The Travel Expense Billing Controversy and False Claims Act
The Travel Expense Billing Controversy and False Claims Act PricewaterhouseCoopers LLP (PwC), a major accounting firm, was engaged in unethical billing practices that generated millions of dollars in additional revenue to the company. PwC was charging its clients the full price of airline tickets and other travel expenses, such as hotel rooms and car rentals, while it was actually expending only a small percentage of the full amount billed to its clients due to applied rebates and discounts it received under travel agencies and airline contracts and negotiations. Therefore, the company was “overcharging… clients and pocketing the difference without revealing the practice” (AccountingWeb). However, since Neal A. Roberts, a PwC employee, discovered his employer’s travel billing practices, PwC found itself in a very difficult situation.
Mr. Roberts wasn’t in agreement with his company’s billing method and made several attempts to address the problem while working for his firm without much success. He reached out to the company’s ethics department and to an in-house PwC lawyer, but only managed to have the company’s policy revised, not corrected. A group of people (mostly the company’s partners) decided that under the new policy, PwC would have to disclose most of the discounts to its clients but still keep 8 percent of the rebates as a “cover our costs” fee while retaining the “millions… collected previously on the earlier rebates” (Carroll and Buchholtz 630).
Despite these policy changes, Neil A. Roberts remained dissatisfied and decided to file a False Claims lawsuit against PricewaterhouseCoopers LLP. The False Claims Act is a federal legislation that was established to make sure companies were not circumventing the government. Under this legislation, anyone who knows about “companies that are defrauding the government may sue on the government’s behalf and share in the proceeds of the suit” while being protected from workplace retaliation under the qui tam
Mr. Roberts wasn’t in agreement with his company’s billing method and made several attempts to address the problem while working for his firm without much success. He reached out to the company’s ethics department and to an in-house PwC lawyer, but only managed to have the company’s policy revised, not corrected. A group of people (mostly the company’s partners) decided that under the new policy, PwC would have to disclose most of the discounts to its clients but still keep 8 percent of the rebates as a “cover our costs” fee while retaining the “millions… collected previously on the earlier rebates” (Carroll and Buchholtz 630).
Despite these policy changes, Neil A. Roberts remained dissatisfied and decided to file a False Claims lawsuit against PricewaterhouseCoopers LLP. The False Claims Act is a federal legislation that was established to make sure companies were not circumventing the government. Under this legislation, anyone who knows about “companies that are defrauding the government may sue on the government’s behalf and share in the proceeds of the suit” while being protected from workplace retaliation under the qui tam
Cited: AccountingWeb. PwC to Settle Travel Expenses Lawsuit for $54.5 Million. 23 December 2003. Web. 28 September 2014. Carroll, Archie B and Ann K Buchholtz. "Corporate Governance: Foundational Issues." Business & Society ; Ethics, Sustainability, and Stakeholder Management. South-Western Cengage Learning, 2012. 94-120. Paper. Carroll, Archie B and Ann K Buchholtz. "The Travel Expense Billing Controversy and False Claims Act." Business & Society ; Ethics, Sustainability, and Stakeholder Management. Ohio: South-Western Cengage Learning, 2012. 628-31. Paper. Weil, Jonathan. "Court Files Offer Inside Look At Pricewaterhouse Billing Clash." The Wall Street Journal Online (2004): 1-4. Web. 28 September 2014.