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WPP pays libel bill

• Robert Peston
• 22 May 07, 11:30 AM

When Sir Martin Sorrell settled his libel case against his former Italian colleagues, Marco Benatti and Marco Tinelli, it was widely expected that he would share the costs of the case with his company, WPP.

That seemed reasonable, in that the vicious “Don Martino” blogs which irked Sir Martin were damaging both to him in a personal capacity and to his world-leading advertising business.

If anything, the allocation of costs should perhaps have been weighted slightly towards Sir Martin rather than the company, in that his determination to bring the court action probably gave rather more publicity to the noxious allegations than would otherwise have happened. Certainly I would never have noticed the absurd and malicious claims against him if he hadn't sued.

However, I have learned that WPP’s board has decided to pay the entire costs of the libel action – which run to £2 1/2m, a bit more than anticipated by most commentators.

The board didn’t make the decision lightly. The question of how to divide costs was assessed by its audit committee, advice was taken from the leading firm of solicitors, Freshfields, and there was a lively debate among directors.

But in the end, at a board meeting on May 10, the directors determined that WPP’s shareholders should pay. That will be disclosed in the coming few weeks, before the company’s annual meeting. I am intrigued by whether WPP’s owners will be happy that they are picking up the tab.

UPDATE: Here’s an odd thing.

A WPP spokesman tells me that £800,000 will be shown in the company’s accounts as the cost of picking up Martin Sorrell’s legal bill and that a further £200,000 has been spent on the bill of his fellow plaintiff, Daniela Weber, the chief operating officer of WPP Italy.

Which is all a bit odd, since the non-executive directors were given a paper earlier this month showing that the total cost of the case to WPP was £2 1/2m. I am at a loss to explain the significant disparity, as is everyone else to whom I have spoken for guidance.

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