One visit to a strip club by the chief executive of telecoms carrier Savvis Communications Corp has landed him and the company with a potential image problem and a lawsuit from American Express Co for allegedly not paying a $241,000 tab.
The lawsuit claims that Robert McCormick incurred the charges two years ago while entertaining business acquaintances at Scores, a Manhattan lap-dancing club that is a favourite haunt of often risque radio personality Howard Stern.
Savvis and McCormick did not return calls seeking comment. A spokeswoman for American Express declined to elaborate on details in the 10-page brief filed on Thursday in New York State Superior Court.
The bulk of the charges were for tips that McCormick gave to dancers entertaining his party in a VIP room known as the President's Club, according to Scores spokesman Lonnie Hanover.
Investors have been shocked in recent years by claims of corporate excess at companies like Enron, MCI and Tyco.
"I'm sure at the time he thought this was a good way to entertain clients but certainly the danger in something like this is that it becomes public, and if it becomes public then you have the eyes of the world on you," said Jean Rosenbluth, a law professor at the University of Southern California.
According to the lawsuit filed by American Express, Savvis has conceded that McCormick visited Scores, but his company claims that he only signed for about $20,000 in charges.
Even if that turns out to be the extent of the cost, that is still far beyond what is appropriate for an executive to spend on entertainment, said one expert on business ethics.
"What he's doing is having a good time on someone else's money," said Bruce Oliver, a Rochester Institute of Technology accounting professor who runs the school's Center for Business Ethics.