Home / News / More tricky stuff for agencies – now it’s Lowe in the dock in Brazil over backhanders to politicians

More tricky stuff for agencies – now it’s Lowe in the dock in Brazil over backhanders to politicians

preview-borghi-logoRicardo Hoffman, Borghi/Lowe’s former VP and head of the agency’s office in capital Brasilia, has been accused by federal judge Sergio Moro, who heads the government’s Operation Car Wash anti-corruption investigation, of instructing third parties (production companies, it seems) to make payments to then-congressman Andre Vargas in connection with two government accounts handled by Borghi/Lowe.

Vargas and his brother Leon Vargas and another former congressman were also detained by police last Friday, Ad Age reports. Operation Car Wash is named after an ongoing corruption investigation into Brazil’s state-owned energy giant Petrobras.

Brazil is unique in still adhering to a system whereby only full-service agencies can buy media, which helps agency margins but also puts agency executives in a position of considerable financial power, with media owners and other suppliers.

On the face of it these alleged dirty dealings have little or nothing to do with the vexed question of media rebates which are not rebated to clients, which is exercising advertisers in the US and Australia at the moment.

But there are millions, if not billions, of any currency you care to name washing around in the global ad market. Are agencies entitled to this or clients? This case in Brazil seems to be about what they do with the money, not where it comes from.

Lowe owner Interpublic issued the following statement: “”As a result of its own investigation, IPG had previously taken a number of remedial and disciplinary actions in connection with this matter. We will undertake additional steps as necessary to fully address the issue. We are working closely with our local agency, which is actively cooperating with Brazilian law enforcement.”

Which is what you say but it doesn’t mean a lot. The big marcoms holdings companies are rather like global investment banks. They dispose of vast amounts of client money, often handled by quite junior executives or traders.

But none of the biggies in adland are very keen to have a light shown on the where the money comes from and where it goes.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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