Weekly Wrap: Fiddling on Expenses? Always a Bad Idea, Even for Executives

Is there a manager out there who hasn’t ever dealt with an employee fiddling around with their expenses?

Back when I was a young manager, I worked at a good-sized newspaper where for some reason, they let a prominent and fairly well-known staff writer (you might recognize his name) who worked on the news side go to Las Vegas and write about big-time boxing events for the sports section.

I’m not sure why the newspaper did this, but somebody higher up thought it made sense at the time. Problem was, the well-known news writer viewed these Vegas trips as his own personal bacchanalia. He wasn’t shy about telling everyone about how much he gambled, partied, consorted with “working” women, and generally ran wild during these Vegas excursions.

When an executive cheats on expenses

Now, that might be ok, but all of this was happening on the newspaper’s dime and expense account. And, this guy was legendary for turning into an expense report that either didn’t have receipts, or, had ones that were laughable at best. The word was that the executive editor used to hold his nose when he signed off on this guy’s Vegas expenses.

All of that happened a number of years ago, in a very different time and place. Business (and life in general) has changed a lot since then, and companies have installed various systems to make sure people can’t do this kind of thing anymore.

Trouble is, they still do. And here’s the poster child for expense abuse — a guy by the name of Ernst Lieb, chief of Mercedes-Benz U.S. operations.

According to The Wall Street Journal, Lieb was fired this week “over the company’s allegations he paid for personal expenditures with company money, according to people familiar with the matter.”

 The German luxury car maker this week unexpectedly removed … Lieb — a well-regarded, 36-year company veteran who took over its U.S. operations in 2006 — from his post and while providing no explanation for the move. He remains at the company in an undisclosed role, Mercedes said Tuesday.

The action came after questions were raised about the 56-year-old German executive’s adherence to its expense and compliance policies, those people said. Daimler last year settled a bribery investigation by the Securities and Exchange Commission. Since then compliance matters have become a top priority at the auto maker, executives said Wednesday, and it has become more vigilant in responding to potential transgressions.

One alleged incident, people familiar with the matter said, involved work performed at Mr. Lieb’s home near Mercedes’s U.S. headquarters in Montvale, N.J., which records show Mercedes had bought for him to live in 2009. Another, according to one person familiar with the matter, was a personal flight he had taken to Australia, where Mr. Lieb had been stationed before his U.S. stint and is thought to have family. In both alleged instances, Mr. Lieb appears to have expensed the costs to the company, they said.

After Daimler became aware of such examples, the company warned Mr. Lieb to disclose any other possible transgressions on the table. When another alleged incident later came to light, the company removed him from his position, one person said.”

Not simply padding the expense account

This wasn’t a guy simply padding his expense account by writing off a few extra lunches. He was expensing, according to the allegations, work on his house and personal trips to Australia. And, the fact that he was president of U.S. operations for Mercedes probably made him think he was bulletproof. Who was going to question HIS expenses?

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What’s amazing to me is that a guy with his kind of professional position and standing would put it all at risk because he wanted to push some extra personal expenses off on the company. It also makes me wonder who caught the transgression. Was it accounting? The CFO? Someone in HR? And how do you confront a problem like this, with the head of your U.S. division, if you are the one to discover it?

Fiddling with expenses never makes sense, especially in today’s business environment. But no matter how many systems get put into place to stop this kind of activity, there’s always someone out there who finds a way to play the system and go around the checks and balances.

Yes, expense fraud may be a lot harder to pull off, but it happens and sometimes it seems all too easy — especially if you happen to be a high-ranking company executive.

Apple employees remember Steve Jobs

Of course, there’s more than fiddling with expenses in the news this week. Here are some other HR and workplace-related items you may have missed. This is TLNT’s weekly round-up of news, trends, and insights from the world of HR and talent management. I do it so you don’t have to.

  • More battling over E-Verify. Last week, it was the California Legislature making a statement against the use of E-Verify. This week, according to the Seattle Times, it’s a city council making a controversial push to require its use. “A councilwoman (in Yacolt, WA) … introduced a measure to require that local employers use a federal employment-verification program, known as E-Verify… But Gov. Chris Gregoire, who recently led a delegation of farm-group representatives to Washington, D.C., where, among other things, they lobbied against the E-Verify bill, believes expansion would worsen an already dire shortage of farm workers in Washington state.”
  • Off-the-books-labor spikes in a down-the-tubes economy. The underground economy is thriving, especially in Missouri, according to the St. Louis Post-Dispatch. “It’s known variously as the underground or shadow economy, getting paid under the table or working off the books. Call it what you will, Missouri Department of Labor director Larry Rebman calls the practice unfair, illegal and another barometer reflecting the depth of the jobs crisis. In 2008, the labor agency identified or cited 180 Missouri workers for inaccurately reporting full-time employees as part-time workers or consultants. In 2011, the state expects to call out nearly 6,000 workers — an increase that exceeds 3,000 percent.”
  • Anonymous online posts doom another executive. The Philadelphia Inquirer reports that  the founder, chairman, and CEO of USA Technologies Inc. was dismissed last week when “the audit committee of its board of directors received information in late September that suggested (George) Jensen, 62, had been posting information about the company on an online investor board…With the help of Kroll Inc., an outside consulting firm, the board conducted an investigation and determined the postings, which were usually signed “Tex,” were “inappropriate.” The company said Jensen admitted writing the messages and was suspended Oct. 5. He resigned Oct. 14. One posting on Oct. 1 by investor.texas predicted that “USAT will be a hot stock this month.” Other comments by the same author take aim at rival posters bashing the penny stock.”
  • Remembering Steve Jobs. Here’s how Apple employees remembered (and celebrated) Steve Jobs this week, courtesy of an Associated Press video and the San Jose Mercury News

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

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