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April 21, 2022

It’s time to end non-disclosure let-outs for scandal-hit boards

Non-disclosure agreements muzzle the harassed, help the perpetrators, and ensure that bad behaviour continues. It’s time they were ditched.

Hillsong Church hoped for years complaints of inappropriate conduct against its founder Brian Houston would remain between the victims, the church and God.

A desire for confidentiality after an allegation of inappropriate conduct or sexual harassment is deeply ingrained; Hillsong Church, which generates nearly $100 million a year, is not alone. But now we must rethink any perceived value in maintaining silence.

We haven’t heard from the two women at the centre of the misconduct allegations against Houston; and there is no evidence that Hillsong Church required a non-disclosure agreement to be signed. We do know what the board has said: “These matters – like all such matters under our code of conduct – were dealt with confidentially.”

Maintaining confidentiality, in whatever form, appears to have been a priority. The use of NDAs is a common tool for maintaining confidentiality.

At the Australian Governance Summit in March, Australia’s Sex Discrimination Commissioner, Kate Jenkins, made yet another call for boards to review how they use these agreements. NDAs were raised as an issue in Jenkins’ 2020 Respect@Work report and again in 2021’s Set the Standard report, delivered after Brittany Higgins’ allegation of rape.

The counter-productive nature of NDAs in tackling and preventing sexual harassment is not new, yet their widespread use persists.

NDAs are the go-to for boards when it comes to protecting reputations – of the company and of the perpetrator. At worst, NDAs facilitate further offending.

Sally Bruce, COO and CFO at Culture Amp and a board member with Chief Executive Women, also addressed the governance summit.

Before her speech, Bruce told the Australian Institute of Company Directors (AICD): “For a long time, when someone has exited the workplace on the basis of their behaviour, the farewell has been crafted in a way that indicates they’re leaving for family reasons or a change of career or something.

“We have to name these things for what they are. A company could instead state that the departure is the result of an investigation into conduct and [the person] is no longer continuing here, based on a breach of the code.”

Instead, perpetrators of sexual harassment or assault are highly motivated to sign an NDA. Just ask Harvey Weinstein.

Companies are also highly motivated to sign an NDA; sexual harassment is not great for company share price or corporate reputations. Just ask AMP.

No perpetrator or company wants to have a conversation about sexual harassment if they can possibly avoid it.

Victims, however, are silenced by NDAs. Victims’ stories are not heard, warnings about perpetrator behaviour cannot be given and the courage of those who speak up cannot be acknowledged.

While NDAs may solve a potential, short-term reputational issue, they don’t solve the systemic, long-term health and safety challenge of workplace sexual harassment.

Not every victim will want to speak up or want to be acknowledged. The timing of whether a victim chooses to speak up – or whether they do so at all – must lie entirely with that victim and not be taken out of their hands through a restrictive NDA. The preferences of victims must be placed at the centre of the board’s decision-making.

Instead of turning to an NDA to seal a financial settlement and drafting a generous resignation letter thanking the perpetrator for their service, boards could announce that someone was departing because there had been a clear breach of the company’s code of conduct, values and commitment to workplace health and safety.

The statement could also thank the victim, unnamed if preferred, for bravely coming forward. The board could acknowledge the courage and commitment the victim had shown to ensure a safe workplace for others and take the opportunity to encourage others to do the same.

The AICD supports traditional NDAs being ditched. While NDAs may solve a potential, short-term reputational issue, they don’t solve the systemic, long-term health and safety challenge of workplace sexual harassment.

James Fazzino, non-executive director of APA Group and Rabobank Australia and chairman of Tassal Group, told the AICD last year: “There’s no place for non-disclosure agreements to shut down an issue.

“Non-disclosure agreements stop people who are being harassed speaking up and telling their story, if they choose to.”
Julia Szlakowski agrees.

Szlakowski was the woman who made a sexual harassment complaint against Boe Pahari at AMP. She said: “Non-disclosure agreements are designed to muzzle survivors of sexual harassment, protect perpetrators and help mask the toxic company culture, which enabled the harmful behaviour in the first place.”

She added: “NDAs are used by most companies and aid in contributing to a culture of silence. Breaking this silence is an intimidating and precarious undertaking. It makes good sense why sexual harassment (and assault) cases are severely underreported.”

Hillsong Church spoke out this week only when the most recent media coverage of allegations of inappropriate conduct against Houston became widespread. Arguing it had wanted to “act biblically and in accordance with good governance”, the board acknowledged there had been a significant breach of trust.

We can only speculate whether if the Hillsong Church board had spoken publicly about Houston’s inappropriate conduct in 2013, it may have helped to prevent further inappropriate conduct in 2019. If the board is committed, as they say, to “understand the truth”, these women should be free to speak publicly about their experiences as well, if they wish.

Only once we feel able to openly speak about what has happened in the past can we have any hope of preventing it from happening again in the future.

Originally published in the Financial Review, March 25 2022

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