Britain’s oldest business organisation, the Institute of Directors, has been plunged into chaos after an explosive row erupted at the very top of the organisation.
Lady Barbara Judge, the IoD’s chair since 2015, had ‘stepped aside’ from her position after allegations of racism, bullying and a litany of governance failures were outlined in a report prepared by external lawyers.
This morning, the IoD confirmed Judge had been suspended, saying that was "pending further investigation".
In a statement the IoD said:
The council took the decision, having received the Hill Dickinson executive summary, to suspend the IoD chair pending further investigation into the matters raised and the process.
While the IoD will hope to move quickly in order to draw a line under the affair, the dispute has exposed serious divisions among the lobby group’s board and has raised questions over its leadership and future.
The scandal is particularly embarrassing given the IoD’s stated aim, handed down by a century-old Royal Charter, to promote good corporate governance.
The blistering row began more than four months ago when allegations against Judge were first investigated by Dame Joan Stringer, the head of the IoD council. She hired Caroline Prosser from law firm Hill Dickinson to carry out a £60,000 independent investigation into allegations against Judge.
It is understood that Judge has hired legal representation from law firm Addleshaw Goddard. They will argue the case against her was fundamentally flawed, misconceived and did not accord with principles of natural justice by not presenting evidence against her.
The report’s executive summary, seen by City A.M., details 41 allegations against Judge, ranging from poor corporate governance to racism and bullying against IoD staff members.
Some of the allegations were rejected by Prosser, although she upheld many of them and warned that “Lady Judge’s conduct has also exposed the IoD, in my view, to the risk of employment tribunal claims and damage to reputation”.
The report alleges that Judge made racist comments on multiple occasions. At one point she is said to have told IoD director-general Stephen Martin there was a “problem” because “we have one black and we have one pregnant woman and that is the worst combination we could possibly have”.
She is said to have expressed the sentiment that “blacks can get aggressive”.
Corporate governance claims
The report also claims that Judge tried to influence policy statements from the organisation, if they were in relation to her friends or contacts in the business community.
In March last year the IoD heavily criticised Rolls Royce for its payout to its chief executive. The report says Judge “requested intervention” because it would affect her personal relationship with Ian Davis, the chairman – although the report mistakenly says he was himself chief executive.
Another incident concerned the 2017 Budget statement by chancellor Philip Hammond. Judge “wished to present a piece which contradicted the official IoD position on the budget” on the basis of her friendships with Hammond and Prime Minister Theresa May, although she was prevented from doing this.
Judge also allegedly used her position to benefit companies in which she and family members had interests. This included requesting staff to assist her in running a show to promote her own fashion range, and pushing IoD staff to use a company in which her son had an interest for redecoration work at the organisation’s historic Pall Mall headquarters.
The report also details serious concerns around the corporate governance process at the IoD, with allegations that Judge sought to change minutes of committee meetings, as well as seeking to appoint allies to the board.
Sir Ken Olisa, the Lord Lieutenant of London, founder of the Restoration Partners merchant bank and the IoD’s deputy chair, said in email to IoD board members that the process of investigating Judge was “fatally flawed from a procedural perspective.”
Olisa has stated that Stephen Martin secretly recorded conversations with Judge. He described the recording as “behaviour I have never experienced in 40+ years in business”, according to an internal IoD email seen by City A.M.
Olisa, who was knighted this year, was himself criticised in the report for corporate governance failures, including not properly investigating complaints about Judge’s conduct raised by members of staff. Olisa has emphatically rejected the allegation and has described the internal report as “defamatory, riddled with errors of fact, false accusations and un-evidenced opinions.”
Olisa last night said to City A.M.: "I just wonder how the people involved in this can look in the mirror and get on with their day."