WPP looks into fraud allegations over Italian deals

WPP, the world's second-largest advertising group, has launched an inquiry into allegations of fraud at its Italian operations.

The British group has appointed Kroll, the financial investigator, and Deloitte, its auditor, to lead the probe. WPP confirmed yesterday that it had hired three Italian law firms specialising in contract, corporate and criminal law respectively, to assist the investigation.

The inquiry centres on Marco Benatti, who was fired on January 9 after a clash with Sir Martin Sorrell, the chief executive of WPP. Mr Benatti had a consultancy role with WPP but took the title of "country manager" and allegedly introduced the group to Mediaclub, a media buying firm. WPP paid Mr Benatti a commission of £140,000 for the introduction when it bought the business for £14m three years ago.

WPP ordered an inquiry into the ownership of Mediaclub after Mr Benatti requested an earn-out payment of €8.9m (£6.1m) be made to the company - €8.3m higher than WPP's estimate. According to WPP insiders, the group believes Mediaclub is owned by Mr Benatti. WPP is also investigating other allegations involving companies and accounts in Switzerland, Scotland and Madeira.