Rocked by two recent scandals that are still being investigated, Dentsu said today it was canceling its annual New Year Party, which had been scheduled for January in five cities in Japan.
The scandals include a government investigation into the firm’s work practices following the suicide of a staffer last year who had worked hundreds of hours of overtime in the months leading up to her death.
A Japanese labor agency issued a report in October that concluded the excessive overtime was a contributing factor in the young woman’s apparent suicide. Dentsu offices in Japan have been raided twice in recent weeks by government investigators. Recent reports in Japan have surfaced indicating that Dentsu may have encouraged workers to underreport overtime hours they worked to make it look as though the company has been complying with regulatory limits.
A second scandal, involving the overcharging of clients, came to light in September. Initially, that contretemps was thought to involve just one client, Toyota. But later Dentsu confirmed that the problem was broader, affecting at least 111 clients and involving some 633 “suspicious” digital ad transactions.
The company, which has launched an internal investigation, said it believes the overcharges were limited to its Japanese operations.
Confirming the cancellation of the planned holiday festivities, Dentsu issued a statement Tuesday that read, “Dentsu fully recognizes the seriousness of recent issues and acknowledges the need for deep reflection. On November 1 Dentsu established its "Working Environment Reforms Commission," and will continue to do its utmost to improve its working environment to ensure the health of its employees and compliance with the relevant laws and regulations. The company will also make every effort to recover the trust of clients and other stakeholders that has been lost in view of the current circumstances.”