Leo Burnett CEO Bernardin Oddly Silent on $15.5 Million Fraud Case

Leo Burnett CEO Tom Bernardin submitted to an interview with Ad Age, but the chat featured a glaring ommission. Can you guess what it was? That’s right. There was no mention of the agency settling its billings fraud case with the US Army for $15.5 million (back story here and here), which occured a couple of weeks earlier.

UPDATE: Age reporter Jeremy Mullman notes that Bernardin was asked about the scandal in its initial coverage of the news, and says that further questioning of him was precluded by space concerns.

So, to make the piece fair and balanced, here’s a translation:

“We had [a new global management team] fully deployed around the world, and what that resulted in was a year in 2008 that was, particularly in the U.S., just spectacular,” he said.

Translation: He’s telling the truth. It was “spectacular” that no one at Burnett was indicted or went to jail, which was what happened at Focus Media, Ogilvy & Mather, Grey Global Group and Wells Rich Greene when similar bill-padding schemes were discovered by the feds. The Leo Burnett case was bigger, financially, than those latter three cases combined.

The network took in $717 million in revenue and employed more than 7,700 people in 2007.

Translation: The network would have taken in $732.5 million had it not been for the Army settlement.

Added [president Rich] Stoddart: “What did [Mr. Bernadin] do in five years? Set a management team in place around the world. A clear sense of purpose at Leo Burnett that people here will tell you has not been the case in a long time.

Translation: The rest of the quote suggests that the “clear sense of purpose” that was lacking is something to do with creativity. But it makes a lot more sense if you read it as a reference to former CEO Linda Wolf. It was on Wolf’s watch that the Army scandal unfolded between 2000 and 2004. And it was Wolf who fired chief financial officer Eric Martinez after Martinez complained about a secret bank account held by Burnett which held $1 million in money skimmed from the Army. Wolf left Burnett in 2005 and is now a board member at Wal-Mart.

Both Mr. Bernardin and Mr. Stoddart hinted at — but wouldn’t detail — more structural changes coming in 2009.

Translation: Hopefully, that will include a series of check and balances to make sure client overbilling never happens again.

Bernardin: “I’m committed for five more years.”

Translation: Assuming the same set of schemes haven’t been perpetrated on P&G, Kellogg, McDonald’s et al.

• See previous stories on questionable antics in the ad business:
• Lamar Advertising Manager Guilty of Embezzling $200,000
• Rita Sanders Advertising employee took $40K in agency credit card scam
  
• The Scale of the Stupidity at Leo Burnett
• Leo Burnett Pays $15.5 Million to Settle Allegations It Defrauded the U.S. Army
• Tom Seifert Made Chairman at Ogilvy; His Ex-Con Wife Is Still in Business
  
• Lamar Advertising Still Embroiled in Pittsburgh Ethics Scandal
• American Apparel Eyed By SEC Over “Almost Bankrupt” Emails
• The Cost of Valassis’ Suit vs. News America Is Eating Its Profit