Boardroom crisis deepens over allegations that lobby group failed to properly investigate claims against chair

The crisis at the Institute of Directors has intensified with the resignation of its chair, Barbara Judge, and two of its most senior directors amid claims the business lobby group failed to conduct a fair investigation into allegations Judge was a bully who made racist comments about staff.

Lady Judge, 71, who is facing 41 allegations of inappropriate behaviour, quit as the trade body’s head on Friday and was followed by deputy chair Sir Ken Olisa and non-executive Arnold Wagner.

The resignations follow a five-hour meeting of members of the business lobby group’s council on Thursday to consider the findings of an inquiry, led by the law firm Hill Dickinson, into the claims about Judge’s conduct, which resulted in the IoD suspending her.

Judge had previously “voluntarily” stepped aside temporarily from her role.

In her resignation letter Judge said: “I continue to strongly refute the allegations made against me and remain deeply disturbed by the gross and conspiratorial mishandling of the process which has led to the damaging circumstances in which I and the institute are now placed.

“The clear flaws in this process were identified in the statement I read to the council yesterday, which included the institute’s failure to give me an opportunity to reply to the allegations, the leaking of a confidential legal document to the press and the misrepresentations made by the institute and its investigators to my legal advisers.”

Olisa, who is also the first black lord-lieutenant of Greater London, wrote in his resignation letter: “Instead of showcasing good governance, we have found ourselves in a surreal world of flawed processes, flagrant disregard for the principles of natural justice and a roughshod journey over the laws of the Institute.

“Senior leaders covertly recording private conversations, systemically disregarding due process and leaking confidential material to the press have combined to make the IoD a laughing stock in the court of public opinion.”

Earlier on Friday the IoD said it had suspended Judge “pending further investigation into the matters raised and the process”

The law firm’s report, which had been commissioned by the business group’s senior independent council member, Lady Joan Stringer, is understood to have begun three months ago.

The IoD said a full investigation had been commissioned after its human resources department was “made aware of a number of allegations from staff members concerning the conduct of non-executive members of our board”.

Judge is alleged to have bullied her assistant and reduced her to tears on several occasions. She is also claimed to have said: “We have three inexperienced people doing a job [on the IoD’s secretariat] when one experienced person could do it and they are making mistakes. And so the problem is we have one black and we have one pregnant woman and that is the worst combination we could possibly have. No, two blacks and one pregnant woman. I couldn’t believe it!”

The words are understood to have been recorded covertly by the IoD’s director general, Stephen Martin.