Are Secret Settlements Good for Companies?

After decades of degeneracy, Harvey Weinstein’s alleged sexual abuse and harassment of dozens of women in Hollywood is being widely discussed and covered in the media. Some of these women accused Mr. Weinstein of criminal acts (assault, rape), while many claimed he acted incredibly inappropriately (suggesting that he could aid their career advancement if they had a sexual relationship with him).

In some of these cases, the women accepted financial settlements and signed non-disclosure agreements. According to the New York Times:

In 1997, Mr. Weinstein reached a previously undisclosed settlement with Rose McGowan, then a 23-year-old-actress, after an episode in a hotel room during the Sundance Film Festival. The $100,000 settlement was “not to be construed as an admission” by Mr. Weinstein, but intended to “avoid litigation and buy peace,” according to the legal document.

In 1998, Zelda Perkins, a former production assistant with Miramax, allegedly confronted Mr. Weinstein… According to former colleagues, she and several co-workers had been regularly subjected to inappropriate requests or comments in hotel rooms, and she was particularly concerned about the treatment of another woman in the office. She told Mr. Weinstein that he had to stop... Steve Hutensky, one of Miramax’s entertainment lawyers, was dispatched to London to negotiate a settlement with Ms. Perkins and her lawyer.

From June 30, 1993 until September 30, 2005, Mr. Weinstein was an executive of the Walt Disney Company, the parent company of Miramax. This means that resources of a public company were secretly used to help cover up the illegal activities of one of its executives, and these are just the settlements the public knows about. This is a risk which should have been disclosed:

  • Disney’s revenue is at risk because families might not want to vacation at theme parks run by a company that employs a person who assaults his colleagues.
  • An executive making employment decisions based on his personal relationships with the prospective employees is not acting in the company’s interest.
  • Keeping the matter secret allowed Mr. Weinstein to assault more women, putting the company at even more risk when the assaults finally become public (as actually happened).

Companies should not be allowed to use payoffs and agreements to keep secret the criminal activities of their executives, while denying their employees the opportunity to exercise their 7th amendment rights to a trial by jury. By doing so, they not only silence women and perpetuate the very rape culture they seek to eliminate with cash instead of criminal proceedings, they put the company and their shareholders at greater risk as well. They should realize that these agreements aren’t just wrong (even if they are clearly morally repugnant), they’re bad business.

Related Posts