THE bank embroiled in Britain’s most expensive “sexism in the City” case paid more than £500,000 last night to a lawyer who claimed that she had been the victim of “disgusting” sexual gibes.

The settlement came as documents seen by The Times disclosing the full details of the case indicating that behind its pinstriped respectability, the US investment bank Merrill Lynch has a culture of bullying and a puerile obsession with sex.

Elizabeth Weston, an Australian solicitor, was suing the bank for sexual harassment, victimisation and constructive dismissal. The bank denied her claims. Merrill Lynch settled the case, paying out the six-figure sum to Mrs Weston, 29. It is understood that it made no admission of liability in the process. Mrs Weston is now bound by a confidentiality clause.

In a statement the bank said: “Both parties are satisfied that they have been able to resolve their differences. Ms Weston will now be withdrawing her complaint from the tribunal.”

Mrs Weston’s claims centred on a Christmas lunch party at a Central London wine bar on December 19 last year. She claimed that a senior lawyer, Nathaniel Norgren, made “disgusting” comments to her during the lunch.

She also accused a senior woman executive of sexism, racism and bullying on other occasions, the documents show. The woman cannot be named because the bank won a draconian gagging order last week to stop the press naming ten executives involved in the case. However, the Central London tribunal rejected a gagging order in relation to Mr Norgren because he had already been identified in articles in The Times.

Mrs Weston claimed that Mr Norgren, who is known as “Nog”, was so drunk at the Christmas party that he knocked over a table, sloshing red wine down her front. He allegedly made repeated comments about her breasts, saying: “Elizabeth has great waps”, arguing with a male colleague about whether the correct slang was “waps” or “baps”. The Dictionary of Slang defines “baps” as breasts.

She said that he held a conversation with her about barbecuing, which he used as a euphemism for sex.

Mrs Weston was seeking £1 million in compensation. However, she is understood to have settled for less to avoid the stress of a full hearing. The bank had already made a settlement offer of £270,000, which was rejected by Mrs Weston this week.

She would have told a tribunal in February that Mr Norgren made comments about her imagined sexual activity and, sliding his hands around her waist under her suit, had said: “Your waist is skinny too.” Noticing a woman in a tight silver skirt sitting at another table he allegedly made an offensive comment about her bottom.

Mr Norgren, who is married with two children, denies sexual harassment but admits telling Mrs Weston in public that she had a “great cleavage”, a preliminary hearing was told last week. He has since left Merrill Lynch, and a job offer from UBS on the Channel Islands was withdrawn after publication of an article in The Times two weeks ago. It is understood that he is now working as a van driver. His wife is believed to be pregnant with their third child. His lawyer, David Hunt, declined to comment last night.

Mrs Weston claimed that a senior male executive referred to a Danish colleague as “hurdy-gurdy” because of her accent, saying: “I haven’t heard hurdy-gurdy talking for a while. She’s talking filth isn’t she? Those Scandinavians are always at it. It’s filthy.”

Mrs Weston earned about £60,000 a year as a solicitor in the legal department at Merrill Lynch Investment Managers. She was the youngest in the department and one of only a handful of women.

She complained to her boss after the party and Merrill Lynch withdrew Mr Norgren’s $48,000 (£26,000) bonus, half of which was later repaid on appeal. He sent a written apology, which offered to pay for her clothes to be dry-cleaned after the wine spillage.

Mrs Weston left Merrill Lynch on June 4 and says she suffers from breathlessness, insomnia, panic attacks, palpitations, tearfulness and lack of confidence. She and her Australian husband were staying in Britain on a five-year work permit organised by Merrill Lynch. They now plan to return to Sydney.

The bank is already fighting a sex discrimination claim brought by Stephanie Villalba, 42, the most senior woman to bring such a claim. Mrs Villalba, who earned £1 million a year, is seeking record damages of £7.5 million.

She claims that she was told to sit in the stewardess’s seat on a private jet and serve drinks. Merrill Lynch says that she was not up to her job.

Her case has been adjourned until August 31.

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