Strip-Club Scandal CEO Quits

In case you hadn't noticed, it's the Thanksgiving holiday in the U.S., and most folk have powered down and are spending time with their loved ones. What a perfect time for companies to sneak out the news they'd rather you didn't read...

So say a big "Hello" to U.S. IT and networking services firm Savvis Communications Corp. (Nasdaq: SVVS), which announced the resignation of its top executive at 5.59pm Wednesday afternoon. (See Savvis CEO Quits.)

Savvis has been embroiled in a strip club scandal recently, courtesy of an unpaid American Express bill run up two years ago by its then CEO Robert McCormick and three other 'guests' at Manhattan nightclub, Scores, where dancing on laps is the order of the day.

The bill, a whopping $241,000, was run up on McCormick's corporate credit card, but hasn't been paid. American Express is suing the service provider, McCormick, and Scores for payment, which the now former Savvis CEO has claimed is the result of a fraud.

McCormick says he spent less than $20,000 on the night in question in October 2003, when a private room and the services of up to six dancers were hired for about six hours, according to papers filed by Savvis with the New York Supreme Court. Oh, and some wine was consumed too. (See Savvis Stripped of CEO .)

Savvis had suspended McCormick, 40, without pay while its Audit Committee conducted an investigation. The company has stressed throughout that McCormick "did not submit the charges in question to Savvis for reimbursement and that Savvis has not made any payment to American Express related to the charges."

On November 16 Savvis filed a motion with the New York Supreme Court to dismiss the American Express action against it "on the grounds that the alleged charges were not business expenses and that Savvis is only liable for charges that are business expenses."

Now the internal investigation is over, and Savvis has accepted McCormick's resignation, effective immediately. Savvis COO and president Jack Finlayson continues as acting CEO.

Savvis says it "does not intend to comment further on this matter pending resolution of the American Express lawsuit, which is still in litigation."

The scandal should serve as a warning to telecom industry executives, who readily admit to entertaining clients in strip clubs. In a poll conducted by Light Reading that attracted more than 170 votes, 21 percent of respondents said their company takes clients to strip clubs more than five times a year, while another 16 percent said that particular form of customer entertainment happened fewer than five times a year. That leaves 63 percent, who believe none of their colleagues take clients to adult clubs for bonding sessions. (See NY Strip Stakes.)

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 2:53:01 AM
re: Strip-Club Scandal CEO Quits Thank goodness for the automated spellchecker. When I wrote that Big Rob had been 'suspendered' it changed, correctly to suspended, and fortunately the phrase "as the litigation lingerie" shifted back to "as the litigation lingers..."

Hey, who says us hacks don't have our minds on the job??!!!
mr zippy 12/5/2012 | 2:53:00 AM
re: Strip-Club Scandal CEO Quits When I wrote that Big Rob had been 'suspendered' it changed, correctly to suspended, ...

Maybe he actually was, and the $240K is hush money ...
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