Ford President Faces Inquiry over Advertising Directive

DETROIT March 10, 2003; Dow Jones reported that Ford Motor Co. , struggling to accelerate its turnaround efforts, faces more unrest at the top, Tuesday's Wall Street Journal reported.

Ford's president and chief operating officer, Nick Scheele, is the subject of a formal inquiry by the company's personnel chief. The internal investigation is focused on whether Mr. Scheele violated company purchasing policies with an order that all of Ford's advertising and marketing business be directed toward WPP Group , the big London-based advertising group that already receives the bulk of the No. 2 auto maker's ad spending.

The inquiry, reported Monday by the Detroit News, comes at a time when Mr. Scheele is under increasing pressure because of Ford's lagging operating performance and battered share price. In particular, Ford Chairman and Chief Executive Officer William Clay Ford Jr. wants Mr. Scheele to step up the pace of cost cutting. Moreover, the questions about Mr. Scheele's handling of the WPP matter highlight continuing tension and rivalry within the company's management, and could become a topic for Ford's board of directors at its scheduled meeting this week.

The inquiry was begun last month by Ford's personnel chief, Joseph Laymon, in response to questions from managers in the purchasing and personnel departments, according to people familiar with the situation. One issue is whether Mr. Scheele's directive violated Ford purchasing policies governing single-source contracts, these people said. Those policies require that Ford managers seek bids or otherwise shop around to ensure the company is getting the best deal. Further complicating matters, Mr. Scheele's son, James, works for a WPP unit in New York. Mr. Scheele previously has disclosed that relationship to Ford.

A spokesman for WPP declined to comment. Ford is WPP's biggest client, working with WPP-owned agencies J. Walter Thompson, Young & Rubicam and Ogilvy & Mather. Analysts say Ford accounts for about 7% of WPP's 3.91 billion pounds ($6.26 billion) in revenue.

Ford spokesman Jim Bright confirmed that an inquiry is under way into how Mr. Scheele handled the agreements with WPP.