In a shocking ruling, an Employment Tribunal (ET) has laid bare a substantial company’s sleazy inner workings and rejected a compensation claim brought by its ‘dishonest’ former managing director, who stooped to blackmail in an attempt to keep his job and spent large sums of company money on prostitutes and cocaine.
Following his resignation from the company, which had a turnover of £60 million a year and was part of a national group, the managing director (MD) made claims of unfair constructive dismissal, sexual harassment and discrimination, victimisation and unlawful deductions from pay, and also claimed that he had been penalised for whistleblowing.
However, in dismissing all of his claims, the ET found that his evidence was in many respects deliberately false; that he had ‘embezzled’ large sums of company money; and that purported protected disclosures he had made in respect of the company’s accounting practices were motivated by blackmail and revenge and not made in good faith.
Central to the MD’s case was that he had been put under pressure to engage in sex parties and to perform indecent acts on the group’s chief executive officer. The Tribunal found that there had been ‘sexual encounters’ between the two men but ruled that they were entirely consensual and that the MD had exaggerated their frequency. The sexual activities had also not taken place in an employment context.
The MD had ‘ruled the company with a rod of iron’, employing a ‘dictatorial’ and ‘domineering’ management style, and had only purported to make protected disclosures after an employee had anonymously made complaints about his conduct that ultimately led to his suspension. He had, at that point, realised that ‘the game was up’ and had threatened to expose the group to adverse publicity.
The ET found that the MD had no genuine belief that the company’s accounts had been falsified and that, even had they been, this would have been his responsibility. His protestations of innocence and ignorance were ‘totally unconvincing’; he knew the disclosures to be false and his motivation was dishonest.
The evidence revealed that the MD had spent around £80,000 on foreign ‘jaunts’ for himself, his family and his friends for non-business related purposes. He had also spent more than £50,000 at lap-dancing clubs and over £66,000 on bar and restaurant bills on non-business related occasions. He had used a company credit card to spend £50,000 on cocaine and £40,000 on prostitutes. All that expenditure had been in defiance of company rules and he had made attempts to conceal it.
Dismissing arguments that the company had breached the term of mutual trust and confidence implicit within the MD’s employment contract, the ET expressed amazement that such misfeasance could take place within a substantial subsidiary of a national company without anyone in authority noticing. “We have formed the view that the MD began his policy of embezzlement largely because he discovered that he could get away with it,” the ET observed.
Ruling the MD liable to compensate the company for the substantial sums that he had embezzled, the ET concluded, “This is a claim which should never have been brought and, once begun, should not have been continued.”