Denise Kingsmill: The Cost of Scandal

Dominique Strauss-Kahn's downfall should act as a warning of the risks attached to turning a blind eye to unacceptable behaviour.

by Denise Kingsmill
Last Updated: 21 Oct 2011

'Libertine', 'seducer', 'womaniser' - are these French for rapist? It will of course be for the US courts to decide whether Dominique Strauss-Kahn (DSK), the former IMF chief, whose career so spectacularly imploded earlier this year, is guilty of the allegations against him. However, he appears to have had plenty of form, albeit hidden from public view.

Sheltered by a combination of French pride in their popular reputation as seductive lovers, the omerta of the French media in relation to disclosures about the sex lives of prominent men and Article 9 of the French Civil Code, which purports to protect privacy, he seems to have got away with some appalling sexual harassment within the IMF for many years. This must reflect with dishonour on the workplace culture tolerated by DSK's employers. He was a catastrophe waiting to happen and the consequences of turning a blind eye have been disastrous for the reputation of the organisation.

The extremity of the alleged behaviour of DSK in the Sofitel in New York, which, incidentally, I have had to stay in many times for business reasons and which far from being luxurious has always seemed to me to be rather seedy, has highlighted yet again the longstanding clash of culture between the French and the Americans. In particular, this incident brings into sharp relief the contrast between the French tradition of secrecy surrounding the sexual habits of the powerful and the more open approach of the Americans, underpinned by their constitutional right to freedom of speech. Compare, for example, the official concealment of French President Mitterrand's second family with the unrelenting exposure of a similar situation that confronted Senator John Edwards and which led to the destruction of his US presidential hopes.

It has also highlighted the privacy debate in the UK and the use of the controversial super-injunction, which is an ordinary injunction, but with the added condition that its existence should remain secret. Since we have neither a defined law of privacy as the French do, nor a written constitution setting out clearly our rights as citizens like the Americans, we have to rely on judges to decide what we are entitled to know or what we are entitled to hide. They do so by applying the tests set out in the Human Rights Act and balancing the reasonable expectation of privacy with the public interest.

It is striking that it is the adolescent sexual antics of footballers which seem to have been the main subjects of these judicial cover-ups, with judges granting these powerful injunctions on the basis that there is no public interest in the disclosure of infidelity. This is despite the suspicion that many footballers are more interested in protecting their sponsorship revenues than their marriages. Perhaps if there had been more analysis of the connection between this loose conduct and the prevalent culture of a sport that has tolerated and condoned loutish behaviour for years, and which at its senior levels seems to be characterised by corruption and sleaze, the public interest would have been easier to establish.

An organisation that ignores or condones inappropriate sexual behaviour in the workplace, particularly in its leading executives, is taking a grave risk, not only of harassment and bullying claims but also of more serious consequences of such a lax culture. In 2009 Network Rail failed in its attempts to obtain an injunction to cover up the lewd and racist behaviour of its human resources director, Peter Bennett, which had resulted in the payment of public funds in compensation payments to employees intimidated by his bullying and sexual harassment. This occurred at the same time as the organisation was lambasted by the Department of Transport for the poor management of its stations and for presiding over a culture of fear. It surely can be no coincidence that in May this year, just weeks before the publication of the independent report of Anthony White QC which found that the company had misused public funds to cover up Bennett's 'admitted and established' misconduct, Network Rail was severely criticised and fined £3m in relation to its failings, which resulted in the horrific Potters Bar crash. Fish rots from the head, as my grandmother used to say.

The editor of the FT wrote earlier this year of Sir Fred Goodwin's superinjunction covering up his affair with a colleague, '... the affair took place when he was running the bank into the ground, raising questions about his judgment on all counts'. Granting a gagging order in such circumstances appeared 'to stretch credulity', he said.

A subsequent comment by an RBS source compared the affair to a hobby or a holiday, demonstrating a similar insouciance to that of the IMF in relation to the affair DSK admitted to having with a junior employee before his arrest in New York. Both organisations failed to recognise that sexual incontinence at the top may be an early symptom, if not a cause, of incipient corporate disaster and crisis.

The extraordinary thing is that, despite all the examples of reputations lost, careers trashed, families destroyed and businesses damaged by sexual misconduct, powerful men still believe they can get away with such risky behaviour. This in itself should be a caution to boards not to try to cover up or ignore what even judges may consider private. At the top, there may be no such a thing as privacy in these circumstances. Whatever the outcome of DSK's trial, his downfall must be a warning to others.

- Baroness Kingsmill is currently a non-executive director of British, European and US boards. She can be contacted on editorial@managementtoday.com

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