ruzicka, like Aegis, also thinks he's the victim not the perpetrator. He's appealing his conviction and has sued Aegis, asking for â‚¬80 million in unpaid back pay. Ruzicka gave this explanation, according to this interview with Michael Ziesmann of German ad trade publication Absatzwirtschaft:
Maybe that sounds ridiculous to outsiders. But it is a perfectly normal compensation for 22 years work I did for this company.Separately, Omnicom Media Group (OMC) appointed a new CEO in Europe, Susanne Koll. Omnicom has not been linked to the volume discount probe and there is no suggestion that Koll's appointment has anything to do it. However, given the current climate, maybe she should take a close look at Omnicom's books, just to be sure, so she can reassure clients that their money has been handled honestly.
And finally: Amid all the drama surrounding Aegis, what is the mainstream media reporting? The company has been named as a potential bidder for iCrossing, a digital ad agency. Er ... scoop?
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- Danone Is Right to Demand Transparency in Aegis Kickback Case
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- Agencies Fight Against Procurement Execs - a War They Will Surely Lose
- Bermuda Opposition Demands "Forensic Audit" of Globalhue Billing on Tourism Account
- Ogilvy's Production Consolidation in NZ Solves Cashflow Problem, But Will Clients Like It?
- Clients Rooked by Middlemen and Volume Discounts in U.K.'s Murky Outdoor Business
- AICP Admits Volume Discounts Exist; Offers Them to Clients Instead of Agencies
- P&G, Reckitt Production Changes Threaten Volume Discounts for Agencies
- Sorrell's Comments on Procurement Reveal Opacity of Agency Billing Practices
- Grey Wins Bid to Keep London Documents Secret
- Ogilvy Settles Suit Which Alleged a Plan to Fraudulently Bill Avon
- News America Marketing Whistleblower: Clients Were Charged for Ads That Never Appeared
- GlobalHue Accused of Overbilling Bermuda Account; Agency Plays Race Card
- Is the TV Networks' Upfront an Antitrust Violation?
- The Scale of the Stupidity at Leo Burnett
- WPP's In-House Commercial Production Shop Courts Controversy With Clients
- Levi's Asks for Transparency and Media Buyers Balk