The Oversight Gap: When Criminality Breaches the Boardroom
A high-profile criminal trial for sex trafficking, set for January 2026, exposes the systemic failure of governance to detect and prevent egregious misconduct by senior personnel.
The Context
Oren, Alon, and Tal Alexander face an 11-count federal indictment. Charges include conspiracy to commit sex trafficking, sex trafficking by force, and sexual abuse by physical incapacitation. The prosecution alleges a coordinated, two-decade scheme (2002-2021) where the brothers used their status as luxury real estate brokers to lure women across borders, incapacitate them, and commit sexual assaults. Judge Valerie Caproni has characterised the allegations as a “coordinated scheme to entice women and girls.” Jury selection is scheduled for 20 January 2026, with the trial commencing on 26 January 2026. All three defendants are currently jailed without bail.
The Risk
While this is a criminal prosecution of individuals, the strategic angle for directors is profound. The alleged two-decade scheme indicates a catastrophic failure of oversight. Under the Companies Act 1993, directors have a duty to act in good faith and in the best interests of the company. Permitting senior personnel to allegedly use company-derived status and resources to facilitate serious criminality may constitute a breach of that duty. Furthermore, the Health and Safety at Work Act 2015 imposes a primary duty of care on a Person Conducting a Business or Undertaking (PCBU) to ensure, so far as is reasonably practicable, the health and safety of workers and others. This duty extends to psychological safety and could be triggered if such alleged activities created a hostile or unsafe environment for other employees. Directors may be personally liable for fines under these Acts if a court finds they failed to exercise due diligence. The reputational contagion is immediate and severe, potentially eroding shareholder value and triggering regulatory scrutiny into the entire organisation’s culture and controls.
The Control
Directors must proactively audit their organisation’s integrity controls. This is not merely a compliance exercise; it is a forensic review of culture and conduct. The board must mandate independent, risk-based audits that look beyond financial statements to examine how power, status, and resources are potentially misused. Scrutinise expense policies, client entertainment logs, and international travel patterns for anomalies. Implement robust, confidential whistleblower channels that are truly independent of management. Most critically, the board must own the ‘tone at the top’ and explicitly define and enforce a zero-tolerance policy for any behaviour that exploits power differentials, regardless of an individual’s revenue generation.
The Challenge
These are the critical questions you should be raising at the board table:
| What specific, auditable controls do we have to detect the misuse of company status or resources for non-business purposes, and when were they last independently stress-tested? | |
| Can our current whistleblower mechanism provide absolute assurance that an allegation against a top revenue earner would be investigated fully and without interference, and what is the evidence for this? | |
| What is our documented, board-approved protocol for immediate suspension and investigation if a senior executive is charged with a serious criminal offence, and how does it protect the company from accusations of vicarious liability? |