Sunday 15 December 2019 3:58 pm

M&C Saatchi board ‘blocked investigation’ into accounting crisis

The board of M&C Saatchi has reportedly been accused of backtracking on its promise to hold an investigation into the firm’s £11.6m accounting crisis.

The advertising stalwart was plunged into chaos last week when founder Lord Maurice Saatchi and three other directors resigned following a fierce row over the scandal.

Read more: M&C Saatchi shares tumble after boardroom bloodbath

In a resignation letter seen by The Sunday Times, the three non-executive directors accused M&C Saatchi management of preventing them from doing their jobs.

“Our recommendations have repeatedly not been accepted,” said the letter, signed by Lord Dobbs, Sir Michael Peat and Lorna Tilbian.

The disgruntled directors accused chief executive David Kershaw and chairman Jeremy Sinclair of backtracking on a promise to set up an independent committee chaired by non-executives.

M&C Saatchi first disclosed the accounting errors in August, which it said would lead to a £6.4m one-off charge.

However, the company last week admitted the sum had risen to £11.6m following an independent review by PwC.

While the non-executives pushed for an immediate probe, Kershaw and Sinclair are said to have insisted on waiting until the full PwC report was available.

The crisis has had a catastrophic effect on M&C Saatchi’s shares, wiping almost two-third off the company’s value. 

The Financial Conduct Authority has made a request for more information into how M&C Saatchi disclosed its accounting problems, the Financial Times reported last week. The ad agency could also face a probe by the Financial Reporting Council.

Read more: Lord Saatchi steps down from M&C Saatchi

The letter called for changes to be made to the board and executive management as a result of the loss of shareholder value.

M&C Saatchi declined to comment.