Image copyright IoD

Leading businesswoman Lady Judge has resigned after allegations of racism, sexism, and bullying.

The chairwoman of the bosses' group the Institute of Directors (IoD) had been suspended pending an investigation into the claims.

Deputy chairman Sir Ken Olisa has also resigned, citing "powerful forces" within the organisation.

A recording of controversial remarks made by Lady Judge, and heard by the BBC, indicates she supports diversity.

However, the IoD director general Stephen Martin called her resignation a "victory for ordinary staff members".

Lady Judge's resignation letter said: "It is with great sadness and concern that I hereby tender my resignation as chair from the Institute of Directors with immediate effect.

"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," she said.

Lady Judge particularly objected to a draft report containing the allegations being leaked to the press.

One of the main concerns of the business lobby group is to promote good corporate governance.

But she said: "The continuing failure to follow the most basic of principles of natural justice demonstrates individuals within the Institute that have no understanding as to what amounts to good governance, which only serves to utterly undermine any credibility the organisation may lay claim on such issues.

"It is not an organisation I wish to be part of."

Lady Judge said the recording was made to entrap her.

But the BBC understands the IoD's position is that the recording was made by the business lobby group's director general, Mr Martin, because he thought she might make racist remarks.

Mr Martin made the recording without her knowledge.

In a discussion about cutting the number of the IoD secretariat, she told Mr Martin that "the problem is we have one black and one pregnant woman [on the IoD secretariat] and that is the worst combination we could possibly [have]... two blacks and one pregnant woman".

Lady Judge said on Friday she wanted to make clear that she was seeking to have those individuals removed from their positions "solely on the basis of their performance" rather than their ethnicity or gender.

'Great job'

Other parts of the recording indicate she is in favour of promoting diversity.

Earlier in the recording, Lady Judge said she had arranged women-only "cocktail party" networking events, and she participated in IoD women's conferences.

"It's all part of this agenda, which is to bring in more women," she said.

Mr Martin then says in the recording: "One of the other things we're trying to do as well is improve diversity not just for women but for disability, for everything else."

Lady Judge responds: "We want to do that too... I think you're doing a great job. I think everybody appreciates the fact that things are getting done. They want change."

The recording was obtained by the BBC's Joe Lynam.

Sir Ken said: "Bizarrely, her [Lady Judge's] success and evident commitment to diversity and modernisation seem to have encouraged fervent opposition."

However Mr Martin welcomed the departure of Lady Judge and said: "This is a victory for ordinary staff members, who had the courage to risk jeopardising their careers, to speak out and make complaints about the conduct and language of people in very senior positions.

"This is a victory also for good governance. Our HR department took these complaints seriously and instigated a truly independent process through an external law firm, which fully and fairly considered the allegations before producing their conclusion in a final report that the majority of the allegations were true."

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Of the IoD secretaries, Lady Judge said earlier: "My acknowledgment that issues of race and pregnancy could complicate their removal both legally and from the standpoint of public perception is an observation I believe most lawyers would make, and that many non-lawyers also know to be true. I was addressing the likely consequences of their dismissal, not the reasons for it."

Lady Judge apologised for the way she had expressed herself in that conversation: "I realise I expressed myself in a way that sounds crude and insensitive. I regret that and apologise for it."

She added: "I am a woman lawyer who has broken many glass ceilings and who has advocated for women and minority rights my entire life, I'm glad that's the case."

Her term as chair was due to expire in May, and she was not seeking re-election.

In December 2017, Caroline Prosser, an employment lawyer from Hill Dickinson, started to gather evidence in an independent investigation of allegations of racism, sexism, and bullying against Lady Judge.

Ms Prosser spoke to 14 complainants, who made 41 allegations.