A source close to Charney says his handpicked American Apparel board turned on him purely for financial reasons, and that they have known about the other factors cited in his termination letter for a long time. The source’s grievances were first aired on Whisper.
Whisper
American Apparel's board is dismissing founder and chief executive officer Dov Charney for three reasons: breaching his fiduciary duty, violating company policy and misusing corporate assets, according to his termination letter, which was obtained by BuzzFeed on Sunday. But a source close to Charney says none of the allegations in the letter are new.
A source passed along the letter after first posting grievances against the board on anonymous social network Whisper. The source agreed to speak after being contacted by Whisper, and BuzzFeed was privy to the telephone interview in Manhattan.
Charney, who was fired Wednesday evening in a surprise move by handpicked board, is plotting his strategy for fighting the decision. (If true, he'll join Lululemon founder Chip Wilson, who's pursuing a similar battle, according to a report in The Wall Street Journal Sunday.) The source close to Charney said the board has known about the allegations set forth in the letter for some time, and that it's calling attention to them now because American Apparel's finances have deteriorated so significantly.
Among the accusations: Charney sexually harassed employees and "refused to participate in mandatory sexual harassment training"; he gave "significant" severance packages to former employees to help conceal wrongdoing; and was "aware of, but took no steps to prevent an employee under (his) direct supervision and control from creating and maintaining false, defamatory and impersonating blog posts about former American Apparel employees."
The company added that its employment practices liability insurance retention has grown to $1 million from $350,00 which is "well outside of industry standards," and notes it "has had a very difficult time raising capital and securing debt financing at reasonable rates because of (Charney's) actions."
Reuters and the Wall Street Journal reported portions of the letter over the weekend, but BuzzFeed was exclusively able to obtain the termination letter, posted below, in its entirety.
The board, for its part, told BuzzFeed on Friday that it learned of new information this spring that spurred an investigation, ultimately resulting in its decision to oust Charney.
Sources are increasingly using anonymous social sharing apps like Snapchat, Secret, and now Whisper, to break news.
Read the full letter below:
Confidential
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