WPP, Benatti Affair Heats Up

NEW YORK Ousted WPP Group Italy manager Marco Benatti today said he has extended an existing wrongful firing lawsuit to include holding company CEO Martin Sorrell. He also said he might bring criminal libel proceedings against WPP’s chief executive.

The latest salvo in the escalating battle between WPP and Benatti came as the company reported a 36 percent increase in 2005 pre-tax profit to about $1.1 billion on a 25 percent rise in revenue to $9.8 billion.

The encouraging results—fueled partly by the strong performance of Grey Global Group, which WPP acquired in March—were marred by the release of a tensely worded statement from Benatti, in which he said his lawyers are seeking “a court verdict in order to find [Sorrell] guilty for continuously spreading unfounded accusations, seriously detrimental to Marco Benatti’s image.”

He also said his lawyers are “weighing the decision to take up legal proceedings, even criminal, for libel.”

On Feb. 10, Benatti filed a lawsuit in an Italian court against WPP Italy and its U.K.-based corporate parent, alleging unfair dismissal and damage to his professional reputation resulting from media reports about the termination of his employment [Adweek Online, Feb. 10]. At the time, he hinted he might file legal charges against Sorrell personally, citing the CEO’s “repeated defamatory statements.”

A WPP representative today responded to Benatti’s latest legal initiative: “The facts will speak for themselves.”

WPP, which earlier sued Benatti in a London court, has brought in three law firms as it investigates alleged fraud and conflicts of interest involving Benatti.

In a statement accompanying today’s release of its unaudited 2005 financial results, WPP said of the Benatti situation: “It is not expected that this will have a significant effect on the group’s financial results” going forward.

On a like-for-like basis, profit and revenue for 2005 rose 32 and 5.5 percent, respectively, WPP said. The company’s operating margin increased last year to 14 percent from 13 percent. Operating targets were raised to 14.5 percent and 14.7 percent for 2006 and 2007.

WPP tallied new billings of $5.2 billion in 2005, a 36 percent increase from 2004.

In the statement, WPP called 2005 a “surprisingly strong” year “that mirrored the continuing steady strength in economic conditions across the globe, with even the weakest region, Western Continental Europe, picking up in the second half.” Grey “performed particularly well and made a strong contribution,” WPP said.