US telecoms firm Savvis has put its chief executive on unpaid leave as it probes allegations relating to a $241,000 New York strip club bill.
More companies are questioning how employees entertain clients
American Express has brought a law suit against Savvis boss Robert McCormick claiming he is two years late in paying the bill from Scores nightclub.
According to court documents filed in New York, Mr McCormick and three associates allegedly racked up the bill, paid with a corporate credit card and then disputed the charges.
"We firmly believe that Mr McCormick was the victim of fraud," said Deena Williamson, Savvis's deputy general counsel. She declined to comment further.
Out of pocket
The St Louis-based company said it was launching an internal investigation into the events surrounding the allegations and have signed up law firm Sullivan & Cromwell as an independent counsel.
Scores nightclub, which has been sued before over the size of its bills, said it gets clients to confirm their spending every time it climbs above $10,000, even going as far as to fingerprint them and get them to talk to their credit card companies over the phone.
"We got authorization for all of the charges," said Lonnie Hanover, a Scores spokesman. "We followed proper procedures and documentation, and we were paid."
American Express is looking to recoup the money it paid out to Scores.
Savvis said that Mr McCormick had not sought reimbursement for the charges, nor had the company paid any money to American Express.
Many companies in the US and UK have been clamping down on corporate expense excesses as profits have come under pressure.
There have also been cases where female workers at large banks and brokerages have complained that they were excluded from the male-dominated world of strip clubs and client entertainment and their careers suffered as a result.
"Our board of directors takes the concerns of stockholders very seriously," Savvis said in a statement, adding it was "confident that the audit committee will conduct a fair, prompt and thorough investigation that protects the interests of Savvis, its investors, customers, and employees."
Jack Finlayson, the company's president and chief operating officer, will take over Mr McCormick's role.