UK's financial watchdog to probe M&C Saatchi after accounting scandal

(Reuters) – M&C Saatchi Plc (L:) said on Friday Britain’s financial watchdog had started an investigation after the advertising agency revealed an accounting scandal last year.

The investigation also followed the completion of an independent forensic review commissioned by M&C’s board, the company said.

An accounting review started in August had found several units of the company’s UK business overstating income and receivables and M&C had said it would restructure its UK operations.

Since then, M&C has seen its co-founder Maurice Saatchi step down from the board and has issued two profit warnings.

The advertising agency, founded in 1995 by brothers and advertising moguls Maurice and Charles Saatchi after they were ousted from Saatchi & Saatchi, said it would co-operate with the Financial Conduct Authority.

The company has started a process to reconstruct its board with new independent directors, with a mandate to conduct a full review of all aspects of its governance.

The original Saatchi business, led by the Saatchi brothers, made a name for itself with its “Labour isn’t working” campaign poster for Margaret Thatcher showing a queue of people snaking out from an unemployment office and disappearing into the distance.

M&C Saatchi has created advertising campaigns for a number of Conservative elections including the “demon eyes” advertisements that ran in 1997 showing Tony Blair with glowing red eyes.

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