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ABUSE OF POWER--Part 1

The astonishing tale of sexual harassment at Astra USA

The lights were dim, the music was softly romantic. It was the final night of the Astra USA Inc. national sales meeting last June, and pairs of employees were dancing in the ballroom of a suburban Boston hotel. Astra President and Chief Executive Officer Lars Bildman, then 49, was entwined with a 25-year-old sales representative, Pamela L. Zortman. Two onlookers noticed that Bildman, extremely drunk, was running his hands along her back and nibbling at her neck.

Suddenly, Zortman rushed into a nearby rest room. Sobbing, she told other women there that Bildman had tried to kiss her. Zortman, who had worked at the company less than a year, apparently didn't get much sympathy from two longtime female managers present. According to accounts Zortman later gave to two sources, the women told her, in effect: ``That's the way it is at Astra, and you'd better get used to it.''

Not anymore. On Apr. 29, as BUSINESS WEEK was about to publish the results of a six-month investigation into allegations of rampant sexual harassment at Astra, Bildman was suspended and relieved of his responsibilities by Astra's parent, giant Swedish drugmaker Astra AB. The parent company appointed one of its most senior executives, Jan Larsson, to replace Bildman and hired outside counsel to perform a thorough probe.

Senior Astra executives acknowledge that BUSINESS WEEK's investigation sparked the abrupt action. Although Bildman had told superiors about the investigation months ago, Carl-Gustav Johansson, a member of Swedish Astra's executive committee, says the company was unaware of the full scope of the allegations until it received a lengthy letter from BUSINESS WEEK on Apr. 19. ``We hadn't heard anything this detailed--and certainly not that Mr. Bildman himself was the focus'' of some allegations, says Johansson. Refusing further comment on Astra's own preliminary inquiries--which also now include allegations of minor financial improprieties by Bildman--Johansson says Astra suspended its U.S. CEO because ``we lost some trust in him.''

The BUSINESS WEEK investigation, which involved interviews with more than 70 former and current employees, uncovered a disturbing pattern of complaints during much of Bildman's 15-year tenure as CEO of Astra USA. BUSINESS WEEK found a dozen cases of women who claimed they were either fondled or solicited for sexual favors by Bildman or other executives. Many women described evenings in which they were expected to escort senior executives to bars and dancing clubs. Others received frequent invitations to join the often inebriated managers in their hotel suites for more intimate late-night gatherings. Until recently, company parties were raucous affairs at which heavy drinking and dancing were virtually mandated. ``Guys were encouraged to get as drunk as they could-- and do whatever they could to the women,'' recalls Kimberley A. Cote, a former Astra sales rep who obtained an out-of-court settlement of harassment charges in 1994. ``If they felt like grabbing a woman by the boob or by the ass, that was O.K.''

Even many male employees were appalled. ``I've never seen anything as blatant and untoward,'' says Mashaan Guy, an Astra rep who quit in 1992 because he disliked the culture. Adds David G. Thurston, a respected district sales manager who quit last September in disgust: ``If ever there was a company where sexual harassment was rampant, this is it.''

Bildman and other senior managers at Astra USA did not respond to BUSINESS WEEK's repeated requests for interviews over the course of two weeks. On May 1, as the article was going to press, Bildman categorically denied the allegations in a written statement. An attorney for Bildman claimed his client hadn't had enough time to respond. In a preliminary interview one week before Bildman's suspension, Astra USA General Counsel Charles E. Yon and national sales manager Robert Vogel vehemently denied the allegations of excessive drinking and widespread sexual harassment. Yon refused, however, to talk about complaints that had been settled, and he declined to respond to numerous specific allegations. Now, as executives from Sweden take charge of the investigation, Johansson says he cannot comment on whether earlier denials still stand.

Some of the individual allegations may be difficult to prove conclusively. That's the nature of sexual harassment, which is partly a question of perception: What one woman might believe is harmless fun, another might find grossly offensive. Plus, some of the incidents took place with just the supposed harasser and his accuser present. But in many cases, the alleged harassment at Astra was witnessed by more than one person or experienced by more than one woman in an evening. And the sheer number of complaints centering on the same male executives, as well as the widely held view among both current and former employees that the environment was generally hostile to women, suggests Astra has a serious problem.

The Astra example comes on the heels of the sexual-harassment scandal at the Normal (Ill.) factory of Mitsubishi Motor Manufacturing of America Inc. There, 15 women allege they were groped and subjected to demeaning and offensive comments. The Equal Employment Opportunity Commission, which brought its largest suit of this kind against the company, alleges Mitsubishi did not respond to the repeated complaints. Mitsubishi denies wrongdoing and, at least initially, mounted an aggressive public-relations campaign designed to show that its employees disputed the EEOC's charges.

While Mitsubishi and Astra are extraordinary for the breadth and depth of their problems, many companies are struggling with sexual-harassment claims. Since the issue burst upon the public's awareness four years ago with Anita Hill's challenges at Clarence Thomas' confirmation hearings, complaints to the EEOC have more than doubled--to 15,549, while monetary awards have more than tripled (page 98). In response, many employers have introduced sensitivity training and instituted clear policies for handling complaints.

What is sexual harassment, exactly? EEOC guidelines define it as ``unwelcome'' sexual attention in the workplace. At the extreme, that means the demand or hint that job benefits will be gained in return for favors. But federal law also bans any conduct that creates ``an intimidating, hostile, or offensive working environment.''

TRICKLE DOWN. What is especially disturbing about Astra is the way the alleged harassment emanated from the top--then coursed its way down through the organization. Legions of women who felt embarrassed and angry nonetheless conformed to an unacceptable standard of behavior set by the subsidiary's very own CEO. So, too, did their male colleagues, many of whom later said they also considered Astra's conduct offensive.

As the Astra case suggests, few people have the fortitude or the financial wherewithal to blow the proverbial whistle. Some Astra employees were daunted by the prospect of taking on a deep-pocketed corporation--especially since those who did complain allege they were targeted for retaliation. Economic need meant others put up with behavior they felt was degrading. Many of those interviewed also said they feared complaints would only result in a reputation as a troublemaker--something that would haunt them in the job market. ``If another pharmaceutical company knows you're involved in something like that, your chances of being hired are slim,'' says Mary Ann Lowe, a former rep who left in 1991. ``Plus, it's very personal. Nobody wants to go public with sexual harassment. You know that if it ever went to trial, you'd be on trial, not the harasser.'' With the alleged harassment sanctioned at the top, many women who felt harassed--and the men who sympathized with them--simply quit.

Where were the legal deterrents? Former employees say that in many cases where women with evidence of harassment or retaliation threatened suits, Astra settled to avoid legal sanction. It has paid cash sums ranging from $20,000 to about $100,000 to five women that BUSINESS WEEK knows of. In return, those women agreed to keep silent. ``When women won't back off, they pay them off,'' says former district manager Thurston. As a result, for the executives charged with harassment, there was no real penalty. Worse, they appear to have used shareholder funds to protect themselves.

Yon denies that Astra paid off women in exchange for their silence. Astra says there have been only a few settlements, and that the majority of the claims came from people fired for poor performance. Though it says most of the claims were baseless, it insists the settlements were made primarily to avoid costly litigation. From the outside, Astra appears to have a clean record. The company says it has won the only harassment case to go to a jury, and there's only one serious complaint in Massachusetts files since 1990. As for the EEOC, Astra says it has faced just four claims, two of which are pending.

MILITARISTIC. Insiders ascribe much of the responsibility for the harassing environment to Bildman, a 22-year Astra veteran. The Swedish-born executive has run the U.S. arm since the early 1980s and is credited with its financial success. ``He's a very disciplined, goal-oriented guy,'' says Stefan Solvell, Astra USA's No.2 executive for years until he quit to run another company last year. With campuslike headquarters in the Boston suburb of Westborough, Mass., the company has grown to 1,500 employees and $323 million in revenues. Its products include the local anesthetic Xylocaine and the allergy medication Rhinocort. A hot new asthma drug, Pulmicort, is expected to hit the market soon. Bildman's bosses in Sweden, meanwhile, have also engineered fast growth: Parent Astra had $5.3 billion in sales last year, triple that of 1991.

Lanky, with longish hair, a shaggy mustache, and piercing eyes, Bildman is a charismatic, if somewhat quirky, leader. He favors suits in unusual colors: purple, coral, or traffic-cone orange. Those who've worked for him describe Bildman as obsessed with youth, beauty, and health. He also has a taste for the high life. According to Massachusetts records, among his six vehicles are a 1967 Lamborghini Miura and a 1967 Ferrari GT. Married, with children, insiders say he's a connoisseur of caviar, fine wine, and Dom Perignon champagne.

Inside Astra, say many sources, Bildman was an autocrat. He established a rigid, almost militaristic atmosphere at Astra's stark offices. Most staffers were required to go to lunch at precisely the same time every day and had to get permission to hang anything personal on their cubicle walls. Another oddity: All but the highest-ranking executives had to use one centralized fax number, and many former insiders say Bildman received copies of all incoming and outgoing messages. ``He has total control of the company; everybody's afraid of him,'' says a former manager who left on good terms two years ago.

Numerous sources say Bildman would exercise power in capricious ways. At one meeting, recalls a sales rep, Bildman didn't like the suit a high-ranking executive was wearing and told him to change it. The executive quickly obliged. Bildman insisted on other unusual rules about attire, including one mandating that an Astra pin had to be worn at all company functions. People who forgot their pins were severely reprimanded. ``I used to carry extra pins around,'' says a former manager. ``The fear got so out of hand that I recall at least six times that I gave somebody an extra pin and they were literally shaken by the fact that they had lost theirs.''

ASTRA WAY. To fuel its fast growth, Astra has hired hundreds of young salespeople, both men and women, since the late 1980s. For female recruits, say numerous sources, appearance seemed inordinately important. One male sales rep who quit early this year recalls being asked by two senior male managers to help persuade a wavering candidate to join the company. ``They told me in no uncertain terms why they wanted her hired--because she was extremely attractive,'' he says. Another ex-manager recalls George Roadman, a vice-president then running Astra's fastest-growing unit, rejecting an unattractive candidate by saying: ``We're not hiring her. I can't see me sitting at a bar having a drink with her.'' In an interview before Bildman's suspension, Vogel, Astra's national sales manager, denied that looks played any role in selection. Roadman, in a written statement, denied allegations that he had behaved inappropriately. He said he did have a drinking problem but that he had gone for voluntary counseling and had not consumed alcohol at Astra functions since 1994.

To many recruits, the job was a dream come true. Selling pharmaceuticals is a high-paying, much-sought-after profession. Starting at $35,000, plus a car and hefty bonuses, compensation at Astra was better than at most rivals. But before going out into the field, newly hired reps--few of whom had prior pharmaceutical experience--attended Astra's rigorous nine-week training course, which included in-depth sales instruction as well as subjects such as anatomy and physiology. Trainees had to study hard and were tested often.

The training also offered an immersion in Astra's unique culture, known as the Astra Way. Each class of up to 100 people was billeted for the entire nine weeks at the Westborough Marriott near Astra headquarters. The company paid for just one plane ticket home and discouraged trainees from taking other trips or receiving visitors. Trainees soon learned that the Astra Way included a rigid set of rules covering everything from sales techniques--presentations had to be memorized and delivered to doctors virtually by rote--to acceptable casual dress. (No jeans. No shorts. Socks required.) Some rules seemed petty. Others added polish to the new recruits. Trainees were taught how to hold their silverware European style and how to drink wine.

Dozens of sources who went through the training describe it as all-encompassing--and isolating. Cut off from family and friends and frequently reprimanded if they didn't adapt fast to the extensive new rules, many say Astra's training bore more than a passing resemblance to military basic training. Some new recruits were even marched around the building in sweats for a day, as managers dressed in fatigues barked questions. Those who flubbed the answers had to do push-ups. Others add it was almost like a cult. ``They tell you how to eat, drink, and sleep,'' says Kristina K. Bell, an Astra rep who quit last year. ``It was a very controlling, domineering atmosphere--like Astra owned me.''

OPEN-BAR NIGHTS. Socializing also appeared to play a key role in the Astra Way. Over and over, recruits were told that to succeed, they had to play hard as well as work hard. ``Work eight hours, play eight hours, sleep eight hours,'' was a phrase Bildman and other top managers frequently used. ``Part of being a successful rep is to be with your customers--and not just nine to five,'' explains Solvell, the former No.2. ``It means entertaining.''

Of course, good social skills are key to many sales jobs. But at the open-bar nights that managers would host three or four nights a week, the social skills of attractive women drew most of the attention. ``Upper management was barely paying attention to the male students, but they were all over the female students,'' says Kendra Kurz, a 1993 trainee who left Astra a year later. Yon and Vogel deny that socializing or drinking played an inappropriate role at Astra.

Nevertheless, trainees from four different classes say the bar nights were common--and that Bildman and Roadman were frequent revelers. ``Bildman would sit in on meetings,'' recalls one former rep who left in 1993 because of the environment. ``He'd go to the bar afterwards, when everybody else went.'' Numerous others say Roadman would often stay at the bar until late at night--and pressure others to do the same.

RACE MATTERS. Frequently, Roadman and other managers would call female trainees in their rooms to ask them down to the bar. Such invitations were hard to refuse. According to Terrance Leahy, who recently retired after years as Astra's director of training, roughly 15% of new recruits were fired during training. Participants say they were repeatedly told that social skills were key to evaluations. Moreover, the managers hanging out in the bar could make the difference between being assigned to San Francisco or Fargo, N.D. ``You had to go to the bar,'' says a female rep still with the company. Adds another who quit Astra last year: ``They would use their power and authority to make you think you didn't have a job if you didn't go along.''

Trainees say they were often offended by what went on down in the bar. Lelia Bush, a black woman who trained in late 1992, says that Roadman called her in her room several times inviting her to join him at the bar. She and another black ex-rep, Cordelia E. Webb, who has also filed an EEOC complaint, claim Roadman liked to talk about racial differences in sexuality. ``He said black women were stallions compared to white women, sexually,'' Bush alleges. ``He said he was a black man in a white man's body.'' Both women were terminated in circumstances that are under dispute.

Bildman, Roadman, and other managers would also invite women out on the town for more intimate excursions. After rebuffing him repeatedly, Kurz recalls finally agreeing to join Bildman when he organized a night out with six trainees--four women and two men. Also joining them was Edward Aarons, a senior executive in charge of institutional business. After dinner, the group retired to a darkly lit piano bar, where Bildman ordered up dancing and Dom Perignon. Trainee Bell remembers it as a ``come-on'' bar, ``the type of place where you'd meet somebody, have a steamy dance, and go home.''

As the party moved to a raucous nightclub, Bell remembers Aarons ``pawing me,'' and alleges that both executives were ``dancing very close to me. I kept thinking: `How do I get out of this?''' she says. In a written statement, Aarons denied that he ever harassed any women, terming such allegations ``completely false.''

The group arrived back at the Westborough Marriott after 2 a.m. Although Bildman lived nearby, he had taken a suite for the night and wanted everybody to join him. ``We didn't want to go up,'' says Bell. ``But we felt we should make an appearance.'' Only Kurz slipped away.

Upstairs, the drinking and dancing continued. ``I didn't feel I could say no,'' Bell says. Bildman was dancing ``way too close,'' she alleges, and kept steering her near the bed. When Bildman remarked that she seemed tense, she told him she was uncomfortable. Bildman's alleged response: ``We're very open here at Astra.'' After she escaped to the couch, Bell alleges Bildman came and ``put his arms around me, pulling me toward him. I kept thinking: `He's the president of the company. Is there any way to get out of this discreetly?'''

Not long after, Bell moved to her new territory in Cincinnati. At her first meeting with her new manager, Thurston, she started crying and told him the entire story. He filed a formal harassment complaint on her behalf. Astra's Yon says the company investigated and concluded that Bell's claim had no merit. The investigation, he says, involved taking sworn statements from the other five trainees. ``The other five,'' he says, ``swore that they saw nothing inappropriate, nothing offensive.''

(Continued in Part 2)

By Mark Maremont With Jane A. Sasseen in New York


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Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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