UK Company Manager Spent £600,000 on Drugs, Holidays and Prostitutes

The managing director of a £1.5 billion company attempted to blackmail his boss over sex parties they had attended after he was exposed as having spent more than £500,000 of company funds on drugs, holidays and prostitutes.

A tribunal heard that a whistleblower had written to the chief executive of the company, revealing that the managing director had been pilfering company money.

In response the managing director demanded a £10 million pay-off and threatened to make public that he and the chief executive had attended sex parties together. An injunction prevents either party or the company from being named.

"What the claimant was demanding was a very large sum of money indeed, certainly leaving in the mind the impression that the claimant was seeking to blackmail the respondent," said the tribunal's judgement, according to the Sunday Times.

When his demands were refused, he issued claims of sexual harassment, unfair dismissal and harassment.

In his evidence, the managing director claimed that he had attended his first sex party with the chief executive in 2001, and had been asked to perform a sex act on him. He said he agreed because his Asian background made him deferential to his boss.

However, the tribunal dismissed all of his claims. Although it found that sex parties had taken place, it found no evidence of sexual harassment, bullying or intimidation and found his remarks about an Asian upbringing rendering him more deferential "repugnant and offensive".

In its ruling, the tribunal described how the managing director, who was paid £180,000 a year, had used the firm as a "private piggy bank", and had taken approximately £600,000.

He spent an estimated £90,000 on cocaine and prostitutes, £80,000 on holidays with friends, family and colleagues that he called "team building trips" and £145,000 on personal expenses, including designer clothes, haircuts, massages and gym membership.

It described one "particularly offensive" jaunt in which favoured colleagues had waited to be picked up for a £57,000 trip to Canada while inside other staff members were being called in for redundancy meetings.

Described as "dictatorial" and a "control freak" by other employees, he also handed jobs to friends and family, employing the partner of his ex-wife, a builder, as a 'procurement consultant' and paying him £78,000 in less than three years.

The tribunal expressed its astonishment that the man was able to take so much, so brazenly, for so long.

"Something that struck the members of the tribunal forcibly was how such malfeasance could take place without someone responsible for such matters noticing. We have formed the view that the claimant began his policy of embezzlement largely because he discovered he could get away with it," it said in its ruling.