Expense Account Living: Charge!

There were sympathetic snickers in some parts of town after City Controller Rick Tuttle scolded Department of Water and Power officials who had tried to dine elegantly on city expense accounts.

“Outrageous,” Tuttle huffed about a $1,013 lunch for 25. “Unreasonable,” he raged recently, denying payment of an $879 dinner tab for 12.

But Jeff Wald, for one, wasn’t angry. “I laughed when I read about the DWP,” says the president of television and management at Barris-Guber-Peters. “Those Power Department guys should have had a power lunch. Someplace like Morton’s or Spago, instead of the Jonathan Club. They didn’t show any power at all.”

Wald is one of many who understand that expense account lunches--and dinners and wardrobes and laundry and limos--are the oil that greases much of Los Angeles life. Without T&E; tabs (travel and entertainment accounts), many of the city’s seemingly rich would live just as modestly as the rest of us. And let those who have never taken home a pencil or made a personal phone call from the office cast the first stone.

Wald remembers bygone days when expense accounts paid for chartered yachts on which he held power meals. But now, “this is a publicly owned company and we don’t spend stockholders’ money frivolously,” he adds. “Nobody here even flies first class--I exclude myself, of course.”

Multiple Meals

Producer Rob Cohen says most filmland types wouldn’t relate to Tuttle’s ire. “Many executives double and triple-book their meals,” he explains. “They have multiple breakfasts, lunches and dinners. They go to the Polo Lounge, then they take a 7:30 and a 9:30 dinner, all of which they pay for and put on their expense accounts.”

Why eat thrice in one night? “It’s partly a sense of grandiosity, and partly a way to pack more business into the day in a context in which the parent company pays for it,” he says.

Cohen, who produced “Witches of Eastwick” and is working on “Bird on a Wire” with Goldie Hawn and Mel Gibson, thinks Los Angeles’ expense-account phenomenon may never fade.

“Hollywood,” he says, “is a town of illusion, and one of the greatest illusions of all is the glamorous public life that people lead. Almost all of that is paid for by studios and expense accounts.”

There’s a positive side to it, he claims. Expense account meals are “a kind of upper-class welfare system in which people who are doing well take people who are not doing well out to a public place” where everyone who sees them thinks they’re all doing well.

So much for glamour folks whose sense of ethics might be affected by the need to keep their images afloat. But what about more righteous types, like journalists, who sometimes risk their lives to bring America the news?

“They can be the worst,” Peter Greenberg says with a laugh. Greenberg, a Los Angeles-based syndicated columnist, says expensive meals are of minor interest compared to some of the tall tabs submitted by foreign reporters at a news magazine where he once worked. A favorite story, he says, concerns a correspondent who did such good work that no one questioned his huge expense reports.

“One night, this guy made a pretty bad mistake. He drank heavily, got into his Lancia and hit a local gendarme on the way home,” Greenberg says. “Magazine execs rescued him from jail and almost fired him on the spot--not because he drank and hit a policeman, but because they couldn’t figure out how he could afford a Lancia unless it was from padding his expense account.”

A Large Taxi Bill

Greenberg also likes the absurd tale of the magazine reporter who did a story on “a day in the life of an aircraft carrier,” then submitted a $435 taxi bill. “Why did he use taxis on that assignment?” the accountants asked. “Do you know how immense an airline carrier is?” the reporter shot back. Greenberg says the reporter got paid, in appreciation for his wit.

The Japanese contingent in Los Angeles doesn’t like to do deals over meals. They prefer to play golf while getting business done, says Kiku Kurahashi of A. T. Cosmo and Co., a local firm that makes commercials for Japanese clients.

“Playing golf with colleagues is one of the most elitist things to do” among the Japanese, she says, adding that the “ultimate” treat for visiting Japanese tycoons is “to be taken to a great golf course at a prestigious country club.”

Kurahashi says Los Angeles affiliates of Japanese-based firms often maintain corporate memberships at golf clubs here, so business visitors can head straight for the links. Expense account business gifts also tend to focus on golf equipment.

Cars in the Budget

In Los Angeles, tales are legion of high-priced cars charged to corporate expense accounts, although those who tell the stories don’t want to be quoted and can’t prove they’re true. Apocryphal or not, there is, for example, one story circulating about eight BMWs allegedly purchased for one film; the cars disappeared--driven home, the story goes, by members of the staff.

Clothing also seems a big expense-account indulgence. Rick Pallack, a Sherman Oaks menswear shop owner, says some networks provide expense account clothes budgets for news anchors and other celebrities who “have to look good.” Other top shopkeepers in town say sales of high-ticket fashions would drop precipitously if expense account spending were seriously curtailed. This, though most corporate employees--even the top dogs--technically are not permitted to put clothing on expense accounts. “If they see a blouse they like, they buy it and then cover the cost by faking one or two high-price lunches on their next expense account,” one retailer says.

One of the most publicized examples of a dispute over expense accounts and clothing occurred in 1981. Dennis Stanfill, then chairman of Twentieth Century Fox, accused Fox Television chairman Harris Katleman of submitting restaurant expenses supported by invoices, which, in fact, represented charges at a Paris clothing store. That problem was resolved when Marvin Davis took over the studio, where Katleman is now president of television production.

In some instances, employees feel entitled to a particular purchase, even if the company refuses to pay. A classic case, cited by Wald, involves a music company executive who lost his favorite $150 hat at a concert. He bought a new hat, charged the company by expense account but was refused reimbursement.

“Three times he tried and was rejected,” Wald recalls. “The fourth time, he inflated his expense report with $150 worth of allowable items and wrote a note saying ‘You find the hat.’ ”

Business Watch

In 1986, the salaried president of the nonprofit Greater Los Angeles Zoo Assn. made what she called an “error in judgment” by charging a $5,000 Rolex watch on a credit card provided to her strictly for business use. That same year, San Francisco’s top welfare official, on an annual salary of $93,000, resigned after charging $2,141 in restaurant bills to a $4,000 city fund intended to help feed the poor.

Though some cases of expense account abuse are clear, lines between right and wrong, between chicanery and crime, tend to blur in many discussions of their use.

But ethics, defined by Webster as “standards of conduct and moral judgment,” is just beginning to be taught at business schools. And Business Ethics only recently became a mandatory course for students at Harvard’s graduate school of business.

Meantime, Tuttle’s office continues to set a “reasonable and prudent” standard for employees’ expense account dinners by “calling a number of places” considered appropriate. Like The Velvet Turtle, where Tuttle reports a meal can be purchased for $5.95 to $13.95.