WPP handles 80% of the car giant's advertising and it is the advertising firm's biggest client, accounting for 7% of WPP's revenues of 拢3.91bn. WPP shares were hit by the news, falling 3.27% this morning to 330.75p.
WPP agencies, including Young & Rubicam in the US and Ogilvy & Mather in Europe, work on Ford accounts including Lincoln Mercury, Jaguar Cars, Volvo and Land Rover. J Walter Thompson handles the main Ford advertising account, worth $1.4bn (拢875m).
The investigation, which began last month, is examining whether Sir Nick violated Ford's company purchasing policies with the decision to allow WPP companies to handle all activity, which includes its global advertising, direct marketing and interactive accounts.
The inquiry is being headed by Ford's head of human resources Joe Laymon, and follows a one-page letter sent to executives by Sir Nick ordering the consolidation of Ford's marketing and advertising business into WPP.
It is understood that the directive was issued following a meeting in New York between Sir Nick and WPP executives, including Sir Martin. According to the Detroit News, Sir Nick said the directive would not only protect WPP's current business with Ford, but also could generate millions of dollars in new revenues for WPP.
The directive makes it more difficult for rival groups to win Ford business. The investigation centres on whether Sir Nick's directive violates company policies governing single-source suppliers.
According to the Detroit News, which broke the story, the inquiry also is examining Sir Nick's ties to WPP CEO Sir Martin Sorrell. It is reported that Sir Nick's son, James, also works for WPP as an account manager at Y&R New York -- but not on the Ford account. James Scheele had been an intern at WPP's Coley Porter Bell in London. Sir Nick did notify Ford's human resources department that his son had taken a full-time job with Y&R.
In the past, Sir Nick has praised fellow Brit Sir Martin. He told the New York Times last year: "Martin has put together an absolutely unrivalled assembly of companies in all aspects of marketing."
Jim Bright, a Ford spokesman, said: "Sir Nick Scheele always does what he perceives to be the right thing for Ford. He made this decision with the urging and support of the marketing team."
However, the inquiry comes at a time when Sir Nick is under increasing pressure as Ford's performance is questioned. The inquiry also reflects Ford chairman and CEO Bill Ford Jr's drive for more corporate transparency.
As a result of the inquiry, Sir Nick has been told to step back from any decision making involving WPP accounts.
Insiders have been quoted as saying that Sir Nick's motivation in consolidating the business into WPP was part of an effort to meet cost-cutting targets. Ford is desperately trying to cut costs, having lost $6.4bn in the last two years.
Scheele told Ford human resources that his son would not be working directly on Ford accounts, a conclusion confirmed by Ford's inquiry.
Sir Nick joined Ford in 1966. He headed Jaguar Cars from 1992 to 1999 and was credited with turning the luxury carmaker's financial performance around. In 1999, Sir Nick was named chairman of Ford of Europe, and two years later, he went to Ford's Dearborn headquarters and was named president in 2001 when Ford chairman Bill Ford Jr fired CEO Jacques Nasser.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .