Issue of the week: Sorrell’s sleaze file
The former WPP chief’s alleged activities could damage both his old company and his new venture
When Martin Sorrell stunned the City a fortnight ago by audaciously launching a new venture, he boasted of having “a clean sheet of paper” that would allow him to operate “without being a prisoner of history”. Wrong: the ad king’s past “is already catching up with him”, said Alex Ralph and Philip Aldrick in The Times. Claims that Sorrell was ousted from WPP after allegedly misusing company funds on a visit to a Mayfair brothel “have threatened to torpedo” his new venture S4 Capital “before it has even got off the ground”. Sorrell denies the allegations. He had won backing from high-profile investors including Lombard Odier, Schroders, and Lord Rothschild’s Five Arrows Investments, plus pledges from other investors to provide some £150m more. At least one of these is now seeking “reassurances”.
It isn’t just the alleged sex that is causing concern, said Madison Marriage and Matthew Garrahan in the FT. What has emerged since Sorrell’s departure in April “is a picture of routine verbal abuse of underlings”, and a worrying “blending of corporate and private life”. There has been criticism, too, of WPP’S handling of his departure – “in particular, the lack of disclosure over the reasons for his exit” and the fact he was able to walk away with his multimillion-pound incentive arrangements intact. Initial disquiet in the company turned to anger when Sorrell, who had no non-compete clause in his contract, announced the launch of a potential competitor. Indeed, all the elements were in place for a humdinger of an AGM this week, said Simon Goodley in The Observer – particularly given a brewing shareholder rebellion against WPP chairman Roberto Quarta, whom some investors accuse of kowtowing to Sorrell and covering up his reasons for leaving.
Quarta can’t disclose “the priapic details of Sorrell’s life” as it would breach privacy laws, said Alex Brummer in the Daily Mail. He also claims “he has done a sound job in taming Sorrell” – “guiding” his annual pay down from £70m to £14m. But in these affairs, the “cover-up” often “proves more toxic than the underlying problem”. WPP’S worry is that “the trickle of demands for publication” of the report detailing the reasons for Sorrell’s departure “becomes a torrent”. The company is “prepared to fight Sorrell tooth and nail”, and may seek to claw back some £20m in options if he poaches WPP talent or data relating to potential bids. “The greatest punishment of all”, however, is that when Sorrell’s business obituary is written, “the narrative of the builder of an advertising colossus will be obscured by his downfall in the sleazier parts of Mayfair”.