Cock Up at American Apparel: Why Charney Will Survive Yet Another Nude Pic Scandal

Last Updated May 24, 2011 6:44 PM EDT

Dov Charney's presence as CEO of American Apparel (APP) tested the patience of his investors again this week as Gawker published a photo that appears to show him partially nude, holding the source of his creative inspiration tightly in his hand. It's not pretty, but if curiosity gets the better of you, you can see the unedited Not Safe For Work version here.

One is not often confronted at eye level with the meat-and-two-veg of a major fashion advertiser. In the picture, its owner reclines behind it, grim-faced, gimlet eyed, in need of a haircut. And yet it's still Charney's handlebar mustache that fascinates most: How can a national arbiter of style wear such a thing on his face?

At any other publicly traded company, Charney would have been asked to leave long ago. But because he owns a huge amount of his own stock, and has agreements with other large investors with whom he collectively controls the majority of the stock, Charney will probably keep his job.

More bizarrely, Charney's past history of sexual affronts may have insulated him against his own critics. It is, after all, not surprising that nude pictures of Charney should show up on the internet given that he has appeared in a state of undress in at least two of his own ads and (almost certainly) published pictures of women he's had sex with on various blogs. If it were anyone else, everyone would assume that Charney was in the middle of some sort of Charlie Sheen-style meltdown. But at American Apparel it's the same-old same-old.

Charney isn't insulated against the legal liabilities the photo creates, however. According to Gawker, the photo is an inside joke at AA, following a computer breach by a former employee:
This picture has been a internal running joke for many, many years ... [My coworker] will often rename it something like 'saleschart.jpg' and send it to me via iChat with some sort of urgent text, and I double click it every single time.
The problem is that distributing sexually explicit pictures is almost the legal definition of sexual harassment in the workplace. Any person receiving the photo could cite it in a complaint. Stranger still, Charney himself could sue his own employees for harassing him.

In the near term, the fallout lands entirely on Charney, whose colleagues and employees will enter every meeting with their boss's face, looming between a pair of creamy white thighs, burned into their retinas.

He'll just have to make a good fist of it.

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