The U.S. Department of Treasury on Wednesday issued an interim final rule requiring, among other things, that companies benefiting from Troubled Asset Relief Program funds adopt an "excessive or luxury expenditures policy," including "standards to ensure appropriate review and approval of potentially excessive and luxury expenditures." Such expenditures may include "entertainment or events, office and facility renovations, aviation or other transportation services, and other similar items, activities or events." The policies must be provided to Treasury and posted online.
Required in February by Congress and the president, the new ruleis subject to a public comment period which will run for 60 days after it is filed in the Federal Register. Interested parties will be allowed to post comments at www.regulations.gov.
As part of the proposed rule, TARP beneficiaries must:
"Identify the types or categories of expenditures which are prohibited (which may include a threshold expenditure amount per item, activity, or event or a threshold expenditure amount per employee receiving the item or participating in the activity or event);
"Identify the types or categories of expenditures for which prior approval is required (which may include a threshold expenditure amount per item, activity, or event or a threshold expenditure amount per employee receiving the item or participating in the activity or event);
"Provide reasonable approval procedures under which an expenditure requiring prior approval may be approved;
"Require principal executive officer and principal financial officer certification that the approval of any expenditure requiring the prior approval of any senior executive officer, any executive officer of a substantially similar level of responsibility, or the TARP recipient's board of directors (or a committee of such board of directors), was properly obtained with respect to each such expenditure;
"Require the prompt internal reporting of violations to an appropriate person or persons identified in this policy; and
"Mandate accountability for adherence to this policy."
The interim rule also calls for the creation of a new "Office of the Special Master for TARP Executive Compensation" to review compliance to the compensation and corporate governance rules.
A U.S. Travel Association statement indicated that the supplier group does "not expect these rules to change in any material way" after the comment period. "We are pleased that after months of discussion with the Obama Administration and our industry's full-court press on the value of meetings, events and incentives, these regulations do not do any further harm to the meetings and events marketplace."
USTA developed for members form letters they can send to TARP- and non-TARP clients which promote the model guidelines developed with Maritz Travelfor various industry associations. This would "allow your company to continue to utilize business travel responsibly and effectively," according to USTA, and "maintain your meetings and events, ensure compliance with an important government directive and protect [your company] from reputational risk."
For non-TARP companies, USTA wrote, the new Treasury rule offers a "reminder to companies everywhere that transparent and responsible board policies governing business meetings and events are more important now than ever."
The National Business Travel Association said it welcomed Treasury's rule "for recognizing the value of an effective corporate travel and meetings policy."
Related resource: Full U.S. Treasury Interim Final Rule On Compensation and Corporate Governance