Will sex scandal be the last straw for stricken CBI?

The future of Britain’s biggest business lobby group hangs in the balance as members await the outcome of an investigation into alleged sexual misconduct. The Confederation of British Industry (CBI), which claims to speak for 190,000 businesses, has been plunged into turmoil over allegations of rape, sexual harassment and drug abuse.

Questions about whether the organisation is fit for purpose are being asked by officials at No 10, The Mail on Sunday can reveal. Discussions have taken place over the possibility of disbanding the CBI, with a new group to represent business formed in its place.

Although the talks are at an early stage, the organisation will be alarmed that they are taking place at all. The problems at the CBI, whose director general Tony Danker is the subject of one of the complaints, go right to the very top. He stepped down last month while law firm Fox Williams looks into his conduct. Its investigation is expected to conclude as early as Tuesday.

A number of companies have said they are reviewing their links with the group. High-profile names including Rolls-Royce, EY and Marks & Spencer have raised concerns about the allegations.

The CBI offers firms access to a wide business network and promises to represent their interests to government. It also hosts high profile conferences and dinners.

Even before the latest scandal, however, membership was shrinking dramatically. In the late 2000s, it had about 240,000 members. This number has shrunk by 50,000 leaving it with 190,000 subscribers. If more leave en masse it will threaten the status of the CBI, which was founded by Royal Charter in 1965.

Critics say the organisation looks increasingly outmoded and is a relic from an industrial era that does not cater to new sectors such as tech. When Silicon Valley Bank suddenly went bust last month, tech entrepreneurs mounted a highly effective lobbying effort that totally bypassed the CBI. One senior City source said: ‘The CBI has been on the wrong side of every argument since the 1940s.

‘From supporting nationalisation, to state planning, joining the European Exchange Rate Mechanism and the euro, the CBI has a distinguished history in being wrong.Every member of the CBI would be better off spending the membership fee on something else.’

The organisation backed Remain in the 2016 referendum.

Going further back, its predecessor, the Federation of British Industries (FBI) was a fervent supporter of appeasement in the 1930s. When Hitler’s tanks rolled into Prague in March 1939, the FBI went ahead with a trade mission to Dusseldorf, claiming ‘political differences have nothing to do with industrialists’.

John Longworth, former head of rival business body the British Chambers of Commerce, said: ‘The CBI is really yesterday’s trade association, not tomorrow’s. If the CBI is to be relevant and survive it needs to be headed by someone who has experience of enterprise, has an impeccable reputation and wants to embrace the opportunities of Brexit.’

The latest allegations are likely to horrify Danker’s predecessor, Dame Carolyn Fairbairn, a champion of women in the boardroom. She was the organisation’s first female director general, and served from 2015 to 2020, when she took aim at the macho culture of boozy dinners and old boys’ clubs.

‘I really believe Carolyn did everything to open up the CBI and bring it into the 21st Century,’ said one source. They will have to get another woman in to clean up this mess.’ Another former insider said the recent difficulties ‘could prove fatal’, adding the CBI had ‘diminished in size’ and influence, and claiming the number of respondents taking part in its regular surveys had fallen sharply. Some senior women are already urging members to quit. Baroness Helena Morrissey, founder of the 30 Per Cent Club that pushes for better gender balance in the boardroom, declared ‘enough is enough’.

She said: ‘We can’t just stand by and wait for the next scandal to happen.’ The crisis began when a junior member of staff was said to have complained about ‘unwanted contact’ from Danker, which she regarded as sexual harassment. It deepened last week when fresh accusations surfaced, unrelated to those against Danker.

One woman said she was raped at a CBI staff party on a boat on the Thames. There were also claims of widespread cocaine use.

Ministers have already cut ties to the CBI and the organisation has cancelled all external events.

So far no major firms have publicly cancelled their membership, with many said to be waiting to see the findings of the investigation into Danker. He has apologised for any unintentional offence and has promised to co-operate with the Fox Williams inquiry. The CBI was contacted for comment.