December 10, 2019 / 7:13 PM / 2 months ago

M&C Saatchi co-founder quits days after profit warning amid accounting woes

(Reuters) - M&C Saatchi (SAA.L) said co-founder Maurice Saatchi and House of Cards author Michael Dobbs would step down from the board, days after the British advertising agency issued its second profit warning in less than three months due to an accounting scandal.

The agency, founded in 1995 by brothers and advertising moguls Maurice and Charles Saatchi after they were ousted from Saatchi & Saatchi, also said non-executive directors Michael Peat and Lorna Tilbian had stepped down.

“We have accepted the decision of these directors to resign. We are determined to restore the operational performance and profitability of the business and are already implementing all of the recommendations set out in the PwC report,” Chairman Jeremy Sinclair said in a statement, referring to an independent audit review.

A source with knowledge of the matter said Saatchi’s exit came after disagreements on areas of actions the company should take in terms of strengthening its governance.

One of the points of contention was Chief Executive Officer David Kershaw’s position, the source added.

Although Kershaw offered to resign, he was strongly advised by the company’s advisers that it would not be in the best interest of the company, the source said.

Sinclair said the company had started a process to reconstruct its board with new independent directors, who “will have a mandate to conduct a full review of all aspects of our governance”.

The original Saatchi business, led by the Saatchi brothers, made a name for itself with its “Labor 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, which has created ad campaigns for a number of Conservative elections including the “demon eyes” advertisements that ran in 1997 showing Tony Blair with glowing red eyes, said last week that it would restructure its UK operations.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Nick Macfie and Shailesh Kuber

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