intern paid for strip club with client on company card, what to do? [closed]

Question

Posting anonymously obviously...this is a very sticky situation.

So I manage a sales team and an intern on my team often takes clients out, both during and after working hours. I just got an expense report for $700 from our company credit card at a notorious strip club. It's the same night my intern was with a client, and I'm quite sure my intern took the client there. So I'm very concerned because:

1. It's an expense over $500, that means my boss has to sign off on it too.
2. My boss is very conservative.
3. Even without my boss I don't think I can justify that expense.
4. This client is relatively important, the only reason he was with our intern is that they had previously hit it off and my intern has acted responsibly to date. We're talking 7 figure deal.
5. The client is religious, not the type I would expect to be seen at that sort of establishment. And surely he doesn't want word to get out.

Anyway, I was kinda caught off guard by this whole situation. Any ideas?

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Update:

Talked to intern, it happened. Reviewed expense policy, no official policy on this. Talked to boss, intern fired, I'm on probation, no interns entertaining clients after hours, boss now approves all venues in advance. Boss will salvage deal personally, thinks we can use this as leverage.

Answer 1

Since it's on the company credit card, there's exactly zero chance of "sweeping it under the rug".

Step 1: Talk to the intern and confirm the facts. Did the intern actually incur that expense?

Step 2: Talk to the boss - he's going to find out anyway, so it's in your best interest to bring it up before he discovers it. For a 7 figure deal he may find a way to overlook a "one time mistake"

Step 3: Review your expense policies to make sure there is no ambiguity - either that sort of thing is permitted or it isn't (some companies consider that a normal cost of business, while others won't).

As for the client, make darn sure that word of this doesn't get out. Try to avoid using his name even internally when discussing this matter. If word does get out and he is embarrassed, you're pretty much guaranteed you'll lose his business. It's very hard to get new clients, but frighteningly easy to lose them.

Answer 2

If there's no current policy against this, then whoever did it is not in the wrong if they were entertaining a client.

CHANGE THE POLICY ASAP

Yes, I know that's acting after the fact, but nothing can be done.

Then, find out who did it and who accompanied him. Don't accuse anyone of anything until you know.

Do NOT talk to the client.

Speak to all company parties involved to understand what went on.

Then, finally go to the manager who needs to approve and express that your company will want to change the policy.

Impress upon your manager that you don't want to embarrass a big client by causing any sort of stir.

Answer 3

First, the intern likely is unaware that such things are problematic. You should first sit him down and explain that you see this charge and why it might be a problem and get his side of the story. Since you saw this from the credit card company, it is possible someone else had the charge or he did not know he was not supposed to use it for such purposes (if indeed that is the case in your company.) He might not even know he should check with you concerning any expenses over a certain limit before he makes them. (I personally wouldn't let an intern have a company charge card unless they had to travel.)

Now you will need to tell your boss about this because the charge will need to be paid. You will likely have to tell him that you are at fault because you didn't make the guidelines clear enough for the intern.

You also need to plan who will pay it if the boss doesn't approve it as seems likely from what you wrote. Given this is an intern who likely did not know that this was something unlikely to be approved, I think the burden of paying this should fall on you as the person who gave him a credit card without making sure he knew what his limits were.

Now if the intern said, that he knew he shouldn't be there and that those were his personal expenses and not client entertainment, then he should have the cost deducted from his pay. But if he had no idea that this was something he shouldn't do, then this is YOUR mistake not his.

If he did take the client to a strip club, then you need to find out whose idea it was. If it was the client's idea, then tell the intern he should check with you before spending that kind of money or going to that sort of place.

If it was the intern's idea, you may need to call the client yourself and make sure he is still happy with your company (you need not mention the strip club, just do a follow up and find out if he is feeling happy or needs something more). In any event, you need to make it crystal clear to the intern that this is something he should not discuss with any work colleagues or anyone outside the office. He can damage a client's reputation and lose the contract.