Two former Young & Rubicam employees are awaiting trial in a Brussels jail for alleged involvement in a 1.5m VAT fraud.
There is speculation that the fraud, which was first uncovered by Y&R’s European office in London, was not confined to the Brussels office of the US ad agency network. “This goes much further than Belgium,” says one agency insider.
However, top management within the network insist the fraud, which totalled BF60m (1.5m) over five years, was a one-off. “It was not pervasive throughout the European region,” said Fernan Montero, chairman and chief executive officer of Y&R Europe. “This was an isolated incident.”
The New York headquarters of Y&R pumped BF50m into the Brussels office in late 1993 to compensate for the lost money.
The two held on remand in Brussels’ St Gilles prison, Marco Ipolito and Jean-Marie Sohet, worked in the finance department of the Brussels office until last summer, when they were fired for financial mismanagement following an investigation by the agency’s accountant, Price Waterhouse. Ipolito and Sohet reported to Rudolf Gaucot, former financial controller, who was also fired but has not been prosecuted. Gaucot is understood to be suing Y&R for unfair dismissal.
Leadership of the Brussels office changed hands at the beginning of last year at Montero’s request. Philippe Delussine, formerly of McCann-Erickson Brussels, joined as managing director, replacing Patrick Willemark who moved to Lowe Troost, Lowe Group’s Brussels arm.
But the agency only began legal action at the beginning of this year. Montero explained the nine-month delay by saying: “We had to understand the situation fully.” But an agency insider put it more bluntly: “You have to know what’s in your cupboards before you invite outsiders into your kitchen.”
The agency repaid the BF60m to the Belgian tax authorities in March, but is still trying to recover the amount, which roughly equals the size of a medium-sized Belgian advertiser’s annual media spend, from Ipolito and Sohet.
Y&R Brussels generates billings of more than BF1.9bn (42m) a year. Its client list includes multinationals such as Heinz, Colgate Palmolive, Pirelli, Danone and Jacobs Suchard.
No trial date has been set. “It can take nine months for a case like this to reach court,” says one Belgian lawyer.