What to Learn from the Provectus Scandal

Businesses need to have checks and balances in place for all employees and everyone needs to adhere to corporate protocols regarding expense reporting and guidelines.

What to Learn from the Provectus Scandal

(Newswire.net — December 28, 2017) — There seems to be a lot of backlash faced by CEOs in today’s economic and political climate. Employees are expressing frustration as they see company leaders are often given huge bonuses and perks, while even in the face of economic growth, wages remain stagnant.

This frustration isn’t entirely unfounded, and the recent story about the former Provectus Biopharmaceuticals CEOs’ expense fraud did little to calm the anxiety and resentment of many corporate employees.

It also serves as a lesson as to the importance of having checks and balances in place for everyone in a company and adhering to corporate protocols regarding expense reporting software and guidelines. The same rules should apply company-wide in these areas, and there should be consistency and internal control exercised in these situations.

Provectus Biopharmaceuticals is a U.S.-based clinical-stage biotech company, and they recently came to a settlement agreement with the Securities and Exchange Commissions (SEC), with regard to investigations on two former executives, as well as the company as a whole.

According to a Provectus statement on the settlement, the SEC discovered that over the years Craig Dees, who was the chief executive at the time, obtained more than $3 million in business travel advances, along with expense reimbursements. These were used for his personal gain.

The statement goes on to state that Dees submitted false cash advance requests, and his expense reports had very little in the way of details about the business trips he was claiming. Additionally, the statement said that he gave either no documentation at all, or if he did submit it, it was found to be false in most instances.

According to reports, Dees used the money to pay for cosmetic surgery for his female friends, to pay for tips at restaurants, and for his personal travel expenses.

From 2013 to 2015 the SEC also found that the Tennessee-based Provectus company paid the former chief financial officer Peter Culpepper $200,000 in payments for business travel that he then went on to use for personal expenses that weren’t authorized.

Provectus reportedly conducted its own investigation of the travel expenses being claimed by Culpepper and found that he got the reimbursements for travel and expenses he was claiming without submitting the necessary documentation. The conclusion resulting from the investigation was that at least some of the reimbursements weren’t legitimate.

To finalize the SEC’s report, they found that the company’s overall lack of internal account control played a role in why the payments weren’t detected. The payments weren’t recorded accurately in the company records.

Per the settlement from the SEC, Provectus is being required to commit to identifying where their weaknesses are, and they can’t commit any future violations.

According to a press release from the SEC about Provectus, the governmental body worked with the new leadership of the company, and all people who were guilty of wrongdoing were fired. There has also been work done to make sure there are controls to avoid a similar situation in the future.

The overall lesson to take from this?

The SEC blames the situation on a lack of internal controls for travel and entertainment expenses submitted by company executives, and it’s something that can be avoided not only by Provectus in the future but other companies as well, with the use of consistent guidelines, oversight and technology that will make it easier to spot red flags. 

Source: http://newswire.net/newsroom/blog-post/00099247-what-to-learn-from-the-provectus-scandal.html