Publicis and Omnicom Media Group in the dock over China money laundering scandal

The bosses of Vivaki, the Publicis online buying operation and a leading client of Omnicom Media Group have been questioned by police in the south-western Chinese city of Chongqing over accusations that a media broker they used, Zheng Zhixiang of Chongqing Huayu, was using the operation to launder money from a prostitution racket based in the local Hilton hotel.

Zheng faces the death penalty for his alleged activities. Vivaki CEO Warren Hui and number two Ye Pengtao have been held by police for 48 hours and told not to leave the country. OMG’s Pepsi client is also under investigation.

Zheng’s company acts as a media broker for clients, that is taking their money and then negotiating time and space deals as the principal. The two media agencies could be looking at losses of more than £10m each.

Media broking is officially banned in the UK as it is in certain other markets although one suspects it goes on in effect.

The danger, of course, is that you don’t know exactly where the money actually came from even when you’re buying or selling media on behalf of a client. The more so in a widely diversified business like Zheng’s.

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About Angie Dean