My office has a sleeping space and we have all sort of names for it including 'man cave', 'room where bad things happen' etc. etc. I can totally see how a disgruntled employee can convert it into "kink room" where people have sex.
On various office parties we had hired strippers and escorts and while none of them were prostitutes I can totally see how it can be reconstructed. We have gone to clubs to pick up women and discussed strategies.
All this in my opinion is perfectly normal and yet can be represented in a negative way.
EDIT: Strippers were not hired by employer but everyone contributed their own money for team event.