CBI sought legal guidance over possible insolvency after misconduct scandal

The president of the CBI has admitted he does not know if it can win back trust while setting out how it plans to bolster its culture amid the sexual misconduct scandal engulfing the business lobby group.

Britain’s most prominent business lobby group has sought guidance on possible insolvency as it battles for survival in the wake of sexual misconduct allegations.

The legal advice was requested by the Confederation of British Industry (CBI) before the publication on Wednesday of a prospectus setting out plans to turn around the organisation. Members will be asked to decide on its future in a confidence vote, with the results announced at a crunch meeting on 6 June, which will determine whether the CBI and its new director general, Rain Newton-Smith, have a mandate to continue their work.

The CBI, which describes itself as the “voice of business” in the UK, lost more than 50 members last month, including the retailer John Lewis and NatWest Bank, and its president has admitted hiring “culturally toxic” individuals.

Both the government and the Labour party have suspended any engagement with the lobby group, and the CBI said it would mothball its operations until after the June meeting.

A spokesperson for the CBI said the board had asked for advice about a range of potential restructuring options, including insolvency or being “smaller and refocused in the future”.

The CBI has engaged the law firm Fox Williams to carry out an independent investigation of human resources processes and the handling of complaints, but it went to a separate firm for the insolvency and restructuring advice, the Guardian understands. The request for advice was first reported by Sky News.

A flood of members left after articles by the Guardian reported allegations of sexual harassment and sexual assault, including rape, spanning several years.

The CBI’s director general, Rain Newton-Smith (left), and the chief people officer, Elizabeth Wallace.
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The exodus has created uncertainty and anxiety for the group’s staff of about 300 people, who fear losing their jobs.

In an open letter to members last month, the group’s president, Brian McBride, conceded the CBI had hired “culturally toxic” individuals and made “mistakes in how we organised the business that led to terrible consequences”. He detailed a range of failings and plans for improving the CBI’s operations.

McBride said: “We didn’t put in place sufficient preventative measures to protect our people from those seeking to cause harm and we didn’t react properly when issues arose as a result.

“We failed to filter out culturally toxic people during the hiring process. We failed to conduct proper cultural onboarding of staff. Some of our managers were promoted too quickly without the necessary prior and ongoing training to protect our cultural values, and to properly react when those values were violated.”

He said the CBI had “paid more attention to competence than to behaviour” and that it “tried to find resolution in sexual harassment cases when we should have removed those offenders from our business”.

A number of people were dismissed after the independent investigation by Fox Williams, the CBI said.

The group’s previous director general, Tony Danker, was also dismissed in April after separate allegations were made about his own conduct. These were unrelated to several other historical claims. Danker said he felt he had been made the “fall guy” for the wider crisis faced by the organisation. After his dismissal, Danker also said he was “truly sorry” for making some colleagues “feel uncomfortable”.

The details of plans for a slimmed-down lobby group are to be revealed on Wednesday morning, giving members a chance to review them before the extraordinary general meeting next week.

On exploring a range of different options for the lobby group’s future, a CBI spokesperson said: “Following a series of member resignations, we know that the CBI will need to be smaller and refocused in the future. The board has sought advice on matters of restructuring as may be appropriate, as any responsible board would.”