The $719,923 expense mistake at Dow Chemical…

Nearly everyone makes the occasional mistake on their expense reports. But not many people can claim to have racked up more than $700,000 in charges that should have been treated as personal expenses.

Andrew Liveris, chairman and chief executive of Dow Chemical (DOW) apparently can, according to the proxy that the company filed on Friday afternoon. We’ll let the company’s disclosure, deep in the proxy’s Corporate Governance section on page 18, spell it out:

“[I]t was determined that certain expenditures incurred on behalf of Mr. Liveris during the period 2007-2010 were not primarily business-related or should have been processed by the Customer Events Department as personal expenses and were not billed to Mr. Liveris by the Customer Events Department when incurred.”

This startling finding came about during what Dow Chemical suggests was a routine audit of the company’s Customer Events Department, which

“is responsible for facilitating marketing and customer/business partner development meetings and events around the world, including arranging meals and accommodations and procuring tickets to major global sporting and entertainment events. These meetings and events are hosted by Company executives and other employees and are a critical component of the Company’s business and marketing activities.”

Not that we ever find out exactly what worked out to such a huge sum — World Series tickets? Really rare bottles of wine? Reservations on Virgin Galactic? Renting a Ferrari for a few months? Probably a variety of more prosaic expenses, but of course, it’s anyone’s guess when companies are vague about the details — especially since, according to this meeting-planner’s profile, Dow Chemical treats customers to the Super Bowl, and is the official chemical company of the Winter and Summer Olympics. (Who knew the Olympics had an official chemical company?)

In any case, Liveris has, we’re told, written a check to reimburse Dow Chemical the full $719,923 (it must be nice to be able to do that so readily). As for how such a monumental mistake came about, the proxy pins the blame squarely on — well, not Liveris, necessarily, but rather

“shortcomings in record-keeping and processing, as well as a failure of current policies and procedures to provide sufficient guidance to avoid confusion and/or misapplication of those policies and procedures.”

After all, it’s not like such piddling expenses (whatever they were) are out of reach for the executive. He racked up $21.3 million in total compensation last year — $6.7 million in cash; stock and options valued at $10.7 million; pension gains of $3.6 million; and $297,145 in retirement-plan contributions and perks, including use of company cars ($19,906) and aircraft ($134,068), home-security services ($14,438) and financial-planning and tax assistance ($53,228).

It’s probably all the kind of harmless thing that titans of industry chuckle about over the canapâŸs. Occasionally, though, these things have a way of coming back to haunt shareholders (and executives) down the road. In January 2010, Michelle footnoted about a tax gross-up of $79,814 for meals during business trips where family members were invited, given to none other than Mark Hurd, then chief executive of Hewlett-Packard (HPQ). Hurd, of course, was forced out of that job in August in part thanks to questions about his expense reports.