The back story: WPP bought The Communications Group for $80 million from Pacific Equity Partners. It sued PEP when two key executives left Patterson and the shop lost clients such as Foster's, National Australia Bank and Cricket Australia. WPP claimed that the two execs, Anthony Heraghty and James McGrath, had been given "secret payments" to induce them to stay with the agency for one year; had WPP known of the payments -- and the consequent likelihood the pair would leave when the year was up -- it would have paid much less, WPP claims. WPP's Y&R Brands is seeking $10 million AUD in damages.
The case centers on a single question: What did WPP's bosses know about the payments and when did they know it? PEP claims Y&R Advertising chief Hamish McLennan was informed of the payments in a phonecall prior to the acquisition; McLennan says PEP's lawyers behaved disengenuously regarding disclosure of the payments. The Australian news media has yet to address whether McLennan is denying outright that he knew about the payments prior to the acquisition closing.
With Sorrell now insisting on not publicly describing what he knew, if anything, about the payments, the judge injected a note of skepticisim:
When told by counsel acting for WPP that Sir Martin would not be attending, Justice Jacobson said: ''Well if they don't call him there may be some consequences.''
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